- Mortgage REIT valuations "appear untethered from traditional metrics," says the JPMorgan team, led by Richard Shane, in its upgrade of MFA Financial (MFA +2.2%). Not upgraded today, but also with Overweight ratings are American Capital Agency (AGNC +1.3%), Apollo Residential Mortgage (AMTG +1%), and Ares Commercial Real Estate (ACRE +1.3%).
- With earnings season for mREITs kicking off next week, Shane and team see book values getting nicked by the Fed rate hike and flattening yield curve.
- As for this year's FHLB rule change which could limit mREIT's access to that source of funding, Shane concludes the names he's following should be fine. He notes ACRE, AMTG, Blackstone Mortgage (BXMT +1.2%), and Western Asset Mortgage (WMC +0.3%) have not utilized FHLB for funding, and while Apollo Commercial Real Estate Finance (ARI -0.4%) is a member, it had no advances as of Sept. 30.
- ETFs: MORL, REM, MORT, LMBS
- Previously: JPMorgan buys the dip in MFA Mortgage (Jan. 26)