The Mortgage REIT Gold Rush

Capital continues to rush to the mortgage REIT sector as ZAIS Financial (NYSE: ZFC  ) just completed its initial public offering last week and Cerberus Mortgage Capital just filed for an IPO. ZAIS has been active since mid-2011, but Cerberus Mortgage doesn't plan to start operations until it completes its IPO. What does this rush of capital to the sector mean for investors? Well, for one thing, it suggests that conditions are particularly favorable right now or else companies wouldn't be rushing to go public. That should be a bit worrisome for investors in established mREITs such as Annaly (NYSE: NLY  ) and American Capital Agency (NASDAQ: AGNC  ) because it likewise suggests that the profitability and good times they've seen in recent years may not last.

Annaly Capital Management has a history of paying huge dividends to shareholders. But there are some crucial issues investors have to understand about its business model before buying the stock. In this brand-new premium research report on the company, our analyst runs through these absolute must-know topics, as well as the future opportunities and pitfalls of their strategy. Click here now to claim your copy.

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  • Report this Comment On February 12, 2013, at 8:19 AM, DavidAkre wrote:

    Mark -

    There are vast differences in strategy between the new mREITs going public and existing ones. To paint them with the same brush is a mistake.

    Basically the new crop will take advantage of 'credit' strategies while the majority of existing mREITs employ an interest rate arb strategy.

    Lots of nuance that requires study.

    David Akre

    Whole Loan Capital

  • Report this Comment On February 12, 2013, at 2:15 PM, TMFKopp wrote:


    As the existing mREITs move into more non-Agency, that muddies the waters. Though certainly the biggies -- NLY and AGNC -- are still far and away agency and therefore aren't dealing with default risk.

    But I think the point still holds -- whether you're talking about an mREIT primarily targeting rate arb, credit, or a bit of both, it's been a particularly favorable environment in recent years. I'm not convinced that it's going to look anywhere near as good going forward.

    Of course you've been in this industry for a heck of a long time, so I'd be interested to hear your thoughts. My email address is mkoppenheffer at


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