Hi All,
I work for a fund that is looking to start covering mortgage REITs. I wanted to see if anyone here has either covered the space or worked at one for some time. Would really appreciate the chance to hear about your experience and learn about the space
I work in a tangential area, though it's not my actual domain. The only thing of note I can say is understanding how mortgages are priced and hedged is key. There is significant rate exposure and not all REITs do a good job at hedging it. As an investor you must assess how much duration/convexity exposure you actually have, and hedge it. We also hedge mortgage basis and credit spread exposure as well. You can gauge relative value based on NAV but the million dollar question is how NAV will evolve over time. And of course, commercial REITs are a whole different ball game than residential.
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