Two Harbors Investment Corp (TWO), PennyMac Mortgage Investment Trust (PMT), Newcastle Investment Corp. (NCT): The Best mREIT Bargains

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The company also expects to get some support from further gains on its distressed loans portfolio. In an improving housing market, PennyMac’s distressed loans can be refinanced near or at face value. Remember, these are purchased by PennyMac Mortgage Investment Trust (NYSE:PMT) at huge discounts of as much as 50%. When the loan gets paid off near 100%, PennyMac Mortgage Investment Trust (NYSE:PMT)’s profits grow significantly.

Senior housing
Newcastle Investment Corp. (NYSE:NCT) operates as a mortgage REIT with major investments in real estate loans, MSRs, and other real estate related assets. The company also has exposure to senior housing through its recent spin-off. As a result, Newcastle Investment Corp. (NYSE:NCT) has exposure to both the U.S. real estate market and the senior housing market.

The senior housing market presents investors with an attractive opportunity as demographics reveal that the population of those age 65 and older has been on the rise and will continue to increase in the future. Given this backdrop, the senior housing market in the U.S. is characterized by an attractive supply demand imbalance. The rapidly growing aging population will drive the demand for more senior care facilities in the future. The supply has not kept pace with this increased demand, however.

As such, the company aims to take advantage of this imbalance and build a strong portfolio of such properties.

Final note
Given the uncertainty in interest rates, it is important to consider the various headwinds and tailwinds impacting these various mortgage REITs.

The article The Best mREIT Bargains originally appeared on Fool.com and is written by James Clarkson.

James Clarkson has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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