mREIT Invesco Mortgage Capital (IVR) announced they could not meet a margin call on borrowed funds.
With mREITS they finance the business with repurchase agreements–generally shorter term loans and they use their mortgage portfolio for collateral. If the value of the collateral falls they need to either come up with cash or addition collateral.
The company’s preferred shares tumbled and are trading in the $4’s right now. All dividends are suspended now.
The preferreds can be seen here.
The company press release can be read here.
We own IVR-C. In checking our account this morning I was pleasantly surprised to see we received our March dividend payment. Does anyone know whether this was because the dividend is payable to shareholders of record as of March 5th and (as of now) future dividends are suspended. The company announcement seemed to indicate all dividends were immediately suspended.
XAN magin calls and notice of default from RBC (which they are disputing):
https://www.prnewswire.com/news-releases/exantas-capital-corp-provides-update-on-status-of-financing-arrangements-as-of-march-25-2020-301029682.html
MFA next reporting inability to meet margin call on borrowed funds
https://finance.yahoo.com/news/mfa-financial-inc-provides-status-185600112.html
Does anyone know if Sachem Capital Corp will make their first scheduled payment on March 30th on their 6.875% notes? Thanks.
Really not unusual in times like these, but I simply can not understand why CMO is trading at the same discount to book as all of the Hybrids – and a lot cheaper than AGNC/NLY. Their prefs are not as beaten down, but as I see it their risk profile is A LOT more conservative than all the other mReits (no negative convexity/prepayment risk and no credit risk). I’m now all in (almost as much as I have in gold and silver) :-). Does anyone have a different view of CMO ?
It’s way too risky right now in mREIT space, but it seems as if the mREITS will be part of the bailout. The Fed announced purchases of Commercial Mortgages yesterday. In the past, they were only buying Mortgage Backed Securities; if I read their stuff right, they may actually buy straight up mortgages now. The carcasses of the mREITS may make a good speculation shortly as the bailouts and Fed rescue efforts ramp up. It’s way too early now though!
Only Agency CMBS will – so far – be part of QE infinity. That should help mReits like Dynex (DX). But agree for most of them transparency is limited. Again those without significant credit exposure only had to survive last week. From now on FED has their back. Even if it does not make sense from a Moral Hazard perspective you can just as well tag along for the ride. If not someone else will…
NYMT same; as was MITT yesterday
Thanks Ptrader
Ptrader, what happened to NYMT? suspended dividend?
Are they included in the bail out?