MFA Financial, Inc. (MFA)

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MFA Financial, Inc. (MFA)

J.P. Morgan 2014 Securitized Products Research Conference Call

March 6, 2014 2:30 PM ET


Mike Commaroto – CEO, Apollo Residential Mortgage

David Finkelstein – Head of Agency MBS Trading

Bill Gorin – MFA Financial, Inc.

Jason Marshall – Head of MBS Portfolio Management, Invesco

Bill Roth – CIO, Two Harbors


Matt Jozoff – JPMorgan


Matt Jozoff – JPMorgan

All right, great. Thanks everybody. So, just a quick housekeeping note again. As Annie (ph) mentioned earlier, this is close to the press now from this point onwards. So we’d ask the press to respect that please.

And I’d like to do a brief introduction of the panel the full bios are actually in the printed books on page 137, conveniently located. But in alphabetical order, we have Mike Commaroto, the CEO of Apollo Residential Mortgage; David Finkelstein, Head of Agency MBS Trading at Annaly, Bill Gorin, CEO MFA Capital, MFA Financial, I’m sorry, Jason Marshall, the Head of MBF Portfolio Management at Invesco and Bill Roth, CIO of Two Harbors.

So, I think with that, I’d actually like each of the panelist maybe just in that order, alphabetical just to kind of give a quick one-minute summary of your firm. And then we can launch into the discussion.

The other thing is, we’d like to have some Q&A at the end, we’ll leave a decent amount of time for that at the end so please think of some questions and we definitely encourage you to engage our panelist.

Mike Commaroto

Matt, thank you, thanks for having us here today this week, I’m really happy to be here. Michael Commaroto, like Matt said, I run a REIT for Apollo, it’s an agency REIT, it’s a hybrid REIT so it’s a mix of agencies and non-agencies. We were public in 2011 in the summer, we raised $200 million in our IPO and then we did a couple of follow-ons and a preferred offering. So, right now we have about $700 million to $750 million of capital on the management.

The genesis of the REIT was actually a private equity vehicle that we started at Apollo in 2008, that was very focused on credit distressed assets, basically home loans and RMBS. And then as the market evolved, we changed that business from a private equity business to frankly a public equity business in the form of a REIT.

And then, in ‘11 and ‘12, we were very focused on agencies, with still an allocation into non-agencies. And again, as the markets evolved then we’ve changed our allocation from heavy agencies into more heavy credit, still with an overlay of agencies as well. As the market continues to evolve, we hope to turn the business into one that’s not just purchasing credit (inaudible) inventories, but actually originating credit opportunities of our own so again trying to continue to evolve the business with the market as it turns. Thank you.

David Finkelstein

Good afternoon, I’m David Finkelstein and I’m with Annaly Capital Management so, where I’m responsible for agency mortgage trading. Annaly has been in a public company since 1997. We have a little over $12 billion in equity capital. We are predominantly in agency REIT. However, this past year, 2013, we diversified by acquiring CreXus, which is commercial real-estate business.

We now allocate or have the capability to allocate up to 25% of our capital into the commercial real-estate space. And it complements the agency side of the business relatively well. We think that it’s a good diversifier until far as it helps us manage or help us manage interest rate cycles going forward between that barb bell, between agency and commercial real-estate.

Bill Gorin

Thanks. I’m Bill Gorin, I’m with MFA Financial and have been since it’s founded about 17 years ago. I would say, we’re pretty much a pure agency REIT until we when we timed this right, the first quarter of ‘09, where we decided to reallocate a good portion of our capital into the non-agency sector. So, we invest across the residential mortgage back security universe.

So, we don’t want to tie our hand behind our back and say we’re only this, we’re only that. We’ll go where the opportunities are and this only seems to be about 11 trillion of opportunities to pick and choose from. We’re internally advised and our market cap is about $3 billion.

Jason Marshall

Jason Marshall, I’m the Portfolio Manager for Invesco Mortgage Capital. We went public in 2009 we’ve raised roughly $3 billion in book equity since that time. And we too are a hybrid REIT, initially, primarily focused on agencies. We’ve been migrating more towards credit space over the last few years, which includes legacy non-agency MBS and CMBS.

And two markets we’ve really concentrated on really is partnering on new issued hold on deals or we’ll buy the subordinates at IO and sell off the seniors, to consolidate us back up to our balance sheet and also NCRE, as a (inaudible).

Bill Roth

Good afternoon and thanks Matt for including us today. I’m Bill Roth, Chief Investment Officer of Two Harbors. Two Harbors was formed in 2009, we are also a hybrid REIT. We have a market capital, approximately $3.8 billion. We’re externally managed by a subsidiary of Pine River Capital Management.

Over the four and half years that we’ve been publicly delivered a little over 100% total return to our shareholders, and another – actually the thing we’re proud of is that we’ve had a positive return every year that we’ve been public.

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