NEW YORK, April 27, 2020 /PRNewswire/ -- MFA
Financial, Inc. (NYSE: MFA) (the "Company") announced today that it
has entered into a second Forbearance Agreement with certain
counterparties to its various repurchase agreement financing
arrangements and provided additional Company updates.
- Extended Forbearance. Under a new Forbearance
Agreement that the Company entered into earlier today with certain
counterparties holding a significant majority of its outstanding
repurchase obligations (the "Second Forbearance Agreement"), such
counterparties have agreed to forbear from exercising any rights or
remedies under their respective repurchase agreements with the
Company, including selling collateral to enforce margin calls,
through June 1, 2020 (unless
terminated sooner upon the occurrence of certain events). The
Second Forbearance Agreement extends the forbearance period agreed
to under the previously announced Forbearance Agreement that the
Company entered into with counterparties on April 10, 2020, which was set to expire today at
6:30 p.m. ET (the "First Forbearance
Agreement").
-
- The terms and conditions of the Second Forbearance Agreement
are substantially similar to those under the First Forbearance
Agreement.
- Participating counterparties to the Second Forbearance
Agreement represent repurchase obligations of an aggregate of
$4.4 billion, which represents
approximately 84% of the Company's $5.3
billion repurchase obligations outstanding as of
April 24, 2020. Since entering into
the First Forbearance Agreement on April 10,
2020, the Company's obligations under its and its
subsidiaries repurchase agreements have further decreased by
approximately 8%. This reduction occurred primarily from ongoing
sales of certain assets and the payoff of the associated repurchase
obligations and unpaid margin calls.
- Under the terms of the Second Forbearance Agreement, the
Company has also agreed to make a cash payment to the participating
counterparties of $150 million, which
will be applied to reduce the Company's outstanding repurchase
obligation balances with counterparties participating in the Second
Forbearance Agreement.
During the period covered by the Second Forbearance Agreement,
the Company intends to continue to explore other potential
transactions to further reduce its obligations under its existing
repurchase agreements, source financing that is generally more
durable than existing funding alternatives and raise cash to
bolster its liquidity. In addition, the Company will continue to
engage in discussions with its counterparties for further
forbearance as and if needed.
- Portfolio Update. The Company has continued
taking steps to manage and de-lever its portfolio and generate
liquidity. In particular, since April 10,
2020, the Company has sold residential mortgage assets at
improved levels, as prices have partially recovered from the
depressed valuations seen from mid-March through early April. These
sales resulted in proceeds of $484.4
million and included, $282.9
million of MSR- related assets, $147.7 million of CRT securities and $51.4 million of Agency MBS.
- Cash and liquidity update. As of April 24, 2020, the Company had total cash
balances of $430.9 million, including
$143.8 million of cash on deposit
with repurchase agreement counterparties to meet margin calls. As
described above, cash balances will be reduced by the $150 million payment to repurchase agreement
counterparties to reduce outstanding repurchase obligations. Under
the Second Forbearance Agreement, the participating counterparties
continue to have a secured interest in the Company's previously
unencumbered assets, primarily residential whole loans, real estate
owned, cash and other assets with an estimated market value of
approximately $1.4 billion as of
April 24, 2020.
About MFA Financial, Inc.
MFA Financial, Inc. is a real estate
investment trust primarily engaged in the business of
investing, on a leveraged basis, in
residential mortgage assets, including
residential whole loans and
residential mortgage-backed securities.
Cautionary Language Regarding Forward-Looking Statements
When used in this report or other written or oral
communications, statements which are not historical in nature,
including those containing words such as "will," "believe,"
"expect," "anticipate," "estimate," "plan," "continue," "intend,"
"should," "could," "would," "may" or similar expressions, are
intended to identify "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act, and, as such, may involve known and unknown risks,
uncertainties and assumptions. Statements regarding the following
subjects, among others, may be forward-looking: the Company's
estimates of its outstanding obligations under its financing
arrangements, uncertainties related to negotiations with the
Company's financing counterparties, including with respect to
forbearance and the continued effectiveness of any forbearance
agreement or any future such agreement, and other financial and
operational metrics included herein. Forward-looking statements are
based on estimates, projections, beliefs and assumptions of
management of the Company at the time of such statements and are
not guarantees of future performance. Forward-looking statements
involve risks and uncertainties in predicting future results and
conditions. Actual results and outcomes could differ materially
from those projected in these forward-looking statements due to a
variety of factors, including, without limitation, risks related to
the Second Forbearance Agreement, including the duration of such
agreement, the Company's ability to meet its ongoing obligations
under such agreement, and the Company's ongoing discussions with
nonparticipating counterparties, the Company's ability to
accurately estimate its first quarter book value per common share,
its portfolio composition and cash balances and
unencumbered assets (particularly in light of the highly volatile
and uncertain market conditions), the Company's ability to
accurately estimate its outstanding obligations under its financing
arrangements, changes in interest rates, changes in default rates,
changes in the yield curve, changes in prepayment rates, the
availability and terms of financing, changes in the market value of
our assets, general economic conditions, conditions in the market
for our residential mortgage backed securities, residential whole
loans, residential mortgage securities, MSR-related assets and
other assets, the timing and amount of distributions to our
stockholders, our ability to maintain our exemption from
registration under the Investment Company Act of 1940, as amended,
conditions in the real estate market, legislative and regulatory
changes that could adversely affect the business of the Company and
the ongoing spread and economic and operational effects of the
COVID-19 virus. Additional information concerning these and other
risk factors are contained in the Company's filings with the
Securities and Exchange Commission, including our most recent
Annual Report on Form 10-K and subsequent filings (including the
Company's Current Report on Form 8-K filed on April 13, 2020). Unless otherwise indicated, all
information in this press release is as of April 27, 2020. The Company undertakes no duty to
update any forward- looking statements to reflect any change in its
expectations or any change in events, conditions or
circumstances on which any such statement is based.
Investor Contact:
InvestorRelations@mfafinancial.com
MFA Investor Relations
212-207-6488
Media Contact:
Abernathy MacGregor
Tom Johnson
212-371-5999
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SOURCE MFA Financial, Inc.