Chimera Investment (NYSE:CIM) operates as an internally-managed real estate investment trust (REIT) in the United States. The company was incorporated in 2007 with the purpose of investing in mortgage loans, asset securitization, and mortgage-backed securities.
Chimere Investment Corporation is based in New York, New York, trades on the New York Stock Exchange, and works to provide attractive risk-adjusted returns via dividends and capital preservation. As of late 2022, the company had more than $3 billion in capitalization including common and preferred stock, and had paid more than $5.8 billion in dividends.
The company has elected to be taxed as a REIT which is a tax-sheltered vehicle for real estate investment. As such, the company must invest at least 75% of its assets in real estate and return 90% of its taxable income to shareholders in the form of dividends. The only drawback is that shareholders are responsible for income taxes on the earnings.
The company’s strategy is to invest in a portfolio of mortgage assets, including residential mortgage loans, agency, and non-agency residential mortgage-backed securities, and agency commercial mortgage-backed securities. Income is generated by the net spread between the income earned on investments and the costs of financing.
Chimera Investment Corporation finances its operations through secured pools of residential and commercial mortgage loans and by leveraging other real estate-related securities as well. The strategy not only provides a stable source of financing but also provides the flexibility to enhance returns or mitigate risk as necessary.
One risk of Chimera Investment Corporation is its exposure to US credit risk retention rules. These rules limit the company’s ability to sell or hedge a large portion of its RMBS portfolio which means it may have to hold some assets it would otherwise sell. In regard to portfolio diversification, RMBS historically make up about 11% of the portfolio while securitized loans comprise 80% to 90% of total holdings.
Chimera Investment Corporation investors may participate in a share repurchase plan as well. Investors of Record can participate directly in the plan while Beneficial Owners may request their shares be transferred to the agent of record and become Investors of Record.
