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Spotlight on REITs: Apex Mortgage Capital

Money Manager | Monday, April 23rd, 2012

Apex Mortgage Capital: Was a US mortgage company that lent to residential clients as well as commercial clients, it also acquired US agency securities, equity securities and other mortgage investments. The company was registered and incorporated in 1986, its goal was to provide short term loans and investments, and make a fast profit off of securities and interest rates. The company did well for a number of years until the stocks started to fall and the real estate market took a steep decline, creating a cash flow problem for the company. Apex Mortgage Capital was traded on the New York Stock Exchange as “AXM” and was registered as a REIT.

In July of 2003 Apex Mortgage Capital was bought by American Home Mortgage Company. American Home Mortgage agreed to pay the shareholders of Apex Mortgage Capital $ 6.21 per share, equal to over $186 million dollars worth of shares in American Home Mortgage. The company then did some restructuring and became a registered REIT, and changed their name to American Home Mortgage Investment Corp, while then listing its self on the New York Stock Exchange, planning on a long and financially stable business venture.

But in just 2007 the company proclaimed that they could no longer give out loans, and would have to liquidate any and all assets that they had, making many shareholders and investors leery of where the company was headed and what the future held for the corporation, causing many shareholders to take out any stocks they held in the company and put them in a more secure investment, making the problem for American Home Mortgage Investment Corp. even worse. And as many had predicted, later in the year American Home Mortgage Investment Corp announced that they were no longer able to stay in business, and were closed as of August 3/2007, the very same day that they made the statement. This was shocking the stock market and employees alike, putting many people out of a job that very day.

Apex Mortgage Capital was lucky to have sold when it did, in 2006, 2007, 2008 and 2009 many mortgage investment companies filed for bankruptcy protection or just simply went out of business. And before it finally sold to American Home Mortgage Company, 100% of Apex Mortgage Capitals revenue was interest based, and very nominal, making it clear to shareholders and the companies investors that something had to be done. After they had made the decision to sell CEO Phillip A Barach and CFO David S DeVito were both happy to have sold the shares when they did, rather than wait it out any further, like many of the more unfortunate mortgage companies did at that time, causing them to claim bankruptcy or foreclosure.

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