Mortgage Real Estate Investment Trusts

Mortgage Real Estate Investment Trust investor enjoying M-REIT dividend income

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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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