New Residential scoops up fix-and-flip lender

New Residential Investment Corp. announced Monday that it has entered into a definitive agreement to buy Genesis Capital LLC, a fix-and-flip lender, from Goldman Sachs.

New Residential said that it expects Genesis to originate close to $2 billion of loans in 2021 and that the fix-and-flip lender has originated over 12,000 loans since 2014.

Michael Nierenberg, chairman, chief executive officer and president of New Residential, said in a statement that the acquisition “adds a new complementary busines line to our company and advances our ability to create and retain additional strong housing assets for our balance sheet.”

“We see the acquisition of Genesis as a great opportunity that supports our growing single-family rental strategy and one that allows us to capture additional unmet demand from our Retail and Wholesale origination channels,” said Nierenberg.

To-date this is the second M&A by the publicly traded mortgage REIT this year, with the company acquiring large, nonbank multichannel lender Caliber Home Loans in August for $1.71 billion.

New Residential, a publicly traded real estate investment trust, intends for Genesis to operate as an independent subsidiary, according to a press release.

The transaction will be financed with existing cash and committed asset-based financing from Goldman Sachs and is expected to close during the fourth quarter of 2021. Terms of the deal have not been disclosed to the public.

Robert Wasmund, chief executive officer of Genesis, said that the company has become a leader within the business purpose lending industry.

“We pride ourselves on executional excellence, which is why almost all of our customers are repeat borrowers and our portfolio has exhibited minimal losses,” added Wasmund.

The fix-and-flip business has been taking off this year, propped up by a lack of housing supply and an increase in home prices.

A report by AlphaFlow, an investment firm that buys real estate loans from lenders, found that more than 60 banks and other firms were financing flippers in March 2021—a 50% increase from two months prior.

New Rez has long been a player in the M&A game, acquiring Ditech‘s forward origination and servicing business for $1.2 billion in 2019 and Shellpoint Partners for $190 million in 2018.