At Trade With Beta, we discuss ideas like this as they happen in more detail. All active investors are welcome to join on a free trial and ask any question in our chat room full of sophisticated traders and investors.We continue to search for 9% yields in the MREIT sector, and today we take a look at MFA Financial ( MFA ). We will examine and compare the company with the sector, and try to assign it a credit rating toArbitrage Trader, aka Denislav Iliev has been day trading for 15+ years and leads a team of ...

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Core Points - Skanska's Third Quarter Report for 2025 is being presented by the Senior Vice President of Investor Relations, Antonia Junelind, along with the President and CEO, Anders Danielsson, and CFO, Jonas Rickberg [1][2] Group 1: Business Update - The presentation will follow a typical structure, starting with a business, financial, and market development update for the past quarter [2] Group 2: Q&A Session - After the initial presentation, there will be a question-and-answer session where attendees can ask questions by raising their hands [2]

Financial Performance - GAAP earnings per share (EPS) for the quarter was $0.36, while Distributable earnings were $0.20 per basic common share [272]. - Net income available to common stock and participating securities for Q3 2025 was $37.3 million, or $0.36 per basic common share, compared to $22.6 million, or $0.22 per basic common share in Q2 2025 [306]. - Net income available to common stock and participating securities for the nine months ended September 30, 2025, was $92.9 million, or $0.89 per basic share, compared to $88.7 million, or $0.85 per basic share, in 2024 [336]. - The company recorded a net gain on residential whole loans measured at fair value of $129.3 million for the nine months ended September 30, 2025, compared to $148.3 million in 2024 [335]. - Distributable earnings for the quarter ended September 30, 2025, were $20.953 million, with a distributable earnings per basic common share of $0.20 [366]. Asset Management - As of September 30, 2025, the company had total assets of approximately $12.1 billion, with $8.8 billion (73%) in residential whole loans [261]. - The residential mortgage asset portfolio increased to approximately $11.2 billion as of September 30, 2025, up from $10.8 billion at June 30, 2025 [275]. - Total recorded investment in residential whole loans and REO was $9.0 billion, representing 79.8% of the residential mortgage asset portfolio [277]. - The total asset allocation at September 30, 2025, was $11.78 billion, with significant portions in single-family non-QM loans and multifamily transitional loans [285]. - The company had a total of $1.1 billion of residential whole loans and $2.0 billion of securities pledged to financing counterparties as of September 30, 2025 [383]. Interest Income and Expenses - Interest income from residential whole loans decreased by $1.3 million, or 0.8%, to $153.3 million for Q3 2025, down from $154.6 million in Q2 2025, primarily due to a yield decrease to 6.81% from 6.85% [320]. - Interest income from securities at fair value decreased by $1.1 million, or 4%, to $27.7 million for Q3 2025, compared to $28.8 million in Q2 2025, driven by a yield drop to 5.79% from 6.60% [321]. - Net interest income for Q3 2025 decreased by $4.5 million to $56.8 million from $61.3 million in Q2 2025 [308]. - Interest expense for Q3 2025 increased by $1.9 million, or 1.5%, to $129.0 million from $127.1 million in Q2 2025 [322]. - The average yield on interest-earning assets was 6.56% for the nine months ended September 30, 2025, compared to 6.70% for the same period in 2024 [344]. Credit Losses and Delinquency - The overall 60+ day delinquency rate decreased from 7.5% at the start of the year to 6.8% by September 30, 2025 [271]. - The provision for credit losses on residential whole loans held at carrying value was recorded at $0.3 million, with a total allowance of $10.1 million [280]. - The provision for credit losses on residential whole loans improved, with a reversal of $(276) thousand in Q3 2025 compared to a provision of $(791) thousand in Q2 2025 [305]. - Provision for credit losses on residential whole loans decreased to $0.3 million in Q3 2025 from $0.8 million in Q2 2025 [323]. Securitization and Debt - The company executed two securitizations and issued $672.8 million of securitized debt during the quarter [271]. - Two securitizations were completed during the quarter, collateralized by $721.5 million of Non-QM loans, providing longer-term financing [281]. - The company issued $115.0 million in 8.875% Senior Notes due 2029, with net proceeds of approximately $110.6 million after expenses [375]. - The company completed the issuance of $75.0 million in 9.00% Senior Notes due 2029, with net proceeds of approximately $72.0 million after expenses [379]. Market Conditions and Economic Factors - The Federal Reserve reduced the Federal Funds rate by 25 basis points in September 2025, influencing market expectations for further rate reductions [271]. - The company anticipates no material impact from the recent tax legislation enacted on July 4, 2025 [302]. - The company expects the adoption of ASU 2023-09 to have no significant impact on financial statement disclosures [371]. Shareholder Value and Dividends - The company aims to deliver shareholder value through the generation of distributable income linked to residential mortgage credit fundamentals [260]. - The dividend payout ratio for the quarter ended September 30, 2025, was 1.80 [367]. - The company declared a third-quarter 2025 dividend of $0.36 per share, totaling approximately $37.3 million [391]. Operational Efficiency - Operating and other expenses decreased by $10.2 million to $120.4 million for the nine months ended September 30, 2025, compared to $130.6 million in 2024 [336]. - Compensation and benefits expenses decreased by $1.1 million to $18.2 million in Q3 2025, primarily due to severance expenses in the prior quarter [327]. - Loan servicing and related operating expenses increased by approximately $1.6 million, or 19.0%, due to higher upfront costs associated with securitizations [329].

Financial Data and Key Metrics Changes - As of September 30, GAAP book value was $13.13 per share, and economic book value was $13.69 per share, effectively unchanged from the end of June [14] - MFA generated GAAP earnings of $48.1 million, or $0.36 per basic common share, with net interest income at $56.8 million for the quarter, showing a modest decline [14] - Distributable earnings for the third quarter were approximately $21 million, or $0.20 per share, a decline from $0.24 per share in the second quarter [15] Business Line Data and Key Metrics Changes - The company acquired $1.2 billion of loans and securities in target asset classes during the third quarter, including $453 million of non-QM loans and $473 million of agency securities [18] - Lima One originated $260 million of business purpose loans during the quarter, a 20% increase from the second quarter [20] Market Data and Key Metrics Changes - The delinquency rate for the entire loan portfolio declined by 50 basis points to 6.8% in the third quarter, driven by decreases in nearly every asset class [22] - The multifamily transitional loan portfolio is almost half of what it was a year ago, with delinquent loans down from $86 million to $47 million so far in 2025 [11] Company Strategy and Development Direction - The company plans to increase capital deployment and has identified several initiatives to enhance earnings and ROEs, including higher capital deployment and expense reductions [5][10] - MFA is focusing on growing origination volumes at Lima One and plans to resume multifamily lending in early 2026 [9] Management's Comments on Operating Environment and Future Outlook - Management expects some near-term pressure on distributable earnings but anticipates growth in DE in the quarters ahead, believing DE will reconverge with the level of the common dividend by mid-2026 [15] - The company is optimistic about the growth prospects across its business and looks forward to sharing continued progress [23] Other Important Information - The company has initiated a program to modify its capital structure by issuing preferred stock and repurchasing common stock at a significant discount to economic book value [13] - The delinquency rate in the non-QM portfolio remains strong, with a delinquency rate just over 4% [18] Q&A Session Summary Question: Should the starting point for run rate EAD be $0.32, pulling out the loss provision? - Management confirmed that the $0.32 number strips out 100% of the losses and highlighted potential ROE upside from strategic initiatives [26] Question: How much capital is tied up in delinquent loans? - Management estimated that approximately $40-$60 million is associated with delinquent loans, which could be available for incremental investment [30] Question: What kind of margins are being seen in the Lima One portfolio? - Management indicated that margins are healthy, with origination fees contributing to income growth, and emphasized the need to increase origination volume [36] Question: What are the levered returns expected in the multifamily space? - Management expects mid-teens ROEs in the multifamily space and plans to utilize third-party capital partners to grow mortgage banking income [45] Question: What is the leverage tolerance for the agency MBS portfolio? - Management stated that leverage remains around plus or minus eight times and discussed the use of cleared swaps and SOFR futures for hedging [47]

Earnings Presentation THIRD QUARTER 2025 Hybrid mortgage REIT with extensive experience in managing residential mortgage assets through economic cycles | | cs | GAAP Book Value | Economic Book Value1 | Total Economic Return2 | Recourse Leverage3 | | --- | --- | --- | --- | --- | --- | | y e K | etri M | $13.13 | $13.69 | 2.6% | 1.9x | | | | per common share | per common share | Q3 2025 | as of Sept. 30, 2025 | | al | cs | GAAP Net Income4 | Distributable Earnings5 | Quarterly Dividend | Dividend Yield | | c ...

Core Insights - The article critiques the high premium of AGNC Investment (AGNC) compared to its historical valuations, emphasizing the importance of evaluating price-to-book (P/B) and price-to-net asset value (NAV) ratios over time [2][4][16] - It highlights that while AGNC trades at a premium, other mortgage REITs, such as MFA Financial (MFA), are trading at significant discounts despite better protection of book value [11][12][22] Group 1: Valuation Metrics - Price-to-BV and price-to-NAV are crucial metrics for understanding valuations in the mortgage REIT sector [4][22] - AGNC has the highest premium to projected book value among mortgage REITs, while most other types have seen their price-to-book ratios decline significantly [5][6][22] Group 2: Historical Context - Historical comparisons show that AGNC's book value has deteriorated significantly since mid-2021, while MFA has managed to protect its book value more effectively [11][13][21] - The article presents charts that illustrate the price-to-trailing book value ratios, indicating AGNC's exceptionally high valuations [14][16] Group 3: Dividend Yield Analysis - AGNC's dividend yield of 14.4% is not higher than MFA's 16.1%, challenging the notion that AGNC's premium is justified by its dividend yield [12][22] - The article argues that simply looking at dividend yields is insufficient for thorough due diligence, especially when premiums to NAV are large [25][22] Group 4: Broader Market Implications - The article warns investors to be cautious of large premiums to NAV, as most investments do not sustain such premiums indefinitely [24][22] - It emphasizes that while some mortgage REITs may trade at lower price-to-book ratios, the overall trend suggests a need for vigilance regarding valuations [24][22]

Core Viewpoint - During market turbulence, investors often seek dividend-yielding stocks, which typically have high free cash flows and offer substantial dividends [1] Group 1: High-Yielding Stocks in Financial Sector - MFA Financial Inc (NYSE:MFA) has a dividend yield of 15.86%. Analysts from Keefe, Bruyette & Woods downgraded the stock from Outperform to Market Perform, reducing the price target from $12 to $10 [8]. RBC Capital maintained a Sector Perform rating and also cut the price target from $12 to $10 [8]. The company is set to host an investor conference call on November 6 to discuss Q3 2025 results [8] - Ready Capital Corp (NYSE:RC) has a dividend yield of 15.72%. Keefe, Bruyette & Woods maintained an Underperform rating and lowered the price target from $3.75 to $3.5 [8]. B. Riley Securities maintained a Neutral rating and reduced the price target from $6 to $4 [8]. The company reported disappointing quarterly results on August 7 [8] - Two Harbors Investment Corp (NYSE:TWO) has a dividend yield of 13.85%. JP Morgan maintained a Neutral rating and increased the price target from $9.5 to $10 [8]. RBC Capital maintained a Sector Perform rating and lowered the price target from $13 to $12 [8]. The company reported in-line earnings for Q3 on October 27 [8]

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