Two Harbors Investment
Two Harbors Investment, founded in 2009, operates as a leading MSR and Agency RMBS REIT, focusing on managing interest rate and prepayment risks while investing in mortgage servicing rights and mortgage-backed securities.
Company History
Two Harbors Investment was founded in 2009 and has since developed into a leading MSR + Agency RMBS REIT, focusing on managing interest rate and prepayment risk. Over the years, the company has made strategic acquisitions and expansions, including acquiring RoundPoint Mortgage Servicing LLC in 2023 and CYS Investments, Inc. in 2018. In 2017, Two Harbors formed Granite Point Mortgage Trust, Inc. to expand into commercial real estate lending. Earlier, the company participated in the formation of Silver Bay Realty Trust Corp. in 2012 and transferred its common stock listing to the New York Stock Exchange from the NYSE Amex in 2011.
Services
Two Harbors Investment focuses on managing interest rate and prepayment risk to invest in mortgage servicing rights (MSR) and mortgage-backed securities (Agency RMBS). The company employs a paired construction of MSR with Agency RMBS to generate attractive risk-adjusted returns and mitigate exposure to interest rate and mortgage spread fluctuations. Financing for these investments is secured through repurchase agreements, revolving credit facilities, and collateralized securitization transactions.
Products
Two Harbors Investment primarily invests in mortgage servicing rights (MSR) and Agency Residential Mortgage-Backed Securities (Agency RMBS). The Agency RMBS investments are guaranteed by government-sponsored entities such as Ginnie Mae, Fannie Mae, and Freddie Mac. Additionally, the company has expanded its portfolio with securitizations backed by prime jumbo residential mortgage loans and has developed initiatives in commercial real estate lending through Granite Point Mortgage Trust, Inc.
Financial Performance
In 2023, Two Harbors Investment reported a total economic return on book value of (3.2%). The company strategically managed its capital structure through issuing shares and purchasing preferred stock, resulting in a total dividend distribution of $1.95 per common share, equivalent to an average dividend yield of 14%. By the end of 2023, the book value was reported as $15.21 per share. Previous financial maneuvers include raising $235 million through common stock offerings in 2010 and issuing convertible debt and preferred stock to enhance the balance sheet.
Strategic Acquisitions and Initiatives
Two Harbors Investment has made significant acquisitions and launched various initiatives to enhance its operational and financial performance. In 2018, the company acquired CYS Investments, Inc., increasing its market capitalization and liquidity. It enhanced its operational platform by acquiring RoundPoint Mortgage Servicing LLC in 2023. In 2014, Two Harbors launched a commercial real estate lending initiative with a $500 million equity capital commitment. Between 2013 and 2016, the company undertook several securitizations backed by prime jumbo residential mortgage loans and discontinued its mortgage loan conduit to reduce costs and complexity.