Mortgage REIT Vs. Equity REIT: How These 2 Firms Have Yields Higher Than The Risk-Free Rate

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Zinger Key Points
  • Broadmark Realty Capital is offering a dividend yield of 16.28% or 84 cents per share annually, making monthly payments.
  • In the second quarter, Gladstone Commercial purchased five fully-occupied industrial properties for $38.1 million in the aggregate.

When investing in real estate investment trust, there is a common misunderstanding about the the difference between mortgage REITs and equity REITs.

Mortgage REITs do not own any properties, rather they earn money from the interest on outstanding loans. With equity REITs, the firm owns the real estate and must record the change in the accretive value of the property, whether it increases or decreases in value.

Essentially, the market price of a mortgage REIT should never trade at a premium to book value more than its dividend, as the firm has only issued out so much debt. Unless the mortgage REIT issues more debt or increases its dividends, the book value or market price should not increase.

Check out the differences between this mortgage REIT and equity REIT.

Broadmark Realty Capital Inc BRMK is offering a dividend yield of 16.28% or 84 cents per share annually, making monthly payments, with a decent track record of increasing its dividends for two consecutive years.

Broadmark Realty Capital is an internally managed mortgage real estate investment trust offering short-term, first deed of trust loans secured by real estate to fund the acquisition, renovation, rehabilitation or development of residential or commercial properties.

“We closed on over $196 million of investments in the second quarter, at a weighted average yield greater than 10.0%. We accomplished this while remaining selective and disciplined with our underwriting to ensure we effectively navigate the rapidly changing and challenging capital markets and macro-economic environment,” stated Brian Ward, the company's CEO.

On June 30, 2022, Broadmark had $171 million in total liquidity, with $578.5 million of unfunded loan commitments on the balance sheet.

Also Read: A Complete Guide To Real Estate Investing 
Gladstone Commercial Corporation GOOD is offering a dividend yield of 9.42% or $1.50 per share annually, utilizing monthly payments, with a solid track record of increasing its dividends for two consecutive years.

Gladstone Commercial is an equity real estate investment trust, which engages in investing and owning net leased industrial, commercial and retail property and making long-term industrial and commercial mortgage loans.

As of June 30, 2022, Gladstone’s portfolio consisted of 136 properties in 27 states totaling approximately 17.0 million square feet.

In the second quarter, Gladstone purchased five fully-occupied industrial properties for $38.1 million in the aggregate, with approximately 606,303 square feet of total rented space.

Photo: IM_photo via Shutterstock

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