They stated in the earnings call that they would only do this when they needed the money to invest in Senior Housing. They didn't announce a bunch of Senior Housing closings, but clearly they are happening. This should be really positive long term. It adds significantly to thier cash flow. They weren't earning money out of CDO 4 at all, according to this call. They will get 15% from the new investment about $10 million in cash flow.
NCT is doing what NRF is doing, collapsing CDOs and gradually becoming more of a property REIT than a MREIT as time goes by, but in senior housing instead of NRF's manufactured housing. This should help the stock price and thus, drive down the yield going forward.
Increasing stock price, yes. Decreasing yield, maybe not, or at lease not as much as it would otherwise decrease if the dividend is increased. I look for both, increasing stock price and increasing dividend. Guidance going forward was quite positive over the next year.
NRZ also looked to do well going forward. What I especially liked was that the MSRs benefit from rising interest rates and NRZ has been busy buying up a lot of MSRs.
I liked what Wes said about changing their strategy from the CDO market to the senior living assets thereby mitigating the effects of future rising interest rates AND being rewarded with a lower yield on the company stock price (higher pps) due to more predicable and sustainable longer duration investments. Boy am I glad I hung on to my nct shares!