TPG Mortgage Investment Trust management said first-quarter results were pressured by a late-quarter macro shock, but emphasized that earnings power remained intact and that it has seen a partial recovery in book value declines early in the second quarter. Executives also pointed to continued portfolio rotation toward residential credit strategies, a conservative leverage posture, and improving contributions from Arc Home as key drivers supporting the dividend.
Book value decline tied to March volatility
CEO and President T.J. Durkin said the quarter began with “additional moderation of interest rate volatility, lower rates, and strong residential credit fundamentals,” alongside increased demand for risk across non-agency assets. That backdrop changed in March following an escalation of conflict in the Middle East, which he said “weigh[ed] on asset valuations broadly.”
As a result, book value fell to $9.97 per share from $10.48. Durkin told investors that while it was “too early” to comment on April book value precisely, the company believes it has “already recovered at least 50% of the previous quarter’s unrealized book value decline.”
Chief Financial Officer Anthony Rossiello said book value declined 4.9% in the quarter and, including the dividend, translated to a negative 2.6% economic return. He attributed the quarter’s GAAP loss to unrealized marks: the company posted a GAAP net loss of about $8.7 million, or $0.27 per share, “entirely driven by net unrealized losses on our investment portfolio,” partially offset by gains in the hedge portfolio and the investment in Arc Home.
EAD covered dividend; fourth increase since early 2025
Despite the book value pressure, management emphasized that operating performance remained strong. Durkin said the company generated adjusted distributable earnings (AD) of $0.26 per share for the quarter, “more than covering” the most recently declared $0.24 dividend.
Rossiello similarly reported Earnings Available for Distribution (EAD) of $0.26 per share, which he said increased from the prior quarter and fully covered the dividend. He said the company’s performance was supported by “durable net interest income, earnings growth at Arc Home, and a controlled expense load.”
Management highlighted that the company has raised its dividend in four of the last six quarters. Rossiello said the latest move marked the firm’s fourth dividend increase since the beginning of 2025, raising the quarterly payout to $0.24 per share.
Portfolio positioning: home equity and non-agency credit focus
Chief Investment Officer Nicholas Smith said the company ended the quarter with an $8.1 billion investment portfolio, with activity centered on home equity and non-agency credit. During the quarter, the company securitized roughly $500 million of home equity loans, building on a partnership with a “market leading” home equity originator. Smith said home equity remains “core to our strategy,” and management believes the segment will offer compelling opportunities as it grows.
Smith also noted a securitization executed after quarter-end consisting of approximately $430 million of non-agency residential mortgage loans.
On credit performance, Smith said serious delinquencies remained low:
- 1.3% for the non-agency portfolio
- 0.4% for the home equity portfolio
He added that the non-agency and home equity portfolios averaged a loan-to-value in the “low 60%” range, citing high-quality borrowers with significant equity.
Management also highlighted leverage discipline. Smith said economic leverage was a conservative 1.7x, while noting the company believes it can “prudently move this up over time” to add earnings power.
Arc Home contribution and outlook
Smith described Arc Home as having reached “a clear inflection point,” contributing approximately $0.04 per share to EAD in the quarter. He said Arc Home lock volumes were $1.3 billion, a 25% increase year over year, driven by strong non-agency originations. Smith said the company’s decision to increase its ownership stake to 56% is “starting to pay off” as the platform gains market share and improves gain-on-sale margins.
In response to a question about second-quarter trends, Smith said that after normalizing for seasonality, performance “may be slightly below budget,” but he added that it is still early in the quarter and that “the gain on sales have been healthy.” He said early signs for the second quarter are positive and that management expects budgeted volumes to normalize.
Capital rotation, commercial exits, and funding considerations
Executives reiterated plans to rotate capital out of legacy commercial holdings and into higher-return residential strategies. Smith said the company is working to exit legacy WMC commercial holdings and is focused on “de-risking these positions,” which would free equity for redeployment into higher-return residential investments.
During Q&A, Durkin said progress on the remaining commercial assets is “taking longer than any of us would like,” but added that the company has extended its facility with a lender, providing “clean financing through September this year.” He outlined three “distinct situations,” including a retail asset sale process that he said is “moving along nicely,” and hotel assets where two of four have assigned letters of intent. He said the last two hotel assets could take longer, with resolution hoped for by the end of the year, though timing “may drift into 2027” for the final two.
Asked whether additional marks should be expected on commercial sales, Smith said that as the process continues, the company is generally reflecting market information in current valuation, and “barring surprises,” he said he would not expect additional marks.
On call rights related to transactions, Smith said execution depends on levels of spreads and interest rates, and while markets retraced toward higher rates and volatility during the quarter, the company has “gotten a good amount of that back.” He said management is looking for stabilization and hopes to have “good news in the coming quarters.”
Rossiello said the company ended the quarter with about $100 million of total liquidity, including $49 million in cash, $50 million of committed financing on unlevered home equity loans, and $1 million of unencumbered agency RMBS.
Management also addressed capital structure flexibility. Asked about the company’s 9.5% notes due 2029, Smith said management is “always evaluating the entire capital structure” and noted the notes are becoming callable later in the year. “To the extent rates in the market move in the right direction,” he said, the company would look to explore refinancing or delevering those notes.
On dividend policy, Durkin told analysts the company expects to continue passing improving earnings power through to shareholders via dividends, while citing conservative leverage and a “pretty linear path” to rotate capital without reserving significant amounts for other purposes.
About AG Mortgage Investment Trust NYSE: MITT
AG Mortgage Investment Trust, Inc is a publicly traded, closed-end management investment company that primarily focuses on investing in U.S. residential mortgage assets. The firm seeks to generate current income for its shareholders by acquiring a diversified portfolio of mortgage loans and mortgage-backed securities. As an externally managed mortgage real estate investment trust (REIT), AG Mortgage Investment Trust aims to deliver attractive risk-adjusted returns through active portfolio management and interest rate hedging strategies.
The company’s investment portfolio is concentrated in adjustable-rate residential mortgage loans, including so-called “jumbo” prime ARMs, as well as Agency and non-Agency residential mortgage-backed securities (RMBS).
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