mREIT New Residential Investment to Sell Preferred

mREIT New Residential Investment Corp. (NYSE:NRZ) has announced a new preferred stock issuance.

The issue will be a fixed-to-floating rate issue with the normal terms for a REIT F-T-F issue.

The shares will have an optional redemption period starting in 2024. At this point the coupon will also begin to “Float” at 3 month Libor plus a spread which has not been announced.

The permanent ticker will be NRZ-A when it moves to the NYSE from the OTC Grey market. The OTC ticker is not yet announced.

Shares will be cumulative in respect to dividends, but will not be qualified. Shares will likely be unrated.

The preliminary prospectus can be read here.

NRZ has been a favorite among many income investors and this issue may be something to look at–we will see when it is priced.

15 thoughts on “mREIT New Residential Investment to Sell Preferred”

  1. A few axioms to consider from those who have not lived through a straight line interest rate decline and The Age of Paper Excess:
    Speculation and Investing are different actions.
    It is a myth to have to learn from the ‘school of hard knocks’, that’s why we have a brain.
    Protect principal.
    Buy the best, forget the rest.
    Can you sleep well at night or just go on vacation for a few weeks?

    I’m old enough to recognize a possible top when this banter starts; a contrary indicator.
    Just Sayin’. JA

  2. I’m hearing it’s going to be a 7 1/2% Coupon. I’d say this trades up to $25.50-$25.75 fast if so.

    1. I agree Ken–I could do at least a flip at this coupon or higher assuming eveyone doesn’t jump on the boat quickly and force the early price up to 25.25

      1. Why do you think it should trade at tighter yields than some of the comps like TWO and CIM? NRZ is probably smarter but they own a ton of MSRs whose valuation is a black box and may not hold up well with rates down and prepayments up.

        Also, NLY offering did not go well and NRZ was down over 2% today on the preferred announcement.

        All that said, I know you are an expert on the trading of preferred IPOs, so figure you probably know better than I do.

    1. It is a complex investment. Mainly invests in MSRs.

      Not a huge fan of the management structure but Michael Nierenberg is one of the best though.

      I’d be interested at the right price/terms.

    2. NRZ is like a quasi-mREIT. Fido analysts bearish. In, there seems to have two defacto leaders, Gridbird is the safe and sound and Lord Xot, just the opposite. Xot is very nimble uses margin but gets in and out typically trading AHT commons and NRZ. As pointed by Tim, NRZ being a large cap, is held by many investors at Silicon following Xot. The best summary is perhaps from
      “Business Summary

      New Residential Investment Corp. is a real estate investment trust (REIT). The Company focuses on investing in, and managing, investments related to residential real estate. The Company’s segments include investments in excess mortgage servicing rights (Excess MSRs); investments in mortgage servicing rights (MSRs); investments in servicer advances; investments in real estate securities; investments in residential mortgage loans; investments in consumer loans, and corporate. Its portfolio includes mortgage servicing related assets, residential mortgage backed securities (RMBS), residential mortgage loans and other investments. The Company’s servicing related assets include its investments in Excess MSRs, MSRs and servicer advances. The Company invests in agency RMBS and non-agency RMBS. The Company’s other investments consist of consumer loans.”
      I intend to wait for the coupon yield and Tim’s valued opinionon NRZ preferreds. Scott Kennedy wrote another very well thought article on BDC. With market showing some nervousness on all the geopolitical uncertainties, all BDC’s generally see drawdown while eREIT with good balance sheet recovering from yesterday’s drawdown. NLY’s new preferred ACAXP, is much safer than NRZ;s, The debt to equity ratio estimated quick and dirty using (Enterprise Value – Capitalization) dividend by Market cap seems to suggest just a little better than AHT or CLNY. While most of positions are still in preferreds, I have started and added some decent dividend stocks, e.g. PFE, JCAP and many of the hidden gems, de facto IG on unrated TDE note with more than a decade history, double downgraded from IG to lower (and actually TDJ when it was closer to par) as identified by Richard Hill of SA. Rida et. al. is pumping CODI A. RIchard Hill got it on his BUY list way back and CODI came alive with Barron’s mag recommending the commons. I still believe that the general partnership is double dipping getting fees from the company it owns plus the CODI as pointed out by one SA article. Nonetheless, the yield is compelling. Rida always recommends AFTER a solid run-up. LOL. I added EPR common along with EPR-G (on Richard Hills buy list) when it was trading lower than it is. It is now close to par with its 5.7% coupon IG rated. I bought tons of ACAXP, paid too much. I am worried, eventually it should trade on the ladder on the oldest and perhaps largest mREIT preferreds. I did manage to sold some AHT preferreds before AHT cuts its dividend by one half on its commons. Still too much. Nonetheless, it should not go in the way of Rait Financial, which had even a considerably higher debt to equity before it filed for B. Having many risky positions balanced with equally many IG SWANS , I am fully invested.

      1. I got bad knees so I’m not nimble like Lord Xot. What a great stage name though, it even sounds nimble. I’ll bet he has a cape, probably a black one. Any word on when Tim plans to roll out his moniker? He needs that.

        1. Lord xot is not that old, in his late 40’s or early 50’s. He has a keen eyes for hidden gems, just like Gridbird. Examples: LXP once upon a time keep on sliding close to 52 week low. I bought more. However, he might not give you the SELL signal. Sold them all before it tanked. STWD, mixed mREIT seems to hold well. When NGL gapped up, NGL-B failed to follow was another good example. He made up all the lost loss from the Xmas “massacre” (sorry for the term, it did seem that way). NRZ common has been one of his playground. His MLP dirty oil CLF did not work, tried many times. So did the presumed near genius, Jeff Gundlach, Barron Mag’s new Bond King also failed. AHT was a bad call. I have not following him much these days.

          1. John, like you, I personally respect Xot. I find him to be honorable and trustworthy and that is all one can really ask of anyone. I enjoy his posts too. His investing risk and tolerance level is just several stages higher than mine. Many ways to skin a cat I freely admit. I personally despise those SA hucksters chasing yield and seeking compensation for it with their “paid subscription sites”. But I think Xot is a good dude. If he is up 50% he will tell you and if is down 50% he will tell you. If I was a high yield investor I would rather tail him for free than to pay some of those nimrods to follow them.

    3. The LT debt is rated Ba3 by Moodys–not totally terrible–definitely not investment grade though.

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