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Mortgage REIT outlook updated by Credit Suisse

Rolling with the trend, Credit Suisse ups its return expectations for mREITs to 9% for 2014 from a 6% guess at the start of the year. Said 9% will be comprised of 11% in dividends and a 2% decline in book value - a bold statement considering book values have likely grown smartly YTD.

The top picks include a couple of hybrid players. PennyMac Mortgage Investment Trust (PMT +0.1%) and Two Harbors (TWO +0.9%), plus Newcastle Investment (NCT +1.6%). Newcastle management won't throw the recommendation out of bed, but must be scratching its head as - two spinoffs later - investors still casually lump the company into a sector it probably doesn't belong in. At this point, NCT is more senior housing REIT than anything else. Still, CS's point is those REITs with real operating assets as opposed to just paper are likely to outperform in a rising rate environment.


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Comments (5)
  • Hungry for Knowledge
    , contributor
    Comments (473) | Send Message
    They're just making it up.....
    7 Apr 2014, 03:04 PM Reply Like
  • tstreet
    , contributor
    Comments (1020) | Send Message
    If one projects unduly rapid rate rises, then I suppose these projections make a little sense. On the other hand, we don't really know the basis for this projection as this is a summary of a summary. I am not sure these reports from Credit Suisse have any value whatsoever unless one blindly follows Credit Suisse's conclusions.


    I would rather read an analysis provided by one of the fine contributors writing on SA.
    7 Apr 2014, 03:24 PM Reply Like
  • Michael Bryant
    , contributor
    Comments (6052) | Send Message
    I thought (NCT) is still an mREIT. (NRZ), one of their spinoff, is more a senior housing REIT. (NEWM), their other spinoff, is a media holding company.
    7 Apr 2014, 06:29 PM Reply Like
  • SA Editor Stephen Alpher
    , contributor
    Comments (558) | Send Message
    NRZ is an MSR play, and NCT senior housing, CDOs, and now the owner of a portfolio of golf courses!
    7 Apr 2014, 07:59 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (10238) | Send Message
    Why were the "analysts" so wrong about mREITs just a few short months ago?
    7 Apr 2014, 07:37 PM Reply Like
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