Mortgage REIT Insider: Origen Rebounds, Crystal River Sells Out

It was a relatively quiet week for mREITs – the iShares FTSE NAREIT Mortgage REIT ETF (REM) fell slightly, reflecting the performance of most stocks in the sector. Crystal River Capital (CRZ), NorthStar Realty Finance (NRF), Arbor Realty Trust (ABR), and Anthracite Capital (AHR) all participated in the Credit Suisse 2008 Global Real Estate Conference this past week. In its presentation, Crystal River disclosed that it had sold all of its agency-backed securities, in response to a jump in the average haircut on repo funding. The company saw the haircut on its repo agreements go from 3 percent to as high as 7 percent, thanks to a frenzy of selling activity in March. However, the company did say that it is looking to reinvest in agency securities again, once repo funding becomes more attractive. The big winner this week was manufactured home lender Origen Financial (ORGN), which announced Wednesday that it had received $46 million in term financing from the company’s largest shareholder. The financing didn’t come cheap, however, as the three-year note bears a 14.5 percent interest rate and obligates Origen to issue warrants for 2.6 million shares of the common at a $1.22/share exercise price. Nonetheless, the $46 million is sufficient to pay off Origen’s remaining obligations to Citigroup under its supplemental advance facility, which had been set to mature in June. With the overhang of the debt maturity removed, Origen shares rocketed up 70 percent on Wednesday to close at $2.28. Shares were at $2.35 in early trading on Friday. Editor’s note: Mortgage REIT Insider will run each week on Friday, and looks at trending and movements in the unique mortgage REIT industry. Patrick Harden is a Certified Public Accountant with three years of experience in auditing publicly-traded real estate investment trusts. For the past two years, he has been involved in the mortgage finance industry as a member of the financial reporting group at a publicly-traded mortgage bank.