How many more agency mREITs can the market absorb?
First, we have the existing players -- Annaly Capital (NLY), Anworth Asset Management (ANH), MFA Mortgage (MFA), and Capstead Mortgage (CMO).
Bimini Capital Management (BMNM.PK) and New York Mortgage Trust (NMTR.OB) have also entered the arena by shifting their business models.
Then, a review of the S-11 filings shows that several more agency mREITs are in the pipeline:
-- American Capital Agency Corp (AGNC), which is sponsored by American Capital Strategies (ACAS)
-- Hatteras Financial Corp., which is sponsored by Atlantic Capital Advisors LLC
-- Point Asset Management (PNT), which is sponsored by Federated Investment Counseling
-- North Sound Mortgage Investments Corp., which is sponsored by French banking giant BNP Paribas
While falling interest rates have created a juicy environment for agency mREITs, which only have interest rate risk to manage, too many competitors may cause pass-through certificates and CMOs to become overpriced.
4 comments:
there is a record amount of agency pass-through supply expected this year given that the non-agency market has collapsed. the mortgage market is in dire need of new capital. it will take sometime before these reits will exhaust the mortgage supply coming to the market. These reits alone will not have an overwhelming impact on spreads.
Nonetheless, a flood of new issuance in MReits could reduce the premium to book of existing REITS
Nonetheless, a flood of new issuance in MReits could reduce the premium to book of existing REITS
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