In a strategic move, Ellington Credit Company (NYSE:EARN), a real estate investment trust with a market capitalization of $184.9 million and an impressive 14.93% dividend yield, has amended its equity distribution agreements to increase the potential offering of its common shares to $130 million.
According to InvestingPro data, the company has maintained consistent dividend payments for 13 consecutive years. The amendment, dated Monday, was filed with the Securities and Exchange Commission (SEC) following the adjustments made to the existing sales agreements with its agents.
The company, in collaboration with its manager, Ellington Credit Company Management LLC, and the agents—Citizens JMP Securities LLC, Ladenburg Thalmann & Co. Inc., B. Riley Securities, Inc., and Armstrong Securities LLC—has revised the terms to include additional common shares. This move comes after approximately $100 million worth of shares were already sold by Monday afternoon.
The shares are available for sale "at the market" on the New York Stock Exchange, among other methods, as defined by Rule 415 under the Securities Act of 1933. The agents involved in the transactions may receive up to 2% in gross proceeds as compensation from the sales. Notably, Armstrong Securities LLC, one of the agents, is affiliated with Ellington Credit Company and will receive compensation not exceeding the set 2% threshold.
The offering is made under the company's existing Registration Statement on Form S-3 and is detailed in a prospectus supplement filed on Monday. Ellington Credit Company has clarified that there is no obligation to sell any of the shares and may suspend offerings at any time.
This expansion of the equity offering provides Ellington Credit Company with the flexibility to raise capital through the sale of additional shares when needed. The company has indicated that the agents and their affiliates have previously provided various services and may continue to do so, for which the company pays customary fees.
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This report is based on the latest SEC filing and does not constitute an offer to sell or a solicitation of an offer to buy securities.
In other recent news, Ellington Credit Company has made significant strides in its strategic transformation. Recently, shareholders approved the transition of the company's legal form from a Maryland real estate investment trust to a Delaware statutory trust, a move that aligns with the company's future growth plans.
Furthermore, an Investment Advisory Agreement with Ellington Credit Company Management LLC was endorsed, set to replace the existing management agreement.
In the realm of earnings and revenue, Ellington Credit Company reported robust Q3 results, with a net income of $0.21 per share and adjusted distributable earnings (ADE) of $0.28 per share, surpassing dividends despite a sequential decline. The company's CLO portfolio also saw significant growth, reaching $144.5 million.
Piper Sandler, an independent financial services firm, highlighted the strategic shift of Ellington Residential towards Collateralized Loan Obligations (CLOs) investments, maintaining an Overweight rating on the company. The firm also revised its core earnings per share (EPS) estimates for Ellington Residential for the years 2024 and 2025.
In addition to these developments, the company's new Delaware Amended and Restated Declaration of Trust was ratified, marking a significant governance update for the trust.
Lastly, the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm for the year ending December 31, 2024, was ratified with a strong majority. These are among the recent developments that continue to shape Ellington Credit Company's corporate landscape.
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