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Msg  4 of 11  at  4/7/2022 1:25:13 PM  by


The following message was updated on 4/7/2022 1:27:02 PM.


While great for income, these businesses often fall like dominoes during macro financial stress or when spreads narrow for too long.  Dropping asset prices also can trigger a rapid collapse.  Dropping mortgage rates with lots of refinancing activity can be a negative. They use a lot of leverage, up to 10X so can quickly drop through equity and breach covenants that wipe out both common and preferred share holders.  That said, they often go a decade or longer essentially printing money for their share holders.  The businesses make money in several ways: loan originations, lending long at higher rate and borrowing short term at a lower rate, servicing CMO/CDO types of assets.  Releases are often murky, giving the appearance of transparency but with key info tightly guarded by insiders.  IMO these represent fair weather plays on a tight leash and are not suitable for the typical conservative investor.  This represents MHO and I an no expert in understanding these complicated business models.  Tread carefully when attracted to their typical 9%-12% yields.

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Msg # Subject Author Recs Date Posted
5 Re: MREITs (List by market cap) hendi_alex 0 4/7/2022 7:13:59 PM
7 Re: MREITs hendi_alex 0 4/7/2022 7:37:47 PM

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