These 3 Mortgage REITs Have Been On Fire Over The Last Month

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Mortgage REITs (mREITs) were among the worst-performing REIT subsectors during 2022 and 2023 when the Federal Reserve raised interest rates. However, several mREITS have performed much better since the Federal Reserve paused its rate hikes in June 2023 and later began discussing the possibility of rate cuts in 2024.

The entire mREIT sector has had positive total gains over the past month, and many have beaten lowered consensus earnings estimates in the first quarter. This bodes well for mREITs as a whole in 2024 and perhaps 2025.

Here are the three mREITs that have produced large total gains over the past 30 days and year-to-date:

Hannon Armstrong Sustnbl Infrastructure Capital Inc (NYSE:HASI) is an Annapolis, Maryland-based mortgage REIT (mREIT) that provides mortgage loans for renewable energy projects and owns stakes in a portfolio of solar and wind projects, renewable natural gas (RNG) plants and other energy-efficient endeavors. Its business model and $12 billion portfolio are specifically designed to invest in energy transitions that may improve the climate future.

Hannon Armstrong joined the S&P Small Cap 600 in mid-September. The company is benefiting from the Biden Administration's funding of energy-efficient projects and the anticipation of the Federal Reserve lowering interest rates. 

Hannon's share price has soared over the past month based on the news of profitable earnings. On May 7, the company reported its first-quarter operating results. Non-GAAP earnings per share (EPS) of $0.68 beat the consensus estimate of $0.57 and improved from $0.53 in Q1 2023. Revenue of $105.82 million easily topped estimates of $40.67 million and Q1 2023 revenue of $31.89 million.

On May 9, Hannon Armstrong declared a quarterly dividend of $0.415, the same as its previous dividend. The dividend is payable on July 12 for shareholders of record on July 3, and the annualized dividend of $1.66 yields 5.14%.

On May 20, Hannon Armstrong secured a BBB- investment grade rating from Fitch Ratings. The company had previously received a rating of Baa3 from Moody's Investors Service in June 2022. Fitch noted several positives about Hannon Armstrong, including "solid operating performance" and "improved funding flexibility." CFO Marc Pangburn believes the second investment grade rating will help Hannon Armstrong increase its access to low-cost and long-duration debt capital.

Hannon’s total return over the past month is 27.25%, and its total return year-to-date is 19.22%.

AG Mortgage Investment Trust Inc. (NYSE:MITT) is a New York-based mortgage REIT (mREIT) that invests in residential properties with non-qualifying mortgages, non-owner-occupied loans, land financing, agency residential mortgage-backed securities, and commercial investments. AG Mortgage is externally managed by AG REIT Management, LLC, an Angelo, Gordon & Co., L.P. affiliate.

AG Mortgage's recent price of $6.88 is well below its book value of $10.84 per share.

AG Mortgage was another mREIT with a good earnings report that increased its share price. On May 3, it released its Q1 operating results. Non-GAAP EPS of $0.21 beat the estimate of $0.06 and crushed the year-over-year EPS of $0.03. Its revenue of $17.18 million was ahead of estimates of $15.51 million and easily topped Q1 2023 revenue of $11.62 million.

On May 9, AG Mortgage announced it'd priced an underwritten public offering of senior notes with a 9.50% interest rate, due in 2029. The aggregate principal amount will be $65 million. AG Mortgage will use the net proceeds for general corporate purposes.

AG Mortgage pays a quarterly dividend of $0.18 per share, and the annualized dividend of $0.72 per share yields 10.45%.

Over the last 30 days, AG Mortgage has had a total return of 23.70% and 14.22% year-to-date.

Angel Oak Mortgage REIT Inc. (NYSE:AOMR) is an Atlanta-based mortgage REIT that specializes in offering wholesale non-qualified (non-QM) mortgage loans for borrowers who don't fit traditional lending guidelines. Mortgage types include investor cash flow loans, asset-qualifying loans, and loans for self-employed individuals.    

On May 7, Angel Oak Mortgage delivered its Q1 operating results. GAAP EPS of $0.51 crushed the consensus estimate of $0.13

On May 9, Angel Oak declared a quarterly dividend of $0.32 per share, which was in line with its previous quarterly dividend. The present yield is 10.50%.

Following a terrible 2022 in which Angel Oak Mortgage’s total return (including dividends) was -61.90%, Angel Oak led all REITs in 2023 with a stunning 129.64% total return.

Those positive returns have continued in 2024. Over the last 30 days, Angel Oak has had a total return of 7.66% and 18.80% year-to-date. However, this includes one day that Angel Oak was down over 10%. Angel Oak has had a total return of 20.40% since April 23.

The mREIT subsector’s bad times may be over, and investors should watch for any pullbacks from recent highs.

Is It Time To Consider Buying Mortgage REITs?

Despite the recent performance, publicly traded mREITs have historically been extremely volatile with inconsistent dividends. However, a new non-traded mREIT backed by Amazon.com Inc founder Jeff Bezos could be a different story.

The Private Credit Fund from Arrived offers investors an attractive opportunity to earn higher yields by investing in short-term financing for real estate projects. With interest rates reaching 10-year highs, this fund simplifies access to a diversified pool of real estate-backed loans, targeting annualized dividends of 7-9%.

The fund invests in loans used to finance professional real estate projects, such as property renovations, rehabs or new home construction, with loan periods ranging from six to 36 months. The fund emphasizes dividend income and capital preservation, providing investors with monthly payouts and quarterly liquidity options after six months.

Click here to learn more about the Private Credit Fund and invest with as little as $100.

This article These 3 Mortgage REITs Have Been On Fire Over The Last Month originally appeared on Benzinga.com