Chimera Investment Corp (CIM, Financials) announced Thursday a definitive agreement to acquire Palisades Group, a U.S.-based alternative asset manager specializing in residential real estate credit, for $30 million in cash plus a possible earnout of up to $20 million over five years. Chimera might pay half of the earnout in common shares.

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Established in 2012, Palisades Group oversees residential real estate assets spread over portfolio of real estate loans. Jack Macdowell Jr., co-founder and Chief Investment Officer of Palisades will occupy the same post at Chimera at the anticipated conclusion of the purchase in Q4 2024.

Chimera expects the purchase to increase its residential credit capacity and boost revenues in 2025, broadening its fee-based income sources and improving management of over $30 billion in notional loans and real estate assets. The CEO of Chimera, Phillip J. Kardis II, stressed that the deal matches Chimera's equity capital with a larger credit management system.

Chimera shares rose 0.81% to close at $16.19 on Thursday. The stock gained another 0.37% in after-hours trading, reaching $16.25.

This article first appeared on GuruFocus.