Mortgage REIT New York Mortgage Trust (NYMT) has priced their new issuance of Senior Notes ($25/bond) at a coupon of 9.125%.
The issue matures in 2030–so with the short duration the share price should remain more stable than a very long dated maturity issue.
NYMT has many outstanding issues of baby bonds and preferred stock which can be seen here. The company sold a 9.125% baby bond in June which is trading at $25.08.
The pricing term sheet can be read here.
I’m trying to stay away from MREITS. Although I understand homeowners are getting used to the idea of a 6 to 7% mortgage I find it hard to believe with the cost of homes it’s affordable. But then again with 2 incomes making over 100,000.00 each I suppose it’s doable, but you still have all the other costs like insurance and taxes.
While I understand that the MREIT is using leverage, how does a business borrow at 9% pay the interest and the business expenses and the wages by loaning back the money at the 6 to 7% loan.
You answered you own question. it’s mostly leverage. Playing interest spreads and various other techniques that are opaque or beyond our peabrain understanding. As long as it works. mREIT preferreds have had a low default rate for the amount they pay but that could change in a meltdown or other black swan events leverage kills faster. Been very profitable for me so far so I’m in.
Martin, I see from your comment on Reader Alerts, you’re not happy with NYMTI and waiting for a recovery in the price to unload after just collecting the recent divy. Still 2 months out from next ex-dividend date. Your thinking of swapping for this one and pushing out maturity date to 2030 compared to the maturity date of 2029 for NYMTI
It can be profitable trading between the different BB and Preferred of Mreits.
NYMT is not one of the higher rated mREITs maybe a little below average though it is in the mix for me because of 9+% and trading opps. I bought too much NYMTI for a mistaken reason the first ex-div date wasn’t readily published and I assumed it hadn’t happened yet. Yes I will swap between them if prices diverge, that’s what I do. When they are virtually identical that makes comparisons easy but not very big. A few months out on the call/redemption dates isn’t very meaningful to me, maybe worth a penny or two at the most.
Deals are coming faster than planes at LaGuardia Airport. This one hung around for a while. Its a 500mm mcreit too small for many investors.
That is certainly a tempting one ….. Had some NYMT a while back but I remember it getting redeemed? I would have to look back to know for sure. Might buy a little, but need to refresh myself on NYMT.
Well, that’s almost tempting… almost.
Not yet available at my german broker