BofA sees trouble ahead for mortgage REITs as Fed tightens policy, lowers PTs

Adamas Trust

18/05/2022 12:50

** BofA Global Research lowers price targets for three
mortgage real estate investment trusts (mREITs) after inflation
concerns and geopolitical risks weigh on Q1 results
    ** Brokerage says hawkish moves by the U.S. Federal Reserve
and rapidly rising interest rates ate into profitability
    ** For Invesco Mortgage Capital Inc  IVR.N , BofA sees
preferred stock buyback helping capital structure even as co
shrinks size of investment portfolio
    ** New York Mortgage Trust Inc  NYMT.O  also remains under
pressure amid market volatility, brokerage adds
    ** Western Asset Mortgage Capital Corp's  WMC.N  focus on
investments in residential real estate will benefit co, but
headwinds in commercial real estate portfolio will limit growth
- BofA
    ** YTD, IVR, NYMT and WMC shares have dropped 36%, 18% and
39%, respectively
    
    
    Company       New PT      Old PT      Median PT
                                            (from
                                          Refinitiv)
    Invesco       $1.75         $2          $1.75
   Mortgage                             
  Capital Inc                           
    IVR.N                               
   New York       $3.50       $3.75           $4
   Mortgage                             
   Trust Inc                            
    NYMT.O                              
 Western Asset    $1.25         $2          $1.25
   Mortgage                             
 Capital Corp                           
     WMC.N                              
 

 (Reporting by Niket Nishant in Bengaluru)
 ((Niket.Nishant@thomsonreuters.com;))