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Sleuth Challenges and Solutions: Mortgage REIT's

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  1.  Report Post# 1
    I'm still looking at some of the mortgage REIT's, specifically HTS, NLY, ANH, and MFA. If I understand how their business model works correctly, they buy MBS's that are backed by the government (fannie, freddie). They make their money based on the spread between what they pay to borrow money, and what the interest rates are. Given that 30 mortgage rates have risen from about 4.6 to 5.5%, and their cost of borrowing stays the same, wouldn't this lead to an increase or at least a maintenance of their current dividend? And if long term rates continue to rise, and the Fed keeps the prime rate low, would that not have a positive effect on these stocks as well?
    • CommentAuthor123notary
    • CommentTimeJun 5th 2009
     Report Post# 2
    Mortgage REITs are especially vulnerable to defaults and spooty payments from there Borrowe in properties Loaned on,
    such as Mall Owner General Growth Properties , recent largest RE Bankruptacy ever. Most Commercial Real Estate is
    hurting right now, they are cutting dividends, which is the way your value REITs.

    However there is a type REIT that is a growth industry is still paying a healthy dividend and its assets are appreciating.
    it properties and operators are doing well.

    Medical Properties Trust Inc (MPX) - there are only 4 of these in US and they own 51 Hospitals. Doubled there income
    2007-2008 year over year. There Book Value indicated in share price is $9.94 its share is trading a $6.73 as 6/5/09.

    They pay $.2 a share quarterly. or approximately 12% annually. Guess what 6/11/2009 is there next dividend. The wireless industry is growing so is the Medical. Did you see Martin Hutchinson report on Magyar Telcom (T-mobile in Hungray) I missed that one, and it took off like a rocket. There is a few bright stars out there, but it takes time and patience to find them. I subscribe to a lot of Investor newletter. To see (MPW) there 1st Qtr report paste this into your browser. I expect to break out once in fund managers discover it, but you can't keep a secret long. See what happen to
    Magyar (MAT)
    Cliick and Paste this into your clipboard. In your browser paste
    http://phx.corporate-ir.net/phoenix.zhtml?c=185765&p=irol-newsArticle&ID=1249789&highlight=

    good hunting

    Bill Bronner
  4.  Report Post# 3
    NOtary: I guess I'm having a hard time establishing the vulnerability of these types of companies if the loans that they buy are backed by the US Government.
  5.  Report Post# 4
    There are many types of Mortgage REITS. I think 123Notary's post refers to Commercial REITS (negative) and Healthcare REITS (positive).
  6.  Report Post# 5
    Sounds like a good spread trade to me........
    • CommentAuthorkrishna
    • CommentTimeJun 6th 2009
     Report Post# 6
    own HCN, VTR - they dun OK, decent divd. Prologis intrigues me (at much lower levels, though)

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