The greater part of ARR assets are MBS's. Interest rates are rising (and probably will continue to rise in the years to come). The rising interest rates will drive down the valuation of the MBS's already on the books, since they will become progressively less valuable the more interest & mortgage rates rise. Most mortgage-REIT's try to sell these declining assets before they fall too much in value (i.e., take a smaller loss rather than a larger loss). If they don't sell the declining assets, then they probably will have to revalue them or write-down their valu. This will decrease the book valu of the stock. The interest income the REIT earns in the mean time will have to be used to help offset declining values or losses. This decreases profits & therefore the div payments. Yes, the REIT has to pay-out 90% of its profits but if the profits are less, then the divs become less. Also remember that the REIT's write-off depreciation & losses before profit is calculated. So, it looks like ARR will probably be a whole lot less profitable & have declining book valu in the future.
By the way, most m-REIT's hedge with swaps, derivitives, & refinance agreements. They usually, hold some cash, Treas bonds, Treas bills, & certain types of derivitives for liquidity & counter-party needs (including repurchases). They also use established lines of credit for liquidiy & counter-party transactions. Most m-REITs use leverage to increase profits, which leave them vulnerable to significant changes in the interest rate landscape. Their holdings act as collateral.
But, when the interest rate landscape changes their assets become worth less. Therefore, collaeral value becomes less. This usually causes the lenders (counter parties) to request more collaeral which could lead to a liquidity crisis. If new collateral can't be established quickly (i.e., cash on hand, lines of credit, etc), assets have to be sold (liquidated). The assets liquidated could be the swaps & derivitives, or the Treas bonds & bills. If the foregoing choices don't completely meet the liquidity need, then the REIT's investment properties have to be liquidated. If the m-REIT doesn't do the liquidation, the REIT's lenders will.
This is usually how m-REITs work (a simplified view). I've tried to keep it simple for you so that it will be easier to grasp. I didn't want to complicate it more by taking into consideration the complexities that also occur when this is happening to the whole industry at once, how counter-parties have their own hedging, how asset & liability equations are factored, or how pre-payments factor into the problem. It might be too much for you.
Since you seem to know ... why dont you check what ARR holds as assets (particularly bonds)? I think you'll be surprised. Check how many swappable bonds they hold. Then get back to me.
I've already checked & the information shows me how ignorant some commentators can be.
They will buy new MBS with a higher yield and the increase in spread will bolster the dividends, and the new MBS will cost less to buy without competition from the Fed. Maybe book "valu" will decline somewhat, but after a period of adjustment the dividends should flow nicely, which will support book value.
By the way, buying new MBS's with higher yld doesn't necessarily mean the int rate spread for ARR gets better. Don't forget that FED, bank, & mortgage rates are also increasing in the markets at roughly the same time that the MBS yld rates are going up.
Yes they can purchase new MBS's with higher ylds (now or in the future). But that doesn't help the loss in valu of the previously purchased & held MBS's. If asset valu is lost on the previous MBS's it's unlikely that the lost valu will be recovered in this interest rate & QE-tapering environment. The lost valu will lead to lost book valu (uless the previously purchased MBS positions were hedged). Note though that hedging mechanisms are limited in REITs.
By the way, where did you get your econ-education ? (Seems like you missed some courses).