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Investments

Two Harbors makes progress on REO-to-rental program

[Update 1: Clarifies Two Harbors single family residential properties acquisitions and asset securitization program are two separate businesses in the REIT.]

According to its first-quarter results, Two Harbors (TWO) holds $6.1 million in investment properties. "The company intends to hold these properties for investment and rent them for income," the earning states.

Two Harbors is traditionally a mortgage bond investment firm. However, the company raised net proceeds of $691.9 million through the issuance of 73.6 million shares of common stock during the first quarter in two discrete and accretive public offerings.

In May, Two Harbors began setting up an asset securitization program targeting a $250 million deal as its first private residential mortgage-backed securitization issuance. However, acquiring assets remain a challenge. However, to be clear, Two Harbors single family residential properties acquisitions and asset securitization program are two separate businesses in the REIT.

"The company made substantial progress in the first quarter related to establishing the necessary infrastructure and commencing the acquisition of single-family residential properties in certain metropolitan areas across the United States," the earnings report states.

Two Harbors reported earnings of $63.7 million for the first quarter, or 34 cents a share, compared to $55.6 million, or 40 cents, for the previous quarter.

During the quarter, the company sold residential mortgage-backed securities for $170.1 million with an amortized cost of $159 million for a net realized gain of $11.1 million.

"We had truly exceptional performance in our portfolio this quarter delivering a record 11.5% total return to stockholders while at the same time raising capital and advancing our strategic priorities," said Thomas Siering, Two Harbors' president and CEO. "Core earnings during the period were muted by our capital raises and were consistent with our expectations as we set the quarterly dividend."

jgaffney@housingwire.com

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