A Favorable Environment for Non-Agency REITS: The Improvement in Underlying Home Prices and Improvement in Overall Delinquency Rates from Underlying Borrowers Behind Positive Non-Agency Performance

67 WALL STREET, New York - June 24, 2013 - The Wall Street Transcript has just published its REITs Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Acquisition and Financing Costs - Pricing Power Outlook - Residential and Commercial REITs - Inexpensive Access to Capital - Apartment, Lodging, Self-Storage and Office REITs

Companies include: Annaly Capital Management, Inc (NLY), Anworth Mortgage Asset Corpora (ANH), MFA Financial, Inc. (MFA), NorthStar Realty Finance Corp. (NRF), National Retail Properties, In (NNN), General Electric Co. (GE), CapLease, Inc. (LSE), Entertainment Properties Trust (EPR) and many more.

In the following excerpt from the REITs Report, an expert analyst discusses the outlook for the sector for investors:

TWST: How much of a difference is there in comparing the performance of the agency, the hybrid and the nonagency mortgage REITs? Also, how do the residential mortgage REITs compare to the commercial?

Mr. Altscher: The performance of my four different subsectors is, quite frankly, all over the board. Your straightforward agency mortgage REITs - names like an Annaly (NLY) or CYS (CYS) or ANH (ANH) are the ones that I cover - on a year-to-date basis are roughly flat.

The broader spectrum of agency mortgage REITs, the group is up about 2%, and they are largely being influenced by concerns around what happens when the Fed exits QE3. They are a lot more volatile day to day, and people will trade them around just based upon movements and expectations around the Fed, market movements of underlying agency RMBS, so those names can move around quite a lot. They've been lagging the overall groups I cover.

The hybrid mortgage REITs, which invest in both agency and nonagency RMBS - names that I cover are Two Harbors (TWO), MFA Financial (MFA) and Invesco Mortgage Capital (IVR) - those names on average are up 10%-plus. Two Harbors, which is actually my top pick, that stock is up 18% year to date. You're really seeing the benefits there of the hybrid flexibility model, because those names are also tied to an overall improvement in the economy.

A lot of these names own nonagency RMBS that was purchased during the crisis; a name like Two Harbors owns their book at $0.50 on the dollar, which is obviously very, very cheap. And with an improvement in underlying home prices and an improvement in the overall delinquency rates from the underlying borrowers, you are seeing a very favorable environment for those nonagency RMBS prices to rise and the overall credit costs or expected cumulative losses to come down. Those names...

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