Mortgage REITs: 3 Trends To Watch This Earnings Season
- Mortgage REITs have taken center-stage over the last two months - and for the wrong reasons - amid the ongoing coronavirus pandemic. mREITs plunged nearly 70% in March before recovering.
- Extreme and unprecedented levels of interest rate volatility triggered a wave of margin calls and a self-reinforcing cycle of "forced selling" which pushed the mREIT sector to the absolute brink.
- Mortgage REIT earnings season kicks-off this week. All 41 mREITs will report results over the next three weeks in what will surely be the most consequential and newsworthy earnings season.
- Interim updates from residential mortgage REITs indicated that the permanent damage to book value was not as devastating as once feared for the majority of mREITs.
- While mREITs are not out of the woods yet, we believe that the residential mortgage market remains on firm footing amid a positive fundamental backdrop for the U.S. housing markets over the next decade.
