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Xinyuan Real Estate Co., Ltd. Message Board

  • peregrinearchery peregrinearchery Nov 14, 2012 5:11 PM Flag

    Time to buy mREITs again!

    ARR and PSEC both have outstanding yields, ARR sitting at nearly 18% with monthly dividends. I hope the market crashes further so I can get them with even higher yields. I love stock crashes! Cheers!

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    • Agnc, Amtg, Ai, Arr, Jmi and Mtge. Been buying hand over fist!!

    • Peregrine, what does the "m" in mREIT stand for? I like the stuff you invest in; it's always off the beaten path.

      Like monthly dividends. I've never even heard of that. How does that happen? What's the risk that offsets the 18% yield (or, reversed, why doesn't the off market 18% yield cause buying and therefore price increases to bring the yield down, closer to market?)

      • 1 Reply to hmmm26
      • The m stands for mortgage, mreits are highly leveraged mortgage security buying monsters that pay out 90% of their earnings in dividends. (PSEC isn't an mreit, but its yield is so good I toss it in their with them) Monthly dividends are what several reits have chosen because people like to compound their earnings faster and reits cater to these investors. There are many risks, being so highly leveraged if things go horribly wrong it is an instant bankruptcy. Current risks are changes to dividend taxation and some other internal taxation I can't even figure out, but there are seeking alpha articles on it. All the mreits have had their dividends very slowly being lowered a penny at a time, so that's also a risk since the trend is likely to continue.

        The main risk is interest rates, if those go up then their current business model fails. They take loans and buy mortgage securities, then use those securities as collateral to get more loans to buy more mortgage securities and so on. If the interest rates get too close to the mortgage rates then they cannot continue making a profit.

        However, only one mreit has failed that I know of, and that is CIM which made some very bad choices. The others are all very strong and have kept up double digit dividend yields for years. (AGNC, NLY, ARR, IVR) My favorite is ARR, which I bought yesterday on the dip and sold today since it decided to shoot right back up. Was planning on holding for a while but things don't always go according to plan.

    • Well damn, I timed that perfectly. Time to sell mreits now! Lol

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