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Made a mREIT Preferred Purchase

As I noted earlier in the day I planned to execute a trade for my ‘high yield, higher risk’ bucket and I did just that.

I bought a starter position in the Annaly Capital 6.95% fixed to floating rate preferred (NLY-F) at $25.30–which includes a month and a half or so of accrued dividends.

This issue is currently redeemable as it is in the floating rate period and floats at a spread of 4.99% plus 3 month SOFR so now has a coupon of around 10.2%. I expect no capital gains (or losses) just simply pay me my 10.2%. The issue may well be redeemed in the next months (or years), but looking to minimize share price movement so this one should trade in a narrow range in the future (say between $24.90 and $25.50).

This is my 1st foray into an mREIT preferred for many years and it gives me some comfort to buy an issue from the giant in the industry.

Of course I will add this to my laundry list of holdings.

3 thoughts on “Made a mREIT Preferred Purchase”

  1. This is supposed to be a response to Tim’s post below. I guess I am not too good using this board…

    mREIT common works ONLY when the Fed is cutting rates. Other than that preferred is better. I have had NLY in various forms and points in time since the 2007 time frame when the CEO was Mike Farell. In those days it was agency only, but more recently it has diversified into non agency mortgage debt and MSR business in addition to the core agency focused business. Non agency and MSR business brings in credit risk, but (in theory) should allow them to operate with less leverage. In the case of MSR it also brings different interest rate exposure which can act as a “hedge”.

    FWIW I have had NLY F and G since the 2022 time frame and am happy with them. Adding the 2 together it is fully sized postion of ~5% of fixed income assets for me. I am happy with them and plan to continue to hold them as long as the Fed keeps rates flat or further increases them (which is my preferred plolicy). When the Fed cuts rates I will probably roll these preferreds into either the NLY or AGNC common.

    I also have RWT and ABR preferred, but these are microscopic and small postions respectivly. I plan to kill one and increase the other and am in the process of understanding last week’s earnings reports.

  2. I amazed how well nly pfds have held up. While their common scares me, the price action of G has lulled me into complacency!!

    1. If you Prefer–virtually all the commons shares of mREITs scare–just trying a bit of this preferred to see if I can get a nice dividend.

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