Real estate investment trust yields robust rewards despite risk | Armonk Real Estate

Sinking money into real estate investment trusts is considered to be one of Wall Street’s most complex investments.
Owning shares of REITs gives investors an opportunity to get investment exposure to real estate, including apartments, shopping centers and office buildings. But they’ve gained a reputation of being risky and confusing — especially after the industry was pummeled during the last real estate crash.
Even Lloyd McAdams, chief executive of Anworth Mortgage Asset Corp., makes no bones about saying his Santa Monica REIT does carry some risk. But it also has given shareholders high dividend yields as the real estate market has recovered.
“The potential magnitude of the risks we have to manage around has been the most daunting aspect of managing the business,” said McAdams, who has been CEO since the company was founded in 1998.
Market shocks have been a challenge for Anworth, whose portfolio holds residential real estate where the mortgages are secured by government guarantees from Freddie Mac,Fannie Mae and Ginny Mae.
Anworth’s stock price has had big gyrations because of the company’s ties to the housing market. The stock at one point traded above $15 before the housing crisis walloped the industry. It now trades for about $5 a share.


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