TPG Mortgage Investment Trust, Inc. (NYSE: MITT) and Cherry Hill Mortgage Investment Corporation (NYSE: CHMI) have entered into a definitive merger agreement under which MITT will acquire CHMI in a transaction implying a value of approximately $117.5 million for CHMI. The merger consideration consists of 0.3063 MITT shares plus $0.93 in cash for each CHMI share. The transaction is expected to close in the fourth quarter of 2026.

The implied per-share price represents a premium of approximately 29% to CHMI's August 7 closing price. Upon closing, existing MITT shareholders will own approximately 73% and former CHMI shareholders will own approximately 27% of the combined company. The combined mortgage investment portfolio is expected to reach approximately $9 billion, with projected annual operational efficiencies of $7–9 million.

Acquirer: TPG Mortgage Investment Trust, Inc. (NYSE: MITT) — a publicly traded mortgage REIT externally managed by an affiliate of TPG, the global alternative asset management firm.

Target: Cherry Hill Mortgage Investment Corporation (NYSE: CHMI) — a publicly traded mortgage REIT focused on residential mortgage assets.

Implied Transaction Value: Approximately $117.5 million for CHMI.

Merger Consideration: 0.3063 MITT shares + $0.93 cash per CHMI share.

Premium: Approximately 29% to CHMI's August 7 closing price.

Post-Merger Ownership: Approximately 73% MITT shareholders, approximately 27% CHMI shareholders.

Combined Portfolio: Approximately $9 billion.

Expected Closing: Q4 2026.

Cash Component Funding: TPG is directly funding approximately $20 million of the cash consideration.

This is a fixed exchange ratio merger — the number of MITT shares to be issued per CHMI share (0.3063) is set at signing and does not float with market prices between signing and closing. This structure has important implications for both sets of shareholders.

For CHMI shareholders: The value they receive depends on the MITT share price at closing. If MITT shares decline between signing and closing, CHMI shareholders receive less value than the implied price at signing. If MITT shares increase, they receive more. CHMI shareholders bear the MITT price risk during the signing-to-closing period.

For MITT shareholders: The fixed ratio means they know exactly how many new shares will be issued, which allows them to calculate the dilution to their existing holdings. However, if CHMI's assets deteriorate between signing and closing, MITT shareholders bear that risk.

The $0.93 cash component per CHMI share provides a floor of certainty for CHMI shareholders, partially mitigating the MITT price risk. TPG's direct funding of approximately $20 million of the cash consideration is a notable structural feature — it aligns the sponsor's economic interest with the transaction's success and provides additional closing certainty.

MITT is externally managed by a TPG affiliate. TPG is also directly funding a portion of the cash consideration. This creates a potential conflict of interest: the external manager (TPG) has an economic interest in the transaction that may not be perfectly aligned with the interests of MITT's public shareholders.

In externally managed REIT mergers, the conflict of interest analysis is critical. The independent directors of MITT's board must demonstrate that they conducted a robust, arm's-length process in evaluating the transaction and negotiating the terms. The fairness opinion from an independent financial advisor, the process documentation, and the independence of the directors who approved the transaction will all be scrutinized in any shareholder litigation.

Both MITT and CHMI are structured as REITs for U.S. federal income tax purposes. The merger must be structured to preserve REIT status for the combined entity. This requires careful analysis of the combined entity's asset composition, income tests, distribution requirements, and the tax treatment of the merger consideration. Any failure to maintain REIT status would have severe tax consequences for the combined entity and its shareholders.

The merger requires the filing of a Form S-4 registration statement with the SEC, which will include a joint proxy statement/prospectus for both MITT and CHMI shareholders. The S-4 must contain detailed financial information, risk factors, a description of the merger consideration, the fairness opinion, and the board's recommendation. The SEC review process for the S-4 is a key item on the closing timeline.

CHMI has outstanding preferred shares. The merger agreement provides that CHMI preferred shares will convert into new MITT preferred shares with substantially the same economic rights. The terms of the new MITT preferred shares — including dividend rates, liquidation preferences, and redemption rights — must be carefully structured to satisfy CHMI preferred shareholders and avoid triggering any consent rights under the existing CHMI preferred share terms.

The combined $9 billion mortgage investment portfolio requires thorough due diligence covering: credit quality of the underlying mortgage assets; interest rate risk and hedging positions; prepayment risk; counterparty exposure in repo and other financing arrangements; and compliance with REIT asset and income tests.

The MITT–CHMI merger illustrates several recurring themes in public REIT consolidation. First, the externally managed structure creates inherent conflicts of interest that require robust independent director processes and careful fairness documentation. Second, fixed exchange ratio mergers in volatile interest rate environments create significant price risk for target shareholders during the signing-to-closing period. Third, the combination of a fixed ratio with a cash component funded by the sponsor is a creative structure that partially addresses the price risk concern while aligning the sponsor's interests with closing.

For practitioners advising on REIT M&A, this transaction is a useful reference point for structuring the conflict of interest analysis, the preferred share treatment, and the REIT status preservation mechanics in a public-to-public mortgage REIT merger.

ULF New York provides legal advisory services on cross-border M&A, REIT transactions, and capital markets. This article is for informational purposes only and does not constitute legal advice.