Neither the sea nor politics could keep John M. Robbins Jr. out of the mortgage business permanently.
The former chief executive officer of American Residential Mortgage Corp. has formed a mortgage real estate investment trust with a familiar name-American Residential Investment Trust-and plans to build it from an investor in mortgage securities into a multifaceted mortgage company.
Mr. Robbins, who is chairman and chief executive officer of the real estate investment trust, left the business after American Residential Mortgage was bought by Chase Manhattan Bank in 1994. He took some time off to pursue his love of deep-sea fishing and work on the host committee for last year's Republican National Convention in San Diego.
American Residential Investment Trust, which was incorporated in February, is about to file a registration statement with the Securities and Exchange Commission for its initial public offering, Mr. Robbins said.
The unit's securities portfolio totals about $225 million. Mr. Robbins said the company will invest mostly in A-minus and B quality loans but will also buy conventional A loans, as well as lower-quality subprime loans.
Mr. Robbins said the Del Mar, Calif., REIT has seven employees, all former American Residential Mortgage employees. There are "tons" of former American Residential employees to hire, he pointed out, because Chase kept only a few American Residential offices when it acquired the company.
Mr. Robbins said he and Jay Fuller, who is the REIT's president and chief operating officer, both have about 25 years of experience in mortgage lending and intend to start originating loans.
"Finding originations will not be a problem. This is something we know a great deal about," Mr. Robbins said. Mr. Fuller was an executive vice president and chief administrative officer of American Residential Mortgage.
Structuring the company as an REIT will allow it to originate loans at a lower cost than a lender must meet, a key concern in an industry plagued by low profit margins, Mr. Robbins said.
"It is difficult to make money in mortgage banking under a traditional structure," he said. "The industry has grave difficulties in the A business relative to pricing."
Mr. Robbins said that mortgage lenders need to look at each portion of their business and try to make it profitable instead of relying on the higher-profit-margin subprime business.
"A lot of companies are making money on the B and C business and are using that to subsidize losses on the A business," Mr. Robbins said.
American Residential Investment Trust will originate loans primarily through correspondents, but the company plans to start hiring loan underwriters, he said.
The REIT will also service loans, Mr. Robbins said. In the next three to five years, he said, he hopes the company will have a portfolio of about $5 billion.
Mr. Robbins and Mr. Fuller are part-owners of the REIT. The investment firms McCown De Leeuw & Co. and TCW/Crescent Mezzanine also own stakes in the firm.
With mortgage real estate investment trusts continuing to do well in the stock market, Mr. Robbins said, he intends to take American Residential Investment Trust public soon. PaineWebber Inc. will be lead underwriter for the upcoming offering, he said.