Big REITs buy up competitors’ cheap stock

American Capital Agency bought $400 million worth of one rival's shares in last two months

TRD New York /
Feb.February 12, 2014 06:45 PM

Larger mortgage real estate investment trusts are scooping up the discounted stock of fellow REITs because their prices have dropped so low. For instance, the second-largest U.S. mortgage REIT, American Capital Agency, bought $400 million worth of competitors’ shares in the last two months, according to reports.

Buying equities of competitors is “a good move” because the share prices are so low — as much as 20 percent below the book value of their assets, according to the Wall Street Journal. Mortgage REITs saw money head to the booming stock market in the last six months.

Buying in its own sector is also a good strategy for the trusts — as long as interest rates stay stable or rise on a moderate basis, the Journal reported. But analysts point out that investing with their competitors can leave companies like American Capital at the mercy of other firms’ management.

The company’s chief investment officer, Gary Kain, said its worth the risk.

“You have to check your ego at the door, and say, ‘Honestly, this is so cheap,'” he told the Journal, though he declined to detail which companies American Capital had invested with. [WSJ] Angela Hunt


Related Articles

arrow_forward_ios
(Image by Wolfgang & Hite via Dezeen)

Hudson Yards megadevelopment inspires a new line of sex toys

Hudson Yards megadevelopment inspires a new line of sex toys
Cammeby's International Group founder Rubin Schron and, from top: 194-05 67th Avenue, 189-15 73rd Avenue and 64-05 186th Lane (Credit: Google Maps)

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio
Wendy Silverstein (Credit: Getty Images)

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out
CoStar CEO Andy Florance (iStock; Getty)

CoStar plots international push with Emporis buy

CoStar plots international push with Emporis buy
Colliers’ Jay Hennick (iStock; Colliers)

Colliers’ profit rebounds

Colliers’ profit rebounds
40 East 72nd Street and Spiros and Antonia Milonas  (Getty; Google Maps)

Under water: Shipping magnate’s troubled UES condo is bankrupt

Under water: Shipping magnate’s troubled UES condo is bankrupt
Photo-illustration of Iron Hound Management’s Robert Verrone (Headshot by Studio Scrivo)

Here are the most active players in the loan workouts space

Here are the most active players in the loan workouts space
Jake Fingert, Casey Berman and Jeff Berman (Camber Creek)

Camber Creek closes $155M fund

Camber Creek closes $155M fund
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...