Fannie, Freddie Predictions Boost Invesco $10.5m Earnings
Real estate investment trust (REIT) Invesco Mortgage Capital (IVR) posted net Q409 income of $10.5m or $1.02 per share after moves to "rebalance asset classes" of investments. The REIT shuffled investments away from agency securities and toward private-label securities in anticipation of a delinquent loan buyout by the government-sponsored enterprises (GSEs). The US Treasury Department on December 24th announced it was raising GSE portfolio caps. Since then, the industry - and, it seems, the Inveso REIT - kept its eyes and ears open for a surge in delinquent buyouts. Then, last week, GSEs Freddie Mac (FRE) and Fannie Mae (FNM) announced they would buy out substantial portions of serious delinquencies. “During the fourth quarter, we correctly anticipated that Fannie Mae and Freddie Mac would increase their buyouts of delinquent loans," said Invesco president and CEO Richard King, in a press statement. "As a result, we sold a portion of our agency residential mortgage-backed securities (RMBS) and deployed more equity into non-agency RMBS and commercial mortgage-backed securities (CMBS)." The company now bears $802.6m of total MBS in its portfolio; $556.4m of agency RMBS, $115.3m of private-label RMBS, $101.1m of CMBS and $29.7m of collateralized mortgage obligations (CMOs). Invesco is also invested $4.1m in the Public Private Investment Fund managed by Invesco Advisers. The gain over last quarter's $7.2m of net income was driven primarily by a $2m gain on securities sales and a $1.1m increase in income following the deployment of initial public offering (IPO) capital. The company also experienced $1.6m of operating expenses. Write to Diana Golobay. Disclosure: the author holds no relevant investment positions.