New York Mortgage Trust Discounted Secondary Offering, With 13% Yield

By Chris Lange Published Nov 21, 10:35AM EST

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New York Mortgage Trust Inc. (NASDAQ: NYMT) announced on Thursday, that it will have a secondary offering of 13 million shares at a price of $7.94 per share. After the offering, this will bring the number of total shares outstanding to roughly 106 million.

The underwriters for this offering are UBS Investment Bank, Deutsche Bank, Barclays, RBC Capital Markets, Credit Suisse and Keefe Bruyette & Woods. Another 1.95 million shares have been given to underwriters as an overallotment option for 30 days.

The proceeds from this offering are intended to be used to fund a portion of the purchase price of the residential loan pool acquisition. If the residential loan pool acquisition is not completed, the company intends to use the net proceeds to fund the acquisition of targeted assets and for general working capital purposes.

New York Mortgage Trust is real estate investment trust (REIT) in the business of acquiring, investing in, financing and managing primarily mortgage-related assets and financial assets. What makes this one so important to many investors is that it is among the highest yields — it currently offers a dividend of about 13.20%.

The company’s objective is to manage a portfolio of investments that will deliver stable distributions to its stockholders over diverse economic conditions. It intends to achieve this objective through a combination of net interest margin and net realized capital gains from its investment portfolio. The portfolio includes certain credit sensitive assets and investments sourced from distressed markets in recent years that create the potential for capital gains, as well as more traditional types of mortgage-related investments that generate interest income.

Needless to say, on the surface this sounds like a more complicated mortgage REIT structure, compared to other peers.

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Following the announcement, shares dropped roughly 5% in the premarket to $7.78. Then shares were down 4.5% at $7.81 shortly after the open. The 6 million shares traded by then was already about four times its normal daily trading volume.

New York Mortgage Trust has a consensus analyst price target of $8.14 and a 52-week trading range of $6.75 to $8.20. Its market cap was listed as about $710 million, but that likely does not include the impact of the new shares.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.