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AG Mortgage New C Series Preferreds Offer An Attractive 7.3% Yield

Published Tue, 24 Sep 2019 10:30:29 -0400 on Seeking Alpha

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Mortgage REIT preferreds are simple balance sheet plays. Whereas the equities in mREITs can be a bit volatile, the C series preferreds at AG Mortgage (MITT) should be a stable asset to hide out in in order to weather any equity market declines.
Here are the basic terms of the preferred:

Source: Author Spreadsheet
As this is a balance sheet play, I thought I would copy that and go through the coverage offered to preferred holders.
From their recent 10Q, below is their balance sheet:

Source: 10Q
They basically have $3.8BB of assets, $2.1BB of which are Fannie or Freddie government backstopped bonds (aka Agency bonds), plus another $680mm of Non-Agency bonds. Non-Agency bonds are not guaranteed by any agency of the government, so carry credit risk. Their CMBS (Commercial Mortgage Backed Securities) book comprises another $281mm.
Then, MITT makes a variety of lower risk direct loans, essentially to consumers for mortgages and businesses in the form of commercial real estate loans. They also carry Mortgage Servicing Rights (MSRs) and a small single family home rental business. Industry analysts refer to MITT as a hybrid REIT (with a mix of credit and non-credit rate risk).
Their portfolio adds up to $3.8BB, and is marked to market every quarter. Of their Agency bonds, almost all are 30 year fixed mortgages. Again, principal and interest are... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
ANNALY CAPITAL MANAGEMENT 8.60   0.0 -3.32 1.20 14.00