Agency mREITs

Research evidence excerpt

Agency mREITs

June 17, 2026 Agency mREITs

Dividends Support Continued Positive Economic Returns; NLY and DX

preferred names Douglas Harter

(332) 400-5093 dharter@btig.comFINANCIALS WHAT YOU SHOULD KNOW: We expect the Agency mREITs to generate a +13% Will Nasta

economic return for 2026 with the return coming from the dividend partially offset (212) 738-6157 wnasta@btig.com

by modest book value declines; this would mark the third straight year of positive

returns. The longer-term environment for the sector remains favorable with spreads

(vs. swaps) still attractive vs. history, which should be supportive to both the book Revisions

value and dividend outlooks. The sector valuation is trading at a premium compared toINDUSTRY Previous Current long-term averages supported by the high current dividend yield. Our preferred names

among the Agency mREITs are NLY and DX. Ticker Rating PT Rating PT

DX Buy $16.00 Buy $14.50

■ The three key themes we are focused on for the Agency mREITs are:

NLY Buy $25.00 Buy $24.00

1. Book value: The supply/demand outlook for Agency MBS is fairly balancedREPORT

with net supply limited by the high level of rates and demand being driven by

the GSEs and increased appetite from the banks. There is potential for some

spread tightening should macro volatility decline. The presence of the GSEs and

their opportunistic buying should help limit the magnitude of any widening in

pockets of volatility. In terms of short-term performance we expect book values

to be up 3.4% (net of dividend accrual) in the second quarter.

2. Dividend: Available returns on new investments are in mid-teens (15-17%)

range, which is below the required return (including expenses) needed to

support the dividend currently. Using the forward curve this math becomes a