Mortgage REIT AG Mortgage Investment Trust (MITT) has announced a new issuance of senior notes with a maturity date in 2029. There will be an early redemption available to the company starting in Feb. 2026.
The issue will trade under ticker MITN on the NYSE when it is priced and begins to trade in a week or 10 days.
MITT has a number of preferred issues outstanding which can be seen here.
The preliminary prospectus can be read here.
Thanks to J for catching this one.
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I like the perpetuals for the higher rate and possible price upside. Been swapping between MITT-A and MITT-B maybe I’ll throw some of the new one into the mix but not heavily.
With a market cap of 185 million, I see three pfds with something like 200-250 in size. All perpetuals. Add in 50 more, can you say leverage?
Someone told me it’s a part of TPG a big firm?
9.5 for five years…..
We have seen an unusual influx of mREITS raising capital via baby bonds.
Interested in any thoughts or speculations as to why these mREITS would be issuing baby bonds at these rates at this stage? Is this a sign of underlying problem? Is it a wise move to optmize capital structure?
Any thoughts?
My two cents:
1) MREITs are biased towards raising capital as they generally get paid more and it can lower the operating expense %. The market is finally open for them to raise capital.
2) now is a relatively good time to deploy $ into structured credit, specifically housing related. It offers an attractive return compared to public IG and HY OAS, which are near yearly lows. Related… a lot of these credit MREITs say their expected return is in the mid teens using leverage.
3) it’s a copycat industry . The bankers have successfully raised capital using similar structures, so they have approached other MREITs offering their services. Client demand also prefers senior. We can debate about how much the senior notes provide ( over prefs) but just gives the financial advisors an easier narrative to tell when they bring these to their clients.
4) we will see more traditional pref issuance once a lot of the solid names gravitate back to par. AGNCL is a relatively new issue, offers a solid 7.75%, the float is decent, yet it still trades at $22! Btw, long AGNCL
Maine – thanks for getting back to me. Your comments are all very appropriate, but the one that sticks out to me is the first one. mREITS always like to raise captial. The common equity window is (or should be) effectivly shut to them as non agency names are generally trading well below book value. So – where they might do an ATM raise perhaps they are looking at other avenues and baby bonds would appear to be all the rage.
I must say I am not overly in love this this name, and would only wonder how they are paying their dividend.
There are just a lot of different notes in firms/funds that generally touch on structured credit coming to market in the next 30 days or so, and it will be interesting to see how they trade.
Yeah, always good to be extra skeptical with mREITS. With that said, I’m still overweight mREIT prefs, albeit trimming as they rise.
Most of the (~8% coupon) MREIT prefs would normally trade near par in an environment where HY spreads are ~350. Yet they still trade 10-30% below par. Ironically, the underlying collateral, housing, is doing phenomenal and no current expectations for a major crash.
I think there is scar tissue left from the Covid crash, hence the wider spreads. Once that scar tissue fades, I’ll be (mostly) gone. It’s def not a big and hold sector!
Related to MITT, I believe they only do residential, not the business loans like others. Last I checked, most was to self employed that couldn’t get a traditional mortgage. Solid credit and low LTV though. I probably won’t buy the baby bond as the prefs offer better value.
Maine thanks for the feedback. I have a good size position in NLY F & G.
I have a very small postion in RWT and have a few Fannie/Freddie MBS bonds.
These mREIT yields are interesting, but when I can get a yields that I am getting from NLY F&G I don’t know why I would go to a different mREIT.