MD Sass-Backed Affiliate Files For IPO

May 28 2009 | 11:05am ET

Newly formed specialty finance firm Sutherland Asset Management Corp. has filed a preliminary prospectus with for an initial public offering.

Sutherland will acquire agency and non-agency mortgage-backed securities, residential mortgage loans, asset-baked securities and other financial assets.

“We will initially focus our strategy on acquiring highly rated tranches of non-agency MBS in combination with agency MBS assets,” according to the firm.

The firm will employ derivatives, including interest rate swap agreements and interest rate cap agreements, to hedge the interest rate risk associated with the financing of its portfolio. It will be externally managed and advised by Waterfall Asset Management, a high-yield, asset-backed securities shop, which is backed by M.D. Sass-Macquarie Financial Strategies, a private equity fund managed by M.D. Sass and the Macquarie Group.

“We believe that our target assets currently present highly attractive risk-adjusted return profiles,” said the firm. “In addition, we believe that current distressed conditions in the financial markets present opportunities for us to acquire our target assets at significantly depressed trading prices and higher yields compared to prior periods. We also believe that recent governmental and central bank actions may positively impact our business, providing us with access to financing as well as opportunities to acquire assets at attractive prices.”

Sutherland’s investment committee will be comprised of Thomas Capasse, Jack Ross and Dominic Bruno. Capasse and Ross are co-founders of Waterfall Asset Management, which currently manages the Eden Fund, Victoria Fund, as well as a limited number of separate accounts that focus primarily on ABS.

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