Mortgage Real Estate Investment Trusts
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Mortgage real estate investment trusts (mREITs) can in theory perform a useful function in the marketplace.
Mortgage Real Estate Investment Trusts (meREITs) Invest in Loans
Their basic concept is to obtain capital at a lower interest rate, then lend it out commercial or home real estate owners at a higher interest rate, which is called the carry trade.
As long as the gap between the cost of capital and the income they derive from it is high enough, they make a profit.
If they are knowledgeable about lending to commercial real estate interests, they can obtain money from investors such as you and I -- who know next to nothing about lending to commercial real estate owners -- and then use their specialized knowledge of local commercial real estate markets to provide financing.
Because of interest rate fluctuations, this kind of business can be highly speculative in the best of times, but highly lucrative. Now is not the best of times. The subprime mortgage crisis has had a heavy impact on the ability of mortgage REITs to make a profit.
In researching the mortgage REITs available, I used lists from a couple of books and from NAREIT, which is probably the most current list of what REITs exist.
Many a mortgage REIT is listed were no longer in existence. Or had been delisted from their stock exchanges.
What are mortgage real estate investment trusts -- What are mortgage real estate investment trusts (REITs)
Anworth Mortgage Asset Corporation -- invest in the spread between their cost of capital and interest rate mortgage holders must pay
Bimini Capital Management -- invests only in securities guaranteed by Freddie Mac, Fannie Mae and Ginnie Mae
BRT Realty Trust -- lending to companies that don't qualify for conventional loans
CapitalSource, Inc -- large number of debt products for middle markets
ECC Capital Corporation -- subprime mortgages
Impac Mortgage Holdings -- real estate and asset management solutions - consulting
MFA Mortgage Investments -- hybrid and adjustable rate mortgage backed securities
Newcastle Investment -- large portfolio of residential, commercial real estate and corporate debt
Annaly Capital Management -- manages assets and debts
PMC Commercial Trust -- conventional real estate loans and Small Business Administration (SBA) loans to small businesses
Redwood Trust -- credit-enhancing and securitizing loans
Spirit Finance Corporation -- sale/leaseback financing strategies to small businesses
iStar Financial -- finances real estate projects
Thornburg Mortgage -- jumbo and super-jumbo ARMs for sophisticated borrowers and investors
Arbor Realty Trust -- wide range of real estate backed financing and securities
American Capital Agency -- Freddie Mac, Ginnie Mae and Fannie Mae backed securities
Anthracite Capital -- high yield commercial real estate investments
American Mortgage Acceptance -- financing for commercial real estate owners and developers
Capital Alliance Income Trust -- nonconforming home loans first and second, mainly in California
Chimera Investment -- mortgage backed and other asset backed securities
Capstead Mortgage -- invests in real estate related assets
Capital Trust -- investment real estate and financing management company
Dynex Capital -- financial services real estate investment trust
Winthrop Realty -- acquiring equity and debt securities backed by real estate
Gramercy Capital -- New York City based finance company for commercial real estate
Hanover Capital Mortgage Holdings -- subordinated mortgage backed securities but, they claim, none that are subprime
Hatteras Financial -- adjustable and hybrid adjustable rate mortgage backed securities
CapLease -- single tenant commercial real estate
Northstar Realty Finance -- originating and acquiring real estate related debt
Origen Financial -- loans using manufactured homes (trailers) as collateral
RAIT Financial -- commercial real estate financing to owners and operators
W. P. Carey -- commercial real estate holdings financed in 14 countries
Starwood Property Trust -- taking advantage of opportunities created by financial crisis
Apollo Commercial Real Estate Finance -- looking for bargains in commercial real estate financing
Colony Financial -- has already bought debt from FDIC
CreXus Investment Corporation -- all types of commercial real estate financing opportunities
Cypress Sharpridge Investments -- investing in Agency Residential Mortgage Backed Securities for interest rate spread profits
Invesco Mortgage Capital -- uses government programs to buy cheap mortgage securities
PennyMac Mortgage Investment Trust -- investing in distressed home mortgages
Foursquare Capital -- a delayed IPO
KKR Financial -- although it had a hugely successful IPO, it was another victim of the financial crisis.
American Residential Mortgage -- residential mortgages - direct and backing securities.
Resource Capital REIT -- many kinds of real estate related financing.
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