Ellington Residential Announces Estimated Book Value Per Share and Provides Business Updates Due to COVID-19
–Has Strategically Lowered Leverage and Enhanced Liquidity–
Book Value Per Share: As of
March 31, 2020, estimated book value per share1 was $11.33.
Dividend: The Company intends to pay its first quarter dividend of
$0.28per share in cash, on April 27, 2020as originally declared.
Liquidity: As of
March 31, 2020, the Company had unrestricted cash of approximately $60 million.
Unencumbered Assets: As of
March 31, 2020, in addition to its unrestricted cash, the Company had other unencumbered assets of an estimated $12 million.
Leverage and Financing: As of
March 31, 2020, the Company's debt-to-equity ratio and net mortgage assets-to-equity ratio2 had declined to an estimated 7.9:1 and 5.6:1, from 8.1:1 and 7.6:1, respectively, as of December 31, 2019. Adjusted for unsettled purchases and sales, the Company's debt-to-equity ratio was an estimated 7.2:1 as of March 31, 2020, as compared to 8.1:1 as of December 31, 2019. Substantially all of the Company's borrowings continue to be secured by agency pools. The Company has satisfied all of its margin calls under its financing arrangements.
"The spread of COVID-19 has led to extreme market volatility and dislocations in the financial markets, which have in turn caused significant yield spread widening on most fixed income assets, a sharp selloff in equities across the globe, volatility in interest rates, a severe drop in liquidity across virtually all asset classes, and significantly less transparency in the pricing of many asset classes," said
"Through the volatility, we have met all margin calls, strategically lowered our leverage, and maintained what we believe is a strong liquidity position. The lowering of our leverage has been strategic and opportunistic; none of our asset sales have been forced. Looking forward, we believe that the opportunities for future returns are strong given the significant repricing across most of our targeted asset classes, where we see substantial yield spread widening even after taking into account the anticipated fundamental credit effects of recent macro-economic developments. While the markets for many of our assets and the financing of those assets seem to have improved in recent days, high levels of uncertainty remain in the current environment.
"Finally, our leadership team has effectively implemented our business continuity plans, and we continue to be fully operational. Our thoughts and sincere wishes are for the health and well-being of all of our stakeholders and their families, and moreover to all those around the world who are suffering through this pandemic."
1This estimated book value per share includes the effect of the previously announced quarterly dividend of
2The Company defines its net mortgage assets-to-equity ratio as the net aggregate market value of its mortgage-backed securities (including the underlying market values of its long and short TBA positions) divided by total shareholders' equity.
Estimated book value per share is subject to change upon completion of the Company's month-end and quarter-end valuation procedures relating to its investment positions, and any such change could be material (particularly in light of the significant volatility, lack of pricing transparency, and market dislocations discussed above). There can be no assurance that the Company's estimated book value per share as of
The Company's estimates of the financial information above reflect estimates with respect to such information based on information currently available to management, and may vary from the Company's actual financial results as of and for the quarter ended
This press release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve numerous risks and uncertainties. The Company's actual results may differ from the Company's beliefs, expectations, estimates, and projections and, consequently, you should not rely on these forward-looking statements as predictions of future events. Forward-looking statements are not historical in nature and can be identified by words such as "believe," "expect," "anticipate," "estimate," "project," "plan," "continue," "intend," "should," "would," "could," "goal," "objective," "will," "may," "seek," or similar expressions or their negative forms, or by references to strategy, plans, or intentions. Examples of forward-looking statements in this press release include, without limitation, the Company's book value per share, its payment of dividends, its ability to meet margin calls, among others. The Company's results can fluctuate from month to month and from quarter to quarter depending on a variety of factors, some of which are beyond the Company's control and/or are difficult to predict, including, without limitation, changes in interest rates and the market value of the Company's securities, changes in mortgage default rates and prepayment rates, the Company's ability to borrow to finance its assets, changes in government regulations affecting the Company's business, the Company's ability to maintain its exclusion from registration under the Investment Company Act of 1940 and other changes in market conditions and economic trends, including changes resulting from the ongoing spread and economic effects of the novel coronavirus (COVID-19). Furthermore, forward-looking statements are subject to risks and uncertainties, including, among other things, those described in Item 1A of the Company's Annual Report on Form 10-K filed on
This release and the information contained herein do not constitute an offer of any securities or solicitation of an offer to purchase securities.
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