NLY - Why This Mortgage REIT's No-Debt Rule Changes the Game
There's often a lot of uncertainty involved when buying a company that has just recently gone public. But sometimes it is worth the risk. That appears to be true for mortgage real estate investment trust (REIT) Broadmark Realty Capital (NYSE: BRMK). The reason for this optimism? Broadmark isn't your typical mortgage REIT.
Here's what you need to know about this recent IPO, and why you might want to buy it before Wall Street catches on.
The first thing to understand about Broadmark is that it deals in debt that is tied to property, but not mortgages as you know them. When most homeowners get a mortgage, a bank is basically fronting them the money to buy a home. The new homeowner agrees to pay back the loan, with interest, over time. The bank (or other company that originates the mortgage) often puts together a whole bunch of loans that it owns and sells them as a single batch to investors, which often include real estate investment trusts that specialize in owning these "collateralized" mortgages.