Mortgage REITs Surging

Core Insights - The article discusses earnings projections for mortgage REITs and BDCs, highlighting preliminary results from several companies [1] Group 1: Main Street Capital - Main Street Capital (MAIN) has established a preliminary figure in the range of $29.77 to$29.83, with a midpoint of $29.80, which is close to the estimated$29.90 [2] - The projected net investment income for MAIN is between $1.00 and$1.02, slightly below previous projections and the last two quarters [2] - MAIN is favored by income investors due to its high yield and growing NAV per share, which allows for trading above NAV and issuing new shares at a premium [2] Group 2: Orchid Island Capital - Orchid Island Capital (ORC) has been criticized for consistently destroying shareholder capital while paying a high dividend [3] - The business strategy of ORC, which involves buying agency MBS and using repo financing, is similar to that of AGNC Investment, Annaly Capital, and Dynex Capital, but ORC has executed it poorly [4] Group 3: AGNC Investment - AGNC Investment is scheduled to announce earnings on July 22, 2024, with a projected tangible book value per share of approximately $8.55, down 3.3$8.84 at the end of Q1 2024 [5] Group 4: Sector Performance - The VanEck Mortgage REIT Income ETF (MORT) has shown a month-to-date return of 7.51%, a significant improvement from a year-to-date return of -2.67% at the end of June [6] - The performance of mortgage REITs has improved due to a sharp drop in Treasury rates, although rates remain elevated overall [6] Group 5: Investor Behavior and Market Dynamics - The increase in investor demand for returns has led to higher prices for financial assets and lower yields on bonds, despite the Federal Reserve's influence on short-term rates [7] - The article questions the effectiveness of the Federal Reserve's strategy of raising rates to combat inflation, suggesting it may lead to increased future interest expenses for the government [7] Group 6: Data and Metrics - There is a need for reliable sources that provide equity REIT metrics, such as same-property NOI and changes to guidance for Core FFO and AFFO [8] - The article mentions the importance of accurate data for preferred shares and common shares, emphasizing the need for comprehensive metrics in the REIT sector [8][18]