EFC - EARN: Transforming From A 14% Yielding REIT To A CLO CEF
2024-04-18 00:37:06 ET
Summary
- Ellington Residential Mortgage REIT has announced its decision to transform from a REIT into a closed-end fund that trades in corporate collateralized loan obligations.
- The transformation is seen as a strategic move to take advantage of the growing CLO market and the potential benefits of CLO investments.
- EARN's transformation follows the trend of other fund managers finding ways to create new CEFs or transform existing ones to capitalize on the opportunities in the CLO market.
In my latest article regarding the pending merger of the Apollo funds, AIF and AFT, with and into the BDC, MidCap Financial Investment Corp. (MFIC), I discussed how those 2 CEFs will be integrated into a new asset class and that this situation represents a unique opportunity. I find it rather interesting that Apollo wants to dissolve the two CEFs, while some other fund managers are finding ways to start new ones. A new opportunity has emerged that involves a transformation from an REIT to a CEF.
The opportunity that I am writing about today involves the April 1 announcement (no fooling!) from Ellington Residential Mortgage REIT (EARN) regarding their decision to transform from an REIT into a closed end fund that trades in corporate CLOs. I intend to take advantage of this opportunity and will be watching closely as the plan unfolds....
EARN: Transforming From A 14% Yielding REIT To A CLO CEF