You need to get thoughts like "is this the new normal". This is the end of a cycle favorable to Mreits and the beginning of a nasty cycle that has crushed investors who were so naïve as to believe Uncle Ben was going to give them the great tell as to when to exit Mreits and other instruments impacted by higher interest rates.
Everyone chose to ignore Mr. Market and/or the bond vigilantes that were always going to be the arbitrators of when the interest rate cycle was coming to an end.
Now, if you don't like what just happened wait for the next 2-3 consecutive quarterly cuts in dividends as all Mreits (except perhaps NLY which started to delever and hit their shareholders with multiple consecutive dividend cuts) first disclose how much in forced sales occurred, second disclose smashed book values and third ultimately disclose the impact on future dividends. The last item will not be disclosed until future events warrant so I suspect many investors will chose to delude themselves into believing the bleeding has stopped when in reality it has only begun.
The answer is quite simply yes and this is why I have no plans to buy mREITs until the fed has finished raising the funds rate. You are now on the hardest part of the interest rat cycle for investing in loans because book values will decline until the funds rate has peaked. You will be rowing up river until the cycle repeats again. What would motivate someone to invest on this part of the cycle is beyond my comprehension. I can only believe that they do because they do not understand the cyclic nature. Because if they did they would be out.
My guess is that the dividend rates being offered at the peak will not be in the 20% range because their portfolio will have too many money losing loans by that time. I'm concerned that rates will be below 10% but then there is no way to know until we are there. It would not be surprising to me if they have to suspend the dividend for a few quarters in order to shore up their financial health.
I think that the fact that the funds rate won't rise for several years, as many have speculated, isn't are reassuring as it once was because the recent decline in PPS has investors feeling burned and they are now thinking much more cautiously, or they should be.
Some M-REIT's may not make it. It doesn't make sense to use leverage and buy hedges in a rising rate environment. The last rising environment 2006-2008, Bimini Capital Management (BMNM), a mortgage REIT in agency MBS, ws hedged wrong and just levered and got stuck with alot of problems. Check their stock out, they just reported quarter one and the BV just hit 10 cents a share, still dropping. This is what an unhedged, M-REIT looks like after a bad bet on interest rates, it will take a decade maybe longer before these guys stabilize.