Banking & Finance

MFA Mortgage Ready To Go Vulture Investing In Mortgages (MFA, MFR, NLY, CIM, BX)

MFResidential Investments, Inc. submitted an IPO filing on Tuesday.  The total proposed maximum aggregate amount in securities is listed as $250,000,000 in securities, although this number is merely for filing purposes.  The underwriting group is listed as UBS, Bear, Stearns, Deutsche Bank, and Morgan Stanley. They have applied for the trading symbol “MFR” on the New York Stock Exchange.

MFResidential Investments will target residential mortgage-backed securities (MBS) and residential mortgage loans, as well as other real estate-related financial assets on a leveraged basis.  MFA Mortgage Investments, Inc. (NYSE: MFA) owns MFA Manager, LLC, who will externally manage MFResidential Investments. The company will seek to provide appealing risk-adjusted returns to its shareholders by investing in a diverse spectrum of real-estate financial assets. These assets will be financed through repurchase agreements, warehouse facilities and other forms of borrowing. MFResidential and its manager, MFA, believe that the current housing market situation has provided opportunities to take advantage of low interest rates and credit spreads. MFA engages in similar investing and financing activities for real-estate financial assets.

This isn’t at all the first of the mortgage vulture investing in this sector.  We have been pounding the table on  the Annaly Capital Management (NYSE: NLY) spin-off Chimera Corp. (NYSE: CIM) even before they came public as having the right expertise and model for pulling this off.  The Blackstone Group (NYSE: BX) has also made its vulture ventures known.  Octavian recently went vulture too, although this was on an international scope.  Even hedge fund Marathon announced plans to go vulture investing with TCW Group.

MFA Mortgage has a $1.12 Billion market cap and its shares are unchanged today at $10.70; its 52-week trading range is $5.55 to $11.07.

Rachel Lopez
February 13, 2008