MFA Financial (MFA 0.20%), a prominent mortgage real estate investment trust (mREIT), delivered third-quarter results Thursday demonstrating a continued recovery in its business.
For the quarter, the company earned net interest income of just under $10.2 million, well down from the year-ago figure of $56.9 million.
Net profit enjoyed a softer landing, coming in at just under $79 million ($0.17 per share) from the year-ago result of $91.8 million. Still, that easily topped the average analyst estimate of $0.06 per share. Total assets stood at just under $7.57 billion, against the year-ago tally of $13.57 billion. GAAP book value per share was $4.61 versus $7.09 a year ago.
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The mREIT sector was hit very hard by the coronavirus pandemic. This is because, in contrast to equity REITs (which invest in physical property rather than the mortgages that underlie them and related securities favored by mREITs), they tend to be heavily leveraged with short-term debt in order to squeeze out profitability on thin interest rate spreads.
Short-term debt financing dried up rapidly at the start of the pandemic, as it tends to in times of crisis. MFA Financial was squeezed by this, and was inundated with margin calls. The company was granted forbearance by creditors and was forced to sell billions of dollars worth of assets. That, plus a rescue package, saved it, although it's now a much leaner operation.
Signaling optimism that it will continue to recover, MFA Financial also announced a new $250 million stock repurchase program. This will last until the end of 2022, and replaces an old program dating from 2103 authorizing the repurchase of up to 10 million shares. Around 6.6 million shares remained available to buy under that authorization.
