New York Mortgage Trust to Issue FTF Preferred

mREIT New York Mortgage Trust (NYMT) has announced a new fixed-to-floating rate preferred issue.

The company currently has 3 other preferred issues outstanding 1 which is fixed-to-floating. The current coupon on these 3 issues ranges from 7.75% to 8%. The 7.75% issue (NYMTP) is currently callable.

The current outstanding issues can be seen here.

The preliminary prospectus can be read here.

17 thoughts on “New York Mortgage Trust to Issue FTF Preferred”

  1. 7.875 is the exact number. I own NYMTN in multiple margin accounts since IPO. No concerns whatsoever, so no need for the new issue given current price/yield of this one.

    Common paying 20 cents/quarter for 11 straight quarters, so barring another decrease I have no concerns regarding preferred dividend coverage.

    In my view, the floating feature is irrelevant at this time on both a relative and absolute basis. No one knows what LIBOR (or replacement) will be that far out into the future.

    Added bonus for me was having NYMTN become eleigible for the Section 199A pass through deduction. Took big advantage of this in tax year 2018 , making it much more valuable to me as a continued hold.

    Quick

    1. Read, forget where, there are a significant number of mtg’s that were re-written- many more than once – underwater. Higher balances now than when they were near foreclosure. With fees, interest etc, many of the present notes are higher by thousands than the original. 2 banks mentioned. Me thinks anything to do with mortgages merits a pass.

    2. Yeah – this one is not for anyone buying and planning to hold given the amount of credit risk they take

      One of the few honest writers I pay attention to on SA rates the company as a 4 out of 5 on the risk level (5 being the riskiest). Comparatively, the two big giants (AGNC and NLY) are a 1 on his scale

      In a recession, NYMT will not fare well and the prices of the preferred will sink

      1. Yup you’re talking about CWMF from SA. The right way to think of NYMTN is as a substitute for S&P500 exposure. I think the risk/reward is much better than the SP500 right now.

        1. Yeah, CWMF is a straight shooter. I do appreciate his risk ratings and mreit analysis

          I may still dabble in this new issue for a flip depending on where it initially trades. But my main MREIT exposure is with NLY and AGNC preferred – but I have some others as well.

    1. Yeah but check out how steady book value has been even in Q4 2018 when they actually gained 1% on book value. The rest of the mREIT space lost 5-10%. NYMT uses less leverage and makes their money taking credit risk in housing related debt. That’s been a better bet than typical mREITs that use lots of leverage and make their money taking rate risk. The common is a bet on residential housing and multi-family housing values. The preferred is a bet on any decline in housing remaining within historic norms.

  2. Seems like the parade continues. Lately only REITs, BDCs and Closed End funds are offering preferreds and baby bonds. Maybe it is a function of the low interest rate environment, maybe something else. But I’m very hesitant to add more BDCs and REITs to a portfolio already overweight in those sectors.

    1. Artemisa, if you’re looking for some sector diversification there is also the preferred issued recently by Broadcom (AVGOP). It converts to common shares in 2022, and pays an 8% coupon.

      1. Citadel, thanks for the tip. Imagine that! Owning a preferred from a company that actually makes “widgets” instead of just owning paper.

  3. I own a big slug of the 8% NYMTN (currently trading at par). Any thoughts as to what the pricing will be on the new preferreds? I’m hoping below 8% but MITT did recently price at 8.25. Not too surprised they would issue more prefs. They’ve been issuing lots of new common in a series of secondaries YTD.

    1. Oops actually MITT-C is an 8% coupon. NYMT should be able to do at least as good as that on pref pricing.

    2. I own more than I should of NYMTN but my cost is $23.10, so I am happy. Have an unrealized gain equal to a years dividends. Will not be buying more.

      1. I have a low cost basis as well but have my finger on the trigger ready to swap into the new preferreds just in case it is superior. It’s one of the chores related to preferred stock portfolio management. You always have to be ready to swap into a superior series when the opportunity presents itself. Like all jobs, there is some grunt work related to preferred stock asset management.

    3. 7 7/8% was the talk, 150 million issued.

      I reviewed their other pfds price history. Looked like 90% of the time they were substantially under 25.

      1. Thanks. 7 7/8 sounds about right. The Libor spread will be interesting to see. I think a knock against NYMTN is that the Libor spread isn’t great. Then again, you’ve got protection out to 2027 before floating. If the new pref prices at 7 7/8 and performs as recent IPOs such as MITT-C have performed (that is, going to 25.50+ in short order) then NYMTN should be at 25.75+, assuming the Libor spread of the new issue isn’t vastly superior to NYMTN’s spread.

        Yeah, NYMT has a way of IPOing preferreds at the top of the market as measured by PFF. Hence, they’ve gone below par soon after IPO as PFF has tumbled shortly after all three of their outstanding prefs IPOed.

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