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hicago, IL – Jan 2 2026 – Zacks Equity Research reviews Apollo Commercial Real Estate Finance (ARI), Ellington Financial (EFC), and NexPoint Real Estate Finance (NREF) as part of its analysis of the REIT and Equity Trust market.
Link: https://www.zacks.com/commentary/2810645/3-mreit-stocks-to-keep-on-your-radar-amid-challenging-industry-trends
**Three mREITs Worth Watching Amid Market Headwinds**
The mREIT segment is gaining traction thanks to falling mortgage rates and a rebound in originations and refinancing after the Federal Reserve’s three rate cuts this year. These conditions are expected to lift book values as agency spreads narrow and asset prices climb. Declining pre‑payment spreads bolster yields and margins, while diversified business models provide additional resilience. Consequently, Apollo, Ellington, and NexPoint are well positioned to benefit from these favorable trends.
**Industry Snapshot**
Mortgage REITs, or mREITs, invest in and originate mortgages and mortgage‑backed securities (MBS), supplying credit to homeowners and businesses. They typically focus on either residential or commercial markets, though some hold assets in both. Agency securities, guaranteed by the federal government, reduce credit risk. Funding comes from a mix of debt and equity instruments, including common and preferred shares, repurchase agreements, structured finance, and convertible or long‑term debt. The net interest margin—interest earned on mortgage assets minus funding costs—is a key profitability metric.
**Drivers of Future Growth**
The Fed’s recent cuts, bringing rates to 3.5‑3.75 %, have eased earnings pressure on highly leveraged mREITs, enabling higher dividend payouts. This environment is likely to attract capital inflows, further improving book values in the near term. The central bank has signaled another cut in 2026, which could sustain the positive trajectory for the sector.
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