Publicly traded Mortgage REITs (mREITs) continue to struggle in attracting institutional Value investors, despite an improving backdrop for business performance and a stock price recovery. Even as economic conditions stabilize, stocks across the sub-sector remain well below levels seen prior to the turn of the credit cycle. What’s more, institutional data shows that mREITs have largely failed to participate in prior equity market rallies spurred by easing inflation expectations.

The lagging Price/NAV (or Book Value) valuations across the space reflect this disconnect, further emphasized by persistently high dividend yields, even as underlying fundamentals improve.

A Prime Opportunity for Value Investors

Despite these challenges, the current environment presents a compelling entry point for institutional Value investors. Consider these key factors:

  • The likely steepening yield curve (2H 2025 – 2026) should strengthen portfolio performance, expand Net Interest Margins (NIMs), stabilize Book Values, and reduce hedging costs.
  • Credit spreads and real estate fundamentals remain strong, and while pockets of dislocation exist, underlying real estate conditions remain resilient.
  • Significant discounts to NAV: with many mREITs trading at historically weak Price/Book Value ratios, this offers compelling relative value opportunity, along with high dividend yields.
  • Improved balance sheets & dividend stability: with prior de-risking, mREITs have seen notable improvements in balance sheet health, supporting more predictable dividend payouts and portfolio investments.

What Should IR Teams Be Doing Right Now?

One key issue remains: institutional Value investors are not actively engaging in the mREIT market. Instead, these stocks are heavily weighted toward passive and index-driven ownership, creating a structural hurdle for valuation growth—even as economic conditions improve.

Refresh and Recalibrate the Investment Thesis

  • Align the thesis to the strengthening portfolio value over the next 6-8 quarters to attract and anchor long-term investors.
  • Integrate key thesis pillars into all external communications.

Realign Investor Relations Strategy Attracting Value-Oriented Audience

  • Target Value-oriented investors by emphasizing portfolio and dividend stability, relative undervaluation, and long-term value creation.
  • Showcase the discount to intrinsic value using P/BV comparisons, portfolio quality, and conservative leverage.
  • Publish a capital allocation roadmap with catalysts for stock price performance, framing the opportunity as Total Return rather than just Income.

Strengthen Buy-Side Targeting

  • Implement a tailored buy-side targeting strategy to engage institutional Value and GARP investors as conditions improve.

Plan for a 2026 Investor Day

  • Utilize an Investor Day to reset the company’s vision for growth and shareholder returns over a 3-5 year horizon.

At Alpha IR, our experience advising REITs has shown that the market won’t do the work for you. Success today requires a proactive, strategic IR approach. With the right strategy, mREITs can bridge the valuation gap and attract long-term investors.

Contact Us to learn how Alpha IR helps companies enhance engagement and market visibility with a strategic IR program.