Two Harbors Investment Corp · NYSE:TWO
Two Harbors Investment — Investor Presentation (April 2013)
19 slides from Two Harbors Investment's investor presentation, Apr 15, 2013
Slide 1: Mortgage REIT Primer
Two Harbors Investment Corp. Mini Webinar Series March 2013 Mortgage REIT Primer
Slide 2: Welcoming Remarks
Welcoming Remarks July Hugen Director of Investor Relations 2
Slide 3: Safe Harbor Statement
Safe Harbor Statement Forward-Looking Statements This presentation includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from expectations, estimates and projections and,
Slide 4: Real Estate Investment Trust (REIT)
Real Estate Investment Trust (“REIT”) A Real Estate Investment Trust (REIT) is a company that owns, and in many cases operates, income- producing real estate. Some REITs also engage in financing real estate.1 (1) Source: NAREIT. http://www.reit.com (2) Source: KBW Mortgage REIT Primer, June 2012. ▪
Slide 5: Industry History
Industry History 1960 The REIT law is passed on September 14, 1960. REITs were created by Congress in an effort to give all investors the opportunity to invest in real estate. 1986 The Tax Reform Act of 1986 establishes that REITs can own, operate, and manage commercial properties. 1999 The REIT Mod
Slide 6: Large Market Sector
Large Market Sector The total equity market capitalization of the REIT industry is just over $600 billion, of which mortgage REITs represent approximately $59 billion.1 Top 10 Largest Equity REITs Top 10 Largest Mortgage REITs (1) Source: NAREIT. http://www.reit.com . Market cap as of 12/31/2012 (2)
Slide 7: Mortgage REIT Market Capitalization
$22 $59 $0 $10 $20 $30 $40 $50 $60 $70 1971 1976 1981 1986 1991 1996 2001 2006 2011 $ (b il ) Mortgage REITs Two Harbors’ inception in 2009 (1) Source: KBW research Assets secured by mortgage loans on commercial properties. Three types: Agency REITs, non-Agency REITs and Hybrid REITs. There are two
Slide 8: Long-Term Opportunity: Holders of Mortgage Debt Outstanding
0% 5% 10% 15% 20% 25% 30% 35% 40% Commercial Banks GSEs & Federal Reserve Other Insurance Cos. Credit Unions Non-Bank Lenders RMBS REITs Foreign Investors Pension / Mutual Funds Long-Term Opportunity Holders of Mortgage Debt Outstanding1 As of Third Quarter 2012 (1) Source: Federal Reserve, Fannie M
Slide 9: Two Harbors Investment Corp.
Two Harbors Investment Corp. 9 Mission is to be recognized as the industry- leading hybrid mortgage REIT Objectives are to optimize shareholder value and provide attractive risk-adjusted returns Mission-Based Strategy Two Harbors Today Largest hybrid mortgage REIT focused on investing in resid
Slide 10: Portfolio Composition
110 110 Portfolio Composition (1) “IO” is defined as Interest Only securities; includes Agency Derivatives (“IIOs”) of $301 million as of December 31, 2012. (2) Home Equity Conversion Mortgage loans (“HECM”) are loans that allow the homeowner to convert home equity into cash collateralized by the va
Slide 11: Portfolio Performance History
110 110 110 Portfolio Performance History 3.5% 3.5% 3.3% 3.1% 2.9% 9.7% 9.7% 9.6% 9.6% 9.5% 4.8% 4.9% 4.6% 4.2% 4.0% – 5.0% 10.0% 15.0% Q4-2011 Q1-2012 Q2-2012 Q3-2012 Q4-2012 Agency RMBS Non-Agency RMBS Aggregate Portfolio $9.08 $9.38 $8.70 $9.24 $9.44 $9.90 $9.73 $9.30 $9.03 $9.67 $9.94 $11.44 $11
Slide 12: Delivering Total Return
-10% 10% 30% 50% 70% 90% 110% Delivering Total Return 12 (1) Two Harbors’ total stockholder return is calculated for the period October 29, 2009 through March 28, 2013. Total stockholder return is defined as capital gains on stock price including dividends. Source: Bloomberg. (2) Two Harbors’ total
Slide 13: Mortgage REIT Risks
Mortgage REIT Risks Exposure to change in rates Uncertain cash flows Borrower defaults cause losses Mortgage Credit Risk Prepayment Risk Interest Rate Risk Low interest rate exposure Portfolio focused on prepayment stability and upside Attractive loss-adjusted yields Interest Rate Risk Low Prepaymen
Slide 14: Attractive Returns With Lower Risk
Attractive Returns With Lower Risk Attractive & Comparable Dividend Yield1… … With Lower Leverage3… … Less Interest Rate Exposure 4 … … And Less Prepayment Risk 5 5.6% 17.3% 6.0% 15.9% 6.0% 18.7% 6.6% 19.0% – 5% 10% 15% 20% 15.8% 13.9% 15.4% 13.6%12.3% 11.9% 19.9%2 12.8% – 5% 10% 15% 20% Note: All p
Slide 15: Summary
Summary ▪ A REIT is a company that owns, and in many cases operates, income-producing real estate. ▪ There are 2 types of REITs: Equity REITs and Mortgage REITs. ― Mortgage REITs include commercial mortgage REITs and residential mortgage REITs. ― Residential Mortgage REITs include Agency mortgage RE
Slide 16: Contact Information
Contact Information 16 For further information, please contact: July Hugen Director of Investor Relations Two Harbors Investment Corp. 612.629.2514 July.Hugen@twoharborsinvestment.com Margaret M. Field Investor Relations Two Harbors Investment Corp. 212.364.3663 Margaret.Field@twoharborsinvestment.c
Slide 17: Appendix
Appendix Ww
Slide 18: Common REIT Acronyms
Common REIT Acronyms 18 ▪ Residential Mortgage-Backed Security (“RMBS”): Securities that are secured by a mortgage or collection of mortgages. ▪ Government Sponsored Enterprise (“GSE”): Refers to Freddie Mac and Fannie Mae. GSE’s are not guaranteed by the U.S. government but have implicit credit pro
Slide 19: Other Resources
Other Resources Two Harbors Investment Corp. http://www.twoharborsinvestment.com National Association of REITs (NAREIT) website: http://www.REIT.com U.S. Securities and Exchange Commission (SEC): http://www.investor.gov/investing-basics/investment-products/real-estate-investment-trusts-reits http://
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