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Overview of Chimera Investment Corporation
Chimera Investment Corporation (CIM) is a publicly traded Real Estate Investment Trust (REIT) specializing in the management and investment of a diversified portfolio of mortgage assets. The company's primary focus is on generating income through investments in mortgage-backed securities (MBS) and other real estate-related financial instruments. This includes both government-sponsored agency residential mortgage-backed securities (agency RMBS) and non-agency RMBS, as well as agency commercial mortgage-backed securities (CMBS), residential mortgage loans, and other related assets.
Business Model and Revenue Generation
Chimera's business model is centered around leveraging its portfolio to maximize returns while managing risk. By investing in agency RMBS, which are backed by government-sponsored enterprises like Fannie Mae and Freddie Mac, the company ensures a stable and predictable income stream. These securities are considered low-risk due to their government backing. On the other hand, Chimera also allocates a significant portion of its portfolio to non-agency RMBS and subprime residential mortgage loans, which offer higher yields but come with increased credit risk. This strategic diversification allows Chimera to balance risk and reward effectively.
The company primarily generates revenue through interest income on its mortgage assets, which is enhanced by the use of leverage. By borrowing funds at lower interest rates and investing in higher-yielding assets, Chimera amplifies its returns. However, this strategy requires careful management of interest rate risk and credit risk to maintain profitability and stability.
Market Position and Industry Context
Operating within the broader real estate and financial sectors, Chimera plays a crucial role in providing liquidity to the mortgage market. As a REIT, the company is required to distribute a significant portion of its taxable income to shareholders in the form of dividends, making it an attractive option for income-focused investors. The mortgage REIT industry is highly competitive, with key players including Annaly Capital Management, AGNC Investment Corp., and other specialized firms. Chimera differentiates itself through its diversified portfolio and expertise in managing both agency and non-agency assets.
The company's operations are influenced by macroeconomic factors such as interest rate fluctuations, housing market trends, and regulatory changes. For instance, rising interest rates can impact the value of mortgage-backed securities and increase borrowing costs, while a strong housing market can improve the performance of residential mortgage loans.
Significance and Value Proposition
Chimera's value proposition lies in its ability to deliver consistent income to shareholders through a well-balanced and actively managed portfolio. By combining the stability of agency-backed securities with the higher yields of non-agency assets, the company offers a compelling investment opportunity for those seeking exposure to the mortgage and real estate markets. Additionally, Chimera's expertise in navigating complex financial instruments and market dynamics underscores its role as a significant player in the mortgage REIT space.
Chimera Investment (NYSE: CIM) has sponsored two residential mortgage loan securitizations totaling $646 million on March 25, 2025. The first securitization, CIM 2025-R1, amounts to $391.8 million with loans having a 5.74% weighted average coupon, 636 FICO scores, and 50.80% LTV ratio. The second, CIM 2025-NR1, totals $254.4 million with a 5.67% weighted average coupon, 597 FICO scores, and 61.61% LTV ratio.
The company sold $333 million in senior securities for CIM 2025-R1 and $184.5 million for CIM 2025-NR1 to institutional investors, representing 85% and 72.50% of their respective capital structures. The net proceeds from both transactions exceeded $187 million. Palisades Advisory Services, Chimera's subsidiary, will serve as Asset Manager for both securitizations.
Chimera Investment (CIM) has announced its first quarter 2025 dividend distribution. The company's Board of Directors declared a cash dividend of $0.37 per common share. The dividend will be paid on April 30, 2025 to shareholders of record as of March 31, 2025, with the ex-dividend date set for March 31, 2025.
Chimera Investment (NYSE:CIM) reported its Q4 and full-year 2024 financial results. The company recorded a Q4 GAAP net loss of $2.04 per diluted share, while earnings available for distribution were $0.37 per diluted share. For the full year 2024, CIM achieved GAAP net income of $90 million ($1.10 per diluted share) and earnings available for distribution of $121 million ($1.48 per diluted share).
The company's GAAP book value stood at $19.72 per common share as of December 31, 2024, with an economic return of 4.40% for the year. The company made progress on building a more diversified portfolio and completed the Palisades acquisition, which is expected to strengthen their business and create additional shareholder value in 2025.
Total assets reached $13.12 billion, with loans held for investment representing the largest portion at $11.20 billion. The portfolio composition showed 87.6% in loans held for investment, 8.3% in Non-Agency RMBS, and 4.1% in Agency MBS and CMBS at fair value.
Chimera Investment (NYSE:CIM) reported its Q4 and full-year 2024 financial results. The company posted a Q4 GAAP net loss of $2.07 per diluted share, while achieving earnings available for distribution of $0.37 per share. For the full year 2024, CIM recorded GAAP net income of $90 million ($1.10 per diluted share) and earnings available for distribution of $121 million ($1.48 per diluted share).
The company's GAAP book value stood at $19.72 per common share as of December 31, 2024, with an economic return of 4.40% for the year. The company made progress on building a more diversified portfolio, with the Palisades acquisition expected to strengthen their business and create additional shareholder value in 2025 and beyond.
Chimera has declared its first quarter 2025 preferred stock dividends for all four series of its preferred shares. The dividends include:
- Series A (8.00%): $0.50 per share
- Series B (8.00% Fixed-to-Floating): $0.6488 per share, reflecting a 10.38139% rate
- Series C (7.75%): $0.484375 per share
- Series D (8.00% Fixed-to-Floating): $0.6231 per share, reflecting a 9.96939% rate
All dividends will be payable on March 31, 2025, to shareholders of record on March 3, 2025, with an ex-dividend date of March 3, 2025. The floating rates for Series B and D are based on three-month CME Term SOFR plus respective spreads.
Chimera Investment (NYSE: CIM) has sponsored CIM 2025-I1, a $287.7 million securitization of residential mortgage investor loans on January 31, 2025. The loan portfolio features a 7.9% weighted average coupon, 748 weighted average FICO scores, and 64% LTV ratio.
The company sold securities worth $275.7 million (95.8% of capital structure) to institutional investors through private placement. Chimera retained subordinate interests of approximately $11.9 million and certain interest-only securities. The weighted average cost of debt on securities sold was 5.8%.
The securitization, rated by Fitch and Morningstar DBRS, includes a call option exercisable by Chimera either on February 25, 2028, or when the unpaid principal balance reaches 30% of the initial balance. Palisades Advisory Services, Chimera's subsidiary, will serve as Asset Manager.
Chimera Investment (NYSE: CIM) has announced it will release its fourth quarter and full year 2024 financial results on Wednesday, February 12, 2025, before 7:00 a.m. EDT. The company will host a conference call and audio webcast to discuss the results at 8:30 a.m. EDT on the same day.
Chimera Investment operates as a REIT focused on investing in diverse real estate assets, including residential mortgage loans, Non-Agency RMBS, Agency RMBS, business purpose loans, MSRs, and other real estate-related assets such as Agency CMBS, junior liens, HELOCs, equity appreciation rights, and reverse mortgages.
Chimera Investment (CIM) has announced its fourth quarter 2024 dividend declaration. The company's Board of Directors has declared a cash dividend of $0.37 per common share. The dividend will be paid on January 31, 2025, to stockholders of record as of December 31, 2024. The ex-dividend date is set for December 31, 2024.
Chimera Investment (NYSE: CIM) has completed the acquisition of Palisades Group, a U.S.-based alternative asset manager specializing in residential real estate credit. The transaction, closed on December 2, 2024, involved a $30 million cash payment at closing, with a potential additional earnout of up to $20 million over five years tied to financial performance targets. Chimera has the option to pay 50% of the earnout in common shares. As part of the deal, Palisades' co-founder and Chief Investment Officer, Jack Macdowell, Jr., has assumed the role of CIM's Chief Investment Officer.
Chimera Investment (NYSE:CIM) has elected Cynthia B. Walsh to its Board of Directors as a Class III Director, effective December 1, 2024. Walsh brings 37 years of financial industry experience and currently serves as President of Walsh Advisors, a registered investment advisory firm. She previously held positions as Managing Partner and CFO at National Bond and Trust, and various roles at Bank of America. Walsh holds degrees from Purdue University, University of Chicago, and DePaul University, where she currently serves as an adjunct professor. She will serve on the Nominating and Corporate Governance Committee and stand for election at the 2025 shareholder meeting.
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