Disclaimer: Do you own investment research, this newsletter is for entertainment and informational purposes only. The author is not responsible for any losses incurred. What you are reading is not investment advice.
What is an M-REIT?
Broadmark Realty Capital $BRMK is a mortgage REIT with a stellar balance sheet and strong top and bottom-line growth. Paying monthly dividends of $0.07/share, $BRMK offers value with a 7.95% annual yield at $10.57/share. $BRMK has a semi-diversified loan portfolio spanning multiple asset classes across multiple non-judicial foreclosure states with average loan-to-value ratios of 65%. Having no debt, while sitting on a war chest of more than 170 million dollars, (last report) BRMK represents unique value in the M-REIT space. However, BRMK’s Price-to-book value currently sits at 1.19, which is a premium to most M-REITS which trade below book value accounting for default risk. Given BRMK’s extremely conservative underwriting standards, loan delinquency risk may be discounted.
The primary concern for BRMK given decent P/E and a safe balance sheet is interest rate sensitivity. If interest rates or inflation expectations sharply rise, M-REITs broadly selloff as higher rates plus inflation discount the value of their loans. This is less of a risk for BRMK which offers primarily short-term construction financing.
Overall, BRMK has strong overall stats and would be a decent long-term real estate play with the potential for dividend growth going forward. With mild risks and a decent future, BRMK would be great for a dividend-reinvestment-plan (DRIP) given the monthly dividends. BRMK was a better deal last year at $7–9/share when the quality assets traded below book value. This is definitely a stock to buy on the cheap during a panic, however even with a P/B of 1.19, investors are rewarded with high dividends and safety.
For more information on $BRMK stock, below is research from the Value Investors Club, a great place for value stock ideas. This user wrote a decent analysis of $BRMK last November so some of the financial figures may have changed.
Cautious investing everyone,
Disclaimer: the author Kevin Habek is not a registered financial advisor. This article constitutes the opinion of the author and should not be misconstrued as financial or investment advice. Stock and options speculation is highly risky and investors employing these investment strategies run the risk of losing all or more than their original invested principal. The author recommends readers perform their own research and due diligence and consult with a qualified investment professional before entering into any investments. The article in reference: “Broadmark Realty Capital $BRMK” by Kevin Habek, is designed for entertainment and informational purposes only.