Capstead Mortgage Corp., a real estate investment trust, said Tuesday it recently completed the sale of $760 million of agency-guaranteed mortgage securities for a loss of about $1.5 million.
The loss will be included in its first-quarter results, Capstead Mortgage said. The Dallas-based company also terminated a $100 million, two-year interest rate swap agreement resulting in a $2.9 million loss that will be amortized to earnings over the remaining term of the contract.
Capstead Mortgage expects to close these transactions by March 31, at which time its portfolio will total about $7.3 billion, compared with $7.1 billion at the end of 2007.
During March, "many market participants reduced holdings of mortgage securities while institutional demand diminished," the company said in its filing with the Securities and Exchange Commission. "As a result, pricing for short-duration agency-guaranteed mortgage securities that we own has declined from the relatively robust levels seen in January and February."
While it believes concerns in the market have largely been alleviated through the Federal Reserve's recent moves to provide additional financing to both banks and primary broker dealers, Capstead Mortgage said it felt the need to lower its leverage through the sale of certain assets.
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