Published on March 11, 2008
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MFA
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MORTGAGE
INVESTMENTS, INC.
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350
Park Avenue New York, New York 10022 |
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PRESS
RELEASE
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FOR
IMMEDIATE RELEASE
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March
10, 2008
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NEW
YORK METRO
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CONTACT:
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MFA
Investor Relations
(800)-892-7547
www.mfa-reit.com
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NYSE:
MFA
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MFA
Mortgage Investments, Inc.
Announces
Reduction in Leverage Through Asset Sales
MFA Mortgage Investments, Inc. (NYSE:
MFA) announced today an adjustment in its balance sheet
strategy. While we have consistently maintained an assets-to-equity
multiple of approximately 9x-10x (or a debt-to-equity multiple of approximately
8x-9x), we have determined that in this period of financial industry stress the
proper strategy is to generally lower our target debt-to-equity multiple to
7x-9x. Our focus will continue to be in high quality assets as the
vast majority of our assets are agency MBS, which are liquid and
financeable.
To effect this change in leverage
strategy, we have, since Friday, March 7, 2008, sold approximately $1 billion in
MBS. The assets sold consist of approximately $950 million of agency
MBS and $50 million of AAA-rated non-agency MBS at a realized loss of
approximately $15 million. Concurrently, we have terminated
repurchase agreements at no cost and approximately $525 million of associated
interest rate swap agreements at a cash cost of approximately $31
million.
We have
made this strategy adjustment because it is our view that credit conditions are
tightening, rapidly and indiscriminately. After analyzing recent
credit events impacting other leveraged public and private companies investing
in high quality MBS, we believe that while these companies utilized
substantially higher levels of leverage than MFA, our interpretation of their
public disclosure and other information available to us increases the
probability of increased margin requirements in the future for all repurchase
agreement borrowers, including MFA. Additionally, recent news about
potential security liquidations has increased our concerns about declining
values for many financial assets including agency and AAA-rated
MBS. As a result, we have proactively reduced leverage to decrease
the potential negative impact of increased margin requirements and falling asset
values.
We
currently estimate our book value per share to be in the range of
$5.75-$6.00. As of tonight, March 10, 2008, MFA’s available cash
balance totaled approximately $348 million and our unpledged agency MBS had a
value of approximately $19 million, both of which are available to meet future
margin calls. To date, MFA has satisfied all of its margin
calls.
On a
positive note, while we will be generally utilizing lower levels of leverage,
the spread MFA expects to earn on its assets is expected to increase in 2008.
Excluding
the realized losses from asset sales and swap terminations, based on current
estimates, we expect MFA’s earnings will approximate $0.18 per share of common
stock in the first quarter of 2008 versus $0.16 per share in the fourth quarter
of 2007.
We have undertaken these actions to
decrease potential future liquidity risks. We believe that while many
financial institutions may face the risk of systemic margin calls, our strategy
is to get ahead of the curve and reduce leverage consistent with our own
discipline. We believe this strategy will reduce the uncertainty
reflected in MFA’s share price and will allow MFA to be positioned to take
advantage of the many profitable opportunities that we believe will be available
in the future.
The Company will hold a conference call
Tuesday, March 11, 2008, at 8:30 a.m. (New York City time), to discuss this
press release. The number to dial in order to listen to the
conference call is (800) 398-9397 in the U.S. and
Canada. International callers must dial (612)
288-0337. The replay will be available through Tuesday, March 18, at
11:59 p.m., and can be accessed by dialing (800) 475-6701 in the U.S. and Canada
or (320) 365-3844 internationally and entering access code: 915260.
When used
in this press release or other written or oral communications, statements which
are not historical in nature, including those containing words such as
“anticipate,” “estimate,” “should,” “expect,” “believe,” “intend” and similar
expressions, are intended to identify “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and, as such, may
involve known and unknown risks, uncertainties and assumptions. These
forward-looking statements are subject to various risks and uncertainties,
including, but not limited to, those relating to: changes in interest rates and
the market value of MFA’s MBS; changes in the prepayment rates on the mortgage
loans securing MFA’s MBS; MFA’s ability to use borrowings to finance its assets;
changes in government regulations affecting MFA’s business; MFA’s ability to
maintain its qualification as a REIT for federal income tax purposes; and risks
associated with investing in real estate assets, including changes in business
conditions and the general economy. These and other risks, uncertainties and
factors, including those described in the annual, quarterly and current reports
that MFA files with the SEC, could cause MFA’s actual results to differ
materially from those projected in any forward-looking statements it makes. All
forward-looking statements speak only as of the date they are made and MFA does
not undertake, and specifically disclaims, any obligation to update or revise
any forward-looking statements to reflect events or circumstances occurring
after the date of such statements.