mREIT Chimera Investment Corporation Sells a Tasty Preferred Issue

By: ,

mREIT Chimera Investment Corporation (NYSE:CIM) has sold a 8% preferred stock issue.  This is a tasty coupon and may be worth purchasing when the price stabilizes.  Shares, which have begun trading on the OTC Grey market, under the temporary ticker symbol CMIAP are in the $24.48-$24.75 area closing Friday at $24.60.

As we take a quick look at the shares of the preferred stocks of other mREITs, such as Annaly Capital (NYSE:NLY), Armour Residential (NYSE:ARR), Invesco Mortgage Capital (NYSE:IVR) as well as others we note that they are not trading strongly with many of them trading below $25/share.  Rightly or wrongly mREITs trade weakly, likely because of the complexity of their financials,  mREITs trade at a discount.  The spread between short term rates and long term rates has narrowed very significantly over the last 5 years and this has weakened the earnings of mREITs which benefit from a wider spread in interest rates.

These shares have the typical REIT preferred terms, optionally redeemable in about 5 years, cumulative in respect to dividends and non qualified for favorable tax treatment.


While we think these shares are a reasonable holding for investors able to tolerate some moderate risk, we don’t believe there will be much potential for capital gains for those pondering a quick flip.

Further details of this issue are available here.

To get more information on preferred stocks, screen them, set up your own portfolio and receive email alerts, go to now.


Related Posts:

Tim McPartland

Connect with Tim McPartland

Tim McPartland
Tim McPartland is a private investor with over 45 years of investing experience. His analysis, research and writing is devoted to the hunt for income producing securities of all types, but in particular specializing in preferred stocks, exchange traded debt and Master Limited Partnerships.
Search Dividend Investor