News Article | April 25, 2017
How lithium-ion (Li-ion) batteries behave under short-circuit conditions can now be examined using a new approach developed by a UCL-led team to help improve reliability and safety. The use of high energy density Li-ion batteries is ubiquitous -- from powering portable electronics to providing grid-scale storage -- but defects can lead to overheating and explosions. Although catastrophic failure is extremely rare, recent high-profile cases including the recall of Samsung's Galaxy Note 7 smartphone line and the grounding of an aircraft fleet highlight why it's important to understand battery failure. "In previous work, we've tracked Li-ion battery failure caused by extreme heat in 3D and real-time, but this is the first time we've tracked what happens to the temperature and structure of cells when we short circuit the battery in a controlled way at an internal location of our choosing, initiating a series of potentially dangerous events," explained first author, Dr Donal Finegan (UCL, NASA and NREL). "This is of particular interest, as short-circuiting is thought to be responsible for a number of high-profile, real world failures. Knowing when and where the cell will fail has allowed us to characterise what happens during catastrophic failure in-depth using high-speed X-ray imaging. This provides us with new insights to help guide the design and development of safer and more reliable Li-ion batteries." The study published today in Energy and Environmental Science involved researchers from UCL, NASA-Johnson Space Center (USA), the U.S. Department of Energy's National Renewable Energy Laboratory (NREL, USA), WMG University of Warwick, Diamond Light Source (UK), The European Synchrotron (ESRF, France) and the National Physical Laboratory (NPL, UK). To induce failure, the team inserted a device capable of generating an internal short circuit on-demand and at a pre-determined location into commercially available Li-ion batteries, which are commonly used to power portable electronics and electric vehicles. Designed and patented by U.S. researchers Dr Eric Darcy (NASA) and Matthew Keyser (NREL), the temperature-activated device allows researchers to mimic hidden defects that can occur during the battery manufacturing processes, leading to a dangerous chain reaction of heat generation and battery failure. The team used the device to gain insight into cell design vulnerabilities by causing cell walls to rupture or cells to burst open. Using high-speed X-ray imaging, researchers monitored what happened to the structure of the cells in real-time, as the short circuit drove the catastrophic failure process which propagated through cells and modules. Individual cells, as well as small cell modules, were tested under conditions that represented a worst-case battery failure scenario. Short circuits were initiated inside the batteries at ~60 degrees C. During the failure process, cell temperatures reached in excess of 1085 degrees C. From analysing the high-speed imaging frame by frame, the team looked at the effects of gas pockets forming, venting and increasing temperatures on the layers inside two distinct commercial Li-ion batteries and identified consistent failure mechanisms. Corresponding author, Dr Paul Shearing (UCL) explained: "It is fascinating to see how quickly the process of thermal runaway can spread throughout these cells, which went from being completely intact to being completely destroyed within around one second. "This investigation provides the first description of how short-circuit failure propagates inside a cell in real time, this was only possible by combining the novel short-circuiting devices developed by NASA and NREL with ultra high-speed X-ray imaging. We were surprised to learn how susceptible neighbouring cells are to propagation of thermal runaway. This demonstrates the importance of isolating failing cells within larger battery packs and modules, which may be found in a range of applications from space suits to electric vehicles." The team now plans to examine how these new insights can be used to improve the safety of commercial battery and module designs. For example, researchers will study how the rupture of the highest energy density commercial cells can be prevented and how to reduce the risk of cell-to-cell propagation.
News Article | May 4, 2017
A team led by researchers from UCL has developed a new method for investigating the forces at work when lithium-ion batteries short-circuit. The study, published in Energy and Environmental Science, used a device patented by engineers from NASA and the US NREL (National Renewable Energy Laboratory) to initiate short circuits in batteries, mimicking the failures sometimes seen in consumer electronics and EVs. Using high-speed X-ray imaging, the researchers then monitored what happened to the structure of the cells in real-time, as the short circuit drove thermal runaway in the devices. “In previous work, we’ve tracked Li-ion battery failure caused by extreme heat in 3D and real-time, but this is the first time we’ve tracked what happens to the temperature and structure of cells when we short-circuit the battery in a controlled way at an internal location of our choosing, initiating a series of potentially dangerous events,” explained first author, Dr Donal Finegan (UCL, NASA and NREL). “This is of particular interest, as short-circuiting is thought to be responsible for a number of high-profile, real-world failures. Knowing when and where the cell will fail has allowed us to characterise what happens during catastrophic failure in-depth using high-speed X-ray imaging. This provides us with new insights to help guide the design and development of safer and more reliable Li-ion batteries.” Individual cells, as well as small cell modules, were tested under conditions that represented a worst-case battery failure scenario. When short circuits were initiated inside the batteries, cell temperatures reached in excess of 1085°C during failure. Using the high-speed X-ray imaging that captured 2000 frames per second, the team examined the effects of gas pockets forming, venting and increasing temperatures on the layers inside two different commercial Li-ion batteries. “It is fascinating to see how quickly the process of thermal runaway can spread throughout these cells, which went from being completely intact to being completely destroyed within around one second,” said UCL’s Dr Paul Shearing, corresponding author on the paper. “We were surprised to learn how susceptible neighbouring cells are to propagation of thermal runaway. This demonstrates the importance of isolating failing cells within larger battery packs and modules, which may be found in a range of applications from space suits to electric vehicles.” As well as UCL, NASA and NREL, the collaboration included researchers from researchers from the University of Warwick, Diamond Light Source, The European Synchrotron and the National Physical Laboratory (NPL).
News Article | April 25, 2017
The use of high energy density Li-ion batteries is ubiquitous – from powering portable electronics to providing grid-scale storage – but defects can lead to overheating and explosions. Although catastrophic failure is extremely rare, recent high-profile cases including the recall of Samsung's Galaxy Note 7 smartphone line and the grounding of an aircraft fleet highlight why it's important to understand battery failure. "In previous work, we've tracked Li-ion battery failure caused by extreme heat in 3D and real-time, but this is the first time we've tracked what happens to the temperature and structure of cells when we short circuit the battery in a controlled way at an internal location of our choosing, initiating a series of potentially dangerous events," explained first author, Dr Donal Finegan (UCL, NASA and NREL). "This is of particular interest, as short-circuiting is thought to be responsible for a number of high-profile, real world failures. Knowing when and where the cell will fail has allowed us to characterise what happens during catastrophic failure in-depth using high-speed X-ray imaging. This provides us with new insights to help guide the design and development of safer and more reliable Li-ion batteries." The study published today in Energy and Environmental Science involved researchers from UCL, NASA-Johnson Space Center (USA), the U.S. Department of Energy's National Renewable Energy Laboratory (NREL, USA), WMG at the University of Warwick, Diamond Light Source (UK), The European Synchrotron (ESRF, France) and the National Physical Laboratory (NPL, UK). To induce failure, the team inserted a device capable of generating an internal short circuit on-demand and at a pre-determined location into commercially available Li-ion batteries, which are commonly used to power portable electronics and electric vehicles. Designed and patented by U.S. researchers Dr Eric Darcy (NASA) and Matthew Keyser (NREL), the temperature-activated device allows researchers to mimic hidden defects that can occur during the battery manufacturing processes, leading to a dangerous chain reaction of heat generation and battery failure. The team used the device to gain insight into cell design vulnerabilities by causing cell walls to rupture or cells to burst open. Using high-speed X-ray imaging, researchers monitored what happened to the structure of the cells in real-time, as the short circuit drove the catastrophic failure process which propagated through cells and modules. Individual cells, as well as small cell modules, were tested under conditions that represented a worst-case battery failure scenario. Short circuits were initiated inside the batteries at ~60 degrees C. During the failure process, cell temperatures reached in excess of 1085 degrees C. From analysing the high-speed imaging frame by frame, the team looked at the effects of gas pockets forming, venting and increasing temperatures on the layers inside two distinct commercial Li-ion batteries and identified consistent failure mechanisms. Corresponding author, Dr Paul Shearing (UCL Chemical Engineering) explained: "It is fascinating to see how quickly the process of thermal runaway can spread throughout these cells, which went from being completely intact to being completely destroyed within around one second. "This investigation provides the first description of how short-circuit failure propagates inside a cell in real time, this was only possible by combining the novel short-circuiting devices developed by NASA and NREL with ultra high-speed X-ray imaging. We were surprised to learn how susceptible neighbouring cells are to propagation of thermal runaway. This demonstrates the importance of isolating failing cells within larger battery packs and modules, which may be found in a range of applications from space suits to electric vehicles." The team now plans to examine how these new insights can be used to improve the safety of commercial battery and module designs. For example, researchers will study how the rupture of the highest energy density commercial cells can be prevented and how to reduce the risk of cell-to-cell propagation. More information: Donal P. Finegan et al. Characterising thermal runaway within lithium-ion cells by inducing and monitoring internal short circuits, Energy Environ. Sci. (2017). DOI: 10.1039/C7EE00385D
News Article | May 3, 2017
Guernsey, 3 May 2017 - Eurocastle Investment Limited ("Eurocastle" or the "Company") today announces a successful completion of a €75 million financing on the secured portion of its Romeo NPL portfolio. Eurocastle received approximately €36 million or 50% of the net proceeds after costs and reserves. The Romeo portfolio was acquired jointly by Eurocastle and Fortress Affiliates, on an unlevered basis, as part of the doBank acquisition from UniCredit S.p.A. in October 2015. The portfolio had an original GBV of €3.3 billion, of which 42% was secured. Eurocastle Investment Limited is a publicly traded closed-ended investment company that focuses on investing in performing and non-performing loans and other real estate related assets primarily in Italy. The Company is Euro denominated and is listed on Euronext Amsterdam under the symbol "ECT". Eurocastle is managed by an affiliate of Fortress Investment Group LLC, a leading global investment manager. For more information regarding Eurocastle Investment Limited and to be added to our email distribution list, please visit www.eurocastleinv.com.
News Article | April 17, 2017
While permanent fencing systems are effective for marking property lines and providing safe play areas for children and pets, they can be very costly and labor-intensive to install and also to remove. Fortunately, an inventor from Fort Myers, Fla., has found a quicker and easier way to have fencing available on an as-needed basis. He developed HIDEAWAY FENCING to provide an enclosed area for temporary confinement of a pet or for privacy. As such, it prevents a dog from getting lost or running away. It is particularly ideal for gated communities that don’t allow permanent fencing. This innovative modular system provides an attractive appearance for both consumer and commercial applications. However, when retracted, the system is completely invisible. What’s more, it is durable and easy to install and operate. Other appealing features include its convenience, effectiveness and affordable price. It is usable with new-construction or existing pools, and it is great for contractors as an added selling feature. The inventor’s personal experience inspired the idea. “I live in a gated community where the fencing we need for our pet is not allowed,” he said. “This invention not only solves that problem but could provide a safe area for confining and protecting small children or simply for privacy.” The original design was submitted to the Naples office of InventHelp. It is currently available for licensing or sale to manufacturers or marketers. For more information, write Dept. 15-NPL-123, InventHelp, 217 Ninth Street, Pittsburgh, PA 15222, or call (412) 288-1300 ext. 1368. Learn more about InventHelp's Invention Submission Services at http://www.InventHelp.com - https://www.youtube.com/user/inventhelp # # #
News Article | April 17, 2017
At one time or another, many people have difficulty reading restaurant menus because of vision problems or lack of sufficient light. As a result they may not be sure exactly what they are ordering for dinner. Fortunately, an inventor from Naples, Fla., has found an easy way to solve that problem. She developed I MENU to help users read restaurant menus without reading glasses or other aids. As such, it allows users to enjoy dim, romantic restaurant atmospheres. It is particularly appealing to elderly users or anyone requiring vision correction because of the greater visibility it provides despite limited lighting. At the same time, it reduces eye strain and is attractive, comfortable and easy to use. In addition, this invention is convenient, effective and affordably priced. The inventor’s professional experience inspired the idea. “While working as a nurse, I often took my patients to restaurants and noticed they had difficulty reading the menus by themselves because of their poor eye sight and the dim lighting,” she said. The original design was submitted to the Naples office of InventHelp. It is currently available for licensing or sale to manufacturers or marketers. For more information, write Dept. 15-NPL-108, InventHelp, 217 Ninth Street, Pittsburgh, PA 15222, or call (412) 288-1300 ext. 1368. Learn more about InventHelp's Invention Submission Services at http://www.InventHelp.com - https://www.youtube.com/user/inventhelp # # #
News Article | May 4, 2017
OLD GREENWICH, Conn.--(BUSINESS WIRE)--Ellington Financial LLC (NYSE: EFC) today reported financial results for the quarter ended March 31, 2017. " For the first quarter, Ellington Financial had net income, including the full impact of mark-to-market adjustments, of $15.3 million or $0.47 per share," said Laurence Penn, Chief Executive Officer and President. " We are pleased to report that our dividend of $0.45 was more than covered by our earnings this quarter, as we reap the benefits of the meaningful transition of our Credit portfolio, which has been the focus of our efforts over the past several quarters. We generated a solid annualized economic return for the quarter of 10.4%, and our book value per share increased quarter over quarter, even after payment of our dividend. " The quarter's results were driven by strong performance within our Credit portfolio, in both loans and securities. We are benefiting from the robust pipeline of high-yielding loan assets that we have developed, and in addition we continue to opportunistically take advantage of the value that we see in several sectors of the securities markets, including selected CLO sectors. In the aggregate, the size of our long Credit portfolio grew to $640.3 million, a 17% increase from the fourth quarter. We funded this growth partially by using some of the cash that we had freed up last year, but also by taking advantage of the diverse financing facilities that we have in place. " To help continue to accommodate our loan pipelines, we added a non-mark-to-market term financing facility for our consumer loans during the quarter, and we also added a second financing facility for our non-QM mortgage loans. Our credit-related borrowings increased by approximately 20% quarter over quarter, and we plan to increase our assets and our leverage further as the year progresses. We believe that we are building a powerful and consistent earnings stream for shareholders, and we hope to continue to demonstrate the success of our transformation in the coming quarters." For most of the first quarter, both interest rate volatility and overall market volatility were low, but many measures of volatility increased towards the end of the quarter. The yield curve flattened over the course of the quarter as market participants ratcheted back their post-election expectations of economic growth and inflation in the U.S. economy. The 2-year U.S. Treasury yield rose 6 basis points to end the quarter at 1.25%, whereas the 10-year U.S. Treasury yield fell 5 basis points to 2.39%. Notably, global monetary policy has begun to diverge, as an interest rate hiking cycle is underway in the U.S. while the monetary policies of other major economies, including Europe and Japan, continue to be highly accommodative. Fixed-income credit spreads continued to tighten during the early part of the first quarter, but began widening in early March following intermeeting commentary from several Federal Reserve governors, who expressed support for an imminent increase in the federal funds rate (which did in fact come to pass at the March 15th FOMC meeting), and who suggested that tapering of the reinvestment program could begin later this year. Demand increased for floating-rate fixed income products, including CLOs and leveraged loans, as many market participants positioned themselves for a rising rate environment. Non-Agency RMBS spreads remained flat to slightly tighter in March despite the movements in the broader credit markets. Agency RMBS yield spreads widened over the course of the quarter, primarily in response to the more hawkish indications from the Federal Reserve. Mortgage rates declined over the course of the first quarter, with the Freddie Mac survey 30-year mortgage rate falling 18 basis points to end the quarter at 4.14%. Similar to the fourth quarter, prepayment speeds remained low, with the majority of Agency mortgages no longer economically refinanceable. The Mortgage Bankers Association Refinance Index increased 12.4% in the first quarter, but remained well below the previously elevated levels of mid-2016. Our Credit strategy generated gross income of $18.2 million for the first quarter, or $0.55 per share. The primary components of this strategy include: non-Agency RMBS; CMBS; performing, sub-performing, and non-performing residential and commercial mortgage loans; consumer loans and ABS; investments in mortgage-related entities; and credit hedges (including relative value trades involving credit hedging instruments). We also opportunistically invest in U.S. and European CLOs, distressed and non-distressed corporate debt, and corporate credit relative value trading when attractive opportunities in those markets arise. During the first quarter, we had strong performance from both our securities portfolios and our loan portfolios. As of March 31, 2017, our total long Credit portfolio (excluding corporate relative value trading positions, hedges, and other derivatives) increased to $640.3 million from $547.0 million as of December 31, 2016. Over the course of the first quarter, we increased our holdings of residential and commercial mortgage loans and REO, both U.S. and European CLOs, and corporate debt. We continued to net sell down our U.S. non-Agency RMBS, redeploying the net proceeds received into other Credit strategy assets. As the case has been for some time, the fundamentals underlying non-Agency RMBS continue to be strong, led by a stable housing market. As legacy non-Agency RMBS continue to amortize, the range of expected outcomes on many of these assets has narrowed significantly; this trend, together with the minimal level of new RMBS issuance generally, has caused yield spreads on legacy non-Agency RMBS to compress significantly, leading us to rotate much of our Credit portfolio into higher-yielding assets. Our non-Agency RMBS portfolio, though much smaller now, performed well in the first quarter, benefiting from strong net interest margins, appreciation from our held positions, and net realized gains from positions sold. While our non-Agency RMBS portfolio currently represents a much smaller portion of our total Credit portfolio than it ever has, we intend to continue to opportunistically increase and decrease the size of this portfolio as market conditions vary. As of March 31, 2017, our investments in U.S. non-Agency RMBS totaled $80.9 million, as compared to $102.7 million as of December 31, 2016. Currently, our credit hedges consist primarily of financial instruments tied to high-yield corporate credit, such as credit default swaps, or "CDS," on high-yield corporate bond indices, as well as tranches and options on these indices; short positions in and CDS on corporate bonds; and positions involving exchange traded funds, or "ETFs," of high-yield corporate bonds. Our credit hedges also currently include CDS tied to individual MBS or an index of several MBS, such as CMBX. We also opportunistically overlay our high-yield corporate credit hedges and mortgage-related derivatives with certain relative value long/short positions involving the same or similar instruments. Our combined credit hedges and relative value trading strategies generated a modest net loss for the quarter. In addition to credit hedges, we also use interest rate hedges in our Credit strategy in order to protect our portfolio against the risk of rising interest rates. The interest rate hedges in our Credit strategy, which currently consist primarily of interest rate swaps, did not meaningfully impact our results for the quarter. We also use foreign currency hedges in our Credit strategy, in order to protect our assets denominated in euros and British pounds against the risk of declines in those currencies against the U.S. dollar. We had net losses on our foreign currency hedges for the quarter, but these were more than offset by net gains on foreign currency-related transactions and translation. We believe that our publicly traded partnership structure affords us valuable flexibility, especially with respect to our ability to adjust our exposures nimbly by hedging many forms of risk, such as credit risk, interest rate risk, and foreign currency risk. During the first quarter, yield spreads on CMBS fluctuated. As a result of the implementation of risk retention regulations and higher interest rates, CMBS conduit issuance slowed during the first quarter, continuing recent lower issuance trends. First quarter conduit issuance totaled $8.7 billion, down 24% from the first quarter of 2016. Even though CMBS yield spreads generally tightened over the course of the quarter, growing concerns around the effects of competition from online retailers on retail commercial real estate, particularly weaker regional malls, weighed on certain CMBS deals and sectors. Our CMBS portfolio continues to consist entirely of post-crisis "B-pieces." B-pieces are the most subordinated (and therefore the highest yielding and riskiest) CMBS tranches. By purchasing new issue B-pieces, we believe that we are often able to effectively "manufacture" our risk more efficiently than what is generally available in the market, and to better target the collateral profiles and structures we prefer. We reduced our B-piece holdings during the quarter, generating net realized gains, as lower issuance created a relative scarcity of B-pieces and drove market yields tighter. For the first quarter, positive income on our CMBS assets was partially offset by losses on our hedges. The CMBS risk retention regulations took effect on December 24, 2016, and CMBS issuance since then has included a variety of risk retention approaches, such as "vertical," "horizontal," and combined vertical/horizontal, or "L-shaped," retained interest structures. The most prevalent form has been the vertical interest retention model, whereby sponsors retain 5% of the face amount of every tranche in order to satisfy risk retention. Under this approach, 95% of the B-piece remains tradeable in the same manner as B-pieces prior to the adoption of the CMBS risk retention regulations. We expect to continue buying tradeable B-pieces in this format and continue to evaluate opportunities created from the new risk retention regulations. As of March 31, 2017, our U.S. CMBS bond portfolio decreased to $31.3 million, as compared to $34.6 million as of December 31, 2016. As of March 31, 2017, our portfolio of small balance commercial mortgage loans included thirteen loans and ten real estate owned, or "REO," properties with an aggregate value of $86.7 million; by comparison, as of December 31, 2016, this portfolio included sixteen loans and one REO property with an aggregate value of $62.8 million. During the first quarter, we had strong performance from our portfolio. In addition to the net interest income on our portfolio, we recognized net realized gains as a result of several successful resolutions and REO conversions. Our REIT subsidiary also originated two high-yield "bridge loans" during the quarter. The number and aggregate value of loans held, as well as the income generated by our loans, may fluctuate significantly from period to period, especially as loans are resolved or sold. We expect to continue to emphasize purchasing distressed loans from banks and special servicers through negotiated transactions, as opposed to through widely circulated auctions where there is greater competition and less assurance that reserve prices will be reasonable. We also expect to continue to originate high-yielding bridge loans. We believe that opportunities will accelerate in both distressed loans and bridge loans, as many commercial mortgage loans—including many originated pre-crisis—reach their maturity but are unable to be refinanced. In Europe, while we remain active in the legacy structured product markets such as MBS and CLOs, we have generally been more focused on the non-performing loan market. Our European non-performing loans include non-performing consumer loans, non-performing residential mortgage loans, and non-performing commercial mortgage loans made to small- and medium-sized enterprises. We believe that non-performing loans in certain select markets, such as Spain and Portugal, will continue to present attractive opportunities, and we are actively pursuing additional opportunities in these and other countries. During the first quarter, we had strong performance from both our structured product portfolio and our non-performing loan portfolio. The first quarter is typically less active for European non-performing loans, and as a result we did not purchase any new loan packages during the quarter. In our MBS and CLO portfolios, however, we did actively trade our holdings in the first quarter; we were able to generate net gains and reinvest the proceeds into other attractively priced securities. We expect to continue to take an opportunistic approach with respect to our participation in the European markets. As of March 31, 2017, our investments in European non-dollar denominated assets totaled $81.3 million, as compared to $75.2 million as of December 31, 2016. As of March 31, 2017, our total holdings of European non-dollar denominated assets included $40.6 million in RMBS (mostly backed by non-performing loans), $10.0 million in CMBS, $27.6 million in CLOs, $3.0 million in ABS, and $0.2 million in distressed corporate debt. As of December 31, 2016, our total holdings of European non-dollar denominated assets included $40.9 million in RMBS (mostly backed by non-performing loans), $8.7 million in CMBS, $22.4 million in CLOs, $3.0 million in ABS, and $0.2 million in distressed corporate debt. These holdings include assets denominated in British pounds as well as in euros. We remain active in non-performing and re-performing U.S. residential mortgage loans, or "residential NPLs," and have continued to focus our acquisitions on smaller, less competitively-bid, and more attractively-priced mixed legacy pools sourced from motivated sellers. During the first quarter we closed on a purchase of a mixed residential NPL pool, which contains a combination of re-performing and non-performing assets. While relatively small, our residential NPL portfolio performed well for the quarter. As of March 31, 2017, we held $17.7 million in residential NPLs and related foreclosure property, as compared to $14.3 million as of December 31, 2016. During the first quarter, we continued to acquire consumer loans under three existing flow agreements. Our portfolio primarily consists of unsecured loans, but also includes auto loans, and it performed well in the first quarter. During the quarter, we entered into a secured borrowing facility with a major investment bank to finance a portfolio of unsecured loans that we purchase under one of our flow agreements. This facility features a term revolving period, during which we can vary our borrowings based on the size of the portfolio, followed by an amortization period, which we believe greatly reduces our financing risk as compared to a sudden maturity. Some of our other consumer loans are financed using reverse repurchase agreements, or through the securitization markets. Apart from our existing flow agreements, we are actively evaluating other opportunities in the space. As of March 31, 2017, our investments in U.S. consumer loans and ABS totaled $111.3 million, as compared to $111.4 million as of December 31, 2016. During the first quarter, we continued to purchase non-QM loans at a steady pace, and our outlook for growth in this sector remains positive. As of March 31, 2017, our non-QM mortgage loan portfolio totaled $96.2 million, as compared to $71.6 million as of December 31, 2016. To date, we have purchased approximately $129.4 million under our flow agreement, and loan performance has been excellent. The number of states where our origination partner is producing loans for us has increased according to expectations. We currently finance most of our non-QM loans under repo facilities with large financial institutions, and we continue to actively monitor the securitization market for a potential issuance after we reach critical mass. Over the past few months, we have begun purchasing non-distressed leveraged corporate loans. We are principally focused on senior secured loans that trade near par, with shorter maturities and low loan-to-value ratios. We believe that these assets offer excellent value in comparison to most high-yield corporate bonds, with their generally higher yield spreads and lower issue leverage. We are currently evaluating securing long-term, non-recourse financing for these assets through the CLO securitization market. While we are not currently making new acquisitions of distressed leveraged loans, we continue to hold a small portfolio of these assets. During the first quarter, our portfolio of performing and distressed leveraged loans performed well. As of March 31, 2017, our investments in performing and distressed leverage loans totaled $58.3 million as compared to $19.9 million as of December 31, 2016. We have also recently increased our purchase activity in U.S. CLOs. While our previous CLO trading activity was almost entirely within the legacy CLO space, our more recent activity has been primarily in 2012 and 2013 vintages. During the first quarter our U.S. CLO portfolio performed well, reflecting strong contributions from both net interest income and net realized and unrealized gains. As of March 31, 2017, our investments in U.S. CLOs totaled $42.9 million as compared to $22.5 million as of December 31, 2016. In the first quarter, we increased our investment in a reverse mortgage originator in which we have been invested since September 2014. We increased our invested capital in this originator from $12.5 million as of December 31, 2016 to $17.5 million as of March 31, 2017. Concurrently with our additional investment, another financial institution also increased its investment in the originator from $12.5 million to $17.5 million. With this increased capital base, this originator intends to significantly expand its footprint in the reverse mortgage origination space. For the last few quarters, we have become more active in a corporate credit relative value trading strategy, whereby we seek to identify and capitalize on short-term pricing disparities in the corporate credit markets. As a subset of this strategy, we often engage in "basis trading," where we hold long or short positions in the bonds of a corporate issuer and simultaneously hold offsetting positions in credit default swaps referencing the same corporate issuer. In the overall strategy, we typically use reverse repurchase agreements to finance the long corporate bond positions that we hold. During the first quarter, our corporate credit relative value trading strategy performed well. As of March 31, 2017, in this strategy the aggregate market value of our long corporate bonds was $90.1 million, the aggregate market value of our short corporate bonds was $(77.9) million, and the aggregate notional amount of our credit default swaps where we were long protection and short protection was $105.7 million and $(118.1) million, respectively. As of December 31, 2016, in this strategy the aggregate market value of our long corporate bonds was $49.6 million, the aggregate market value of our short corporate bonds was $(36.9) million, and the aggregate notional amount of our credit default swaps where we were long protection and short protection was $50.1 million and $(62.1) million, respectively. Our Agency strategy generated gross income of $1.9 million, or $0.06 per share, during the first quarter of 2017. Over the course of the quarter, positive net interest income on our portfolio was partially offset by net realized and unrealized losses on our Agency RMBS assets and net realized and unrealized losses on our interest rate hedges. During the first quarter, pay-ups on our specified pools decreased and the yield curve flattened relative to the prior quarter. Consistent with past quarters, as of March 31, 2017, our Agency RMBS consisted mainly of "specified pools." Specified pools are fixed-rate Agency pools consisting of mortgages with special characteristics, such as mortgages with low loan balances, mortgages backed by investor properties, mortgages originated through the government-sponsored "Making Homes Affordable" refinancing programs, and mortgages with various other characteristics. Our Agency strategy also includes RMBS that are backed by ARMs or Hybrid ARMs and reverse mortgages, and CMOs, including IOs, POs, and IIOs. Finally, our Agency strategy also includes interest rate hedges for our Agency RMBS, as well as certain relative value trading positions in interest rate-related and TBA-related instruments. During the first quarter, both realized and implied volatility remained low, but yield spreads for Agency RMBS widened. Agency RMBS investors are becoming increasingly focused on the timing and mechanism of the Federal Reserve's discontinuation of its current policy of reinvesting principal payments from its Agency RMBS holdings. While the Federal Reserve has indicated that it expects to continue its reinvesting policy " until normalization of the level of the federal funds rate is well under way," uncertainty around when that condition would be satisfied weighed on asset valuations during the first quarter. Despite the anticipated reduced support from the Federal Reserve, we do not expect that Agency RMBS yield spreads will widen substantially, as they did during the 2013 "Taper Tantrum," largely because the investor base for Agency RMBS has changed substantially since then. Agency RMBS ownership has largely shifted away from investors such as the GSEs, certain money managers, and mortgage REITs whose activities, including delta-hedging and utilization of high degrees of leverage, tend to amplify price swings during periods of high volatility. During the first quarter, mortgage rates remained relatively elevated from their pre-election levels, and prepayment rates declined, as many borrowers did have not an economic incentive to refinance their mortgages. The lower day count of the first quarter and the impact of winter seasonality were also factors contributing to the overall decline in prepayments. Since the generic pools that underlie TBAs tend to be more prepayment-sensitive than specified pools, the favorable decline in overall prepayment rates helped TBAs outperform specified pools over the course of the first quarter. This dampened our results for the first quarter, given that TBA short positions are a major component of our interest rate hedging portfolio. Pay-ups on our specified pools decreased slightly quarter over quarter. Pay-ups are price premiums for specified pools relative to their TBA counterparts. Average pay-ups on our specified pools decreased to 0.66% as of March 31, 2017, from 0.76% as of December 31, 2016. Notwithstanding the decline of the first quarter, we believe that the evolving landscape, including the Federal Reserve's eventual withdrawal from the TBA market, may provide substantial support to pay-ups. In addition, technological advances in the mortgage origination and servicing industry have tended to have a much greater impact on non-specified pools as compared to specified pools. We believe that this trend will continue, ultimately driving greater investor demand for specified pools relative to TBAs. During the quarter we continued to hedge interest rate risk in our Agency strategy, primarily through the use of interest rate swaps and short positions in TBAs, and to a lesser extent, short positions in U.S. Treasury securities. Within our hedging portfolio, our interest rate swaps generated net gains as swap rates increased across the yield curve, but those gains were offset by losses on our short positions in TBAs and U.S. Treasury securities. During the quarter, TBA roll prices increased and longer maturity U.S. Treasury yields declined, most notably in March, thereby leading to losses. In our hedging portfolio, the relative proportion (based on 10-year equivalents1) of TBA positions increased quarter over quarter relative to interest rate swaps. We believe that it is important to be able to hedge our Agency RMBS portfolio using a variety of instruments, including TBAs. We actively traded our Agency RMBS portfolio during the quarter in order to capitalize on sector rotation opportunities. Our portfolio turnover for the quarter was approximately 10% (as measured by sales and excluding paydowns), and we had net realized losses of $(0.7) million, excluding interest rate hedges. Our portfolio selection continues to be informed by mortgage industry trends—including significant enhancements in technology that are helping streamline the origination process—and we note that refinancing capacity remains high, with employment in the mortgage industry near a post-financial crisis high. As of March 31, 2017, our long Agency RMBS portfolio was $841.3 million, up from $827.4 million as of December 31, 2016. During the first quarter, we continued to focus our Agency RMBS purchasing activity primarily on specified pools, particularly those with higher coupons. As of March 31, 2017, the weighted average coupon on our fixed-rate specified pools was 4.0%. Our Agency RMBS portfolio continues to include a small allocation to Agency IOs, where we purchased additional assets in the first quarter. Some of the IOs that we purchased were backed by seasoned Ginnie Mae pools that have demonstrated some level of "burnout." Burnout often occurs after periods of high prepayments, when the mix of loans remaining in an RMBS pool becomes more concentrated in loans that tend to prepay more slowly; burnout can reflect a variety of factors, including the behavior of individual borrowers and overall trends in the mortgage banking industry. Our Agency IOs not only contribute to our portfolio in the form of their yields, but they also inherently serve as portfolio market value hedges in a rising interest rate environment. Our net Agency premium as a percentage of the fair value of our specified pool holdings is one metric that we use to measure the overall prepayment risk of our specified pool portfolio. Net Agency premium represents the total premium (excess of market value over outstanding principal balance) on our specified pool holdings less the total premium on related net short TBA positions. The lower our net Agency premium, the less we believe that our specified pool portfolio is exposed to market-wide increases in Agency RMBS prepayments. The net short TBA position related to our specified pool holdings had a notional value of $427.0 million and a fair value of $448.4 million as of March 31, 2017, as compared to a notional value of $370.6 million and a fair value of $390.3 million as of December 31, 2016. Our net Agency premium as a percentage of fair value of our specified pool holdings was approximately 2.9% as of March 31, 2017, as compared to 3.2% as of December 31, 2016. Excluding TBA positions used to hedge our specified pool holdings, our Agency premium as a percentage of fair value was approximately 5.5% and 5.7% as of March 31, 2017 and December 31, 2016, respectively. Our Agency premium percentage and net Agency premium percentage may fluctuate from period to period based on a variety of factors, including market factors such as interest rates and mortgage rates, and, in the case of our net Agency premium percentage, based on the degree to which we hedge prepayment risk with short TBA positions. We believe that our focus on purchasing pools with specific prepayment characteristics provides a measure of protection against prepayments. 1"10-year equivalents" for a group of positions represent the amount of 10-year U.S. Treasury securities that would experience a similar change in market value under a standard parallel move in interest rates. We prepare our financial statements in accordance with ASC 946, Financial Services—Investment Companies. As a result, our investments are carried at fair value and all valuation changes are recorded in the Consolidated Statement of Operations. We also measure our performance based on our diluted net-asset-value-based total return, which measures the change in our diluted book value per share and assumes the reinvestment of dividends at diluted book value per share and the conversion of all convertible units into common shares at their issuance dates. Diluted net-asset-value-based total return was 2.51% for the quarter ended March 31, 2017. Based on our diluted net-asset-value-based total return of 163.8% from our inception (August 17, 2007) through March 31, 2017, our annualized inception-to-date diluted net-asset-value-based total return was 10.6% as of March 31, 2017. The following table summarizes our operating results for the quarters ended March 31, 2017 and December 31, 2016: The following tables summarize our portfolio holdings as of March 31, 2017 and December 31, 2016: Non-Agency RMBS and CMBS are generally securitized in senior/subordinated structures, or in excess spread/over-collateralization structures. Disregarding TBAs, Agency RMBS consist primarily of whole-pool pass through certificates. We actively invest in the TBA market. TBAs are forward-settling Agency RMBS where the mortgage pass-through certificates to be delivered are "To-Be-Announced." Given that we use TBAs primarily to hedge the risk of rising interest rates on our long holdings, we generally carry a net short TBA position. The mix and composition of our derivative instruments may vary from period to period. The following table summarizes, as of March 31, 2017, the estimated effects on the value of our portfolio, both overall and by category, of hypothetical, immediate, 50 basis point downward and upward parallel shifts in interest rates. The following table summarizes our aggregate borrowings, including reverse repos and other secured borrowings for the three month period ended March 31, 2017 and December 31, 2016. Throughout the first quarter, borrowing costs increased as LIBOR rose, which impacted our Agency-related as well as Credit-related borrowings. However, the cost of funds for our Credit-related borrowings decreased slightly quarter over quarter, primarily because we had an increase in the amount of reverse repo borrowings in our corporate credit relative value trading strategy; the reverse repo borrowings in this strategy have much lower costs of funds than most of our other Credit-related borrowings. Excluding reverse repo on corporate bonds held in this strategy, our Credit-related average cost of funds increased to 3.47% for the first quarter, as compared to 3.44% for the fourth quarter. Our leverage ratio, excluding U.S. Treasury securities, increased to 1.70:1 as of March 31, 2017, as compared to 1.63:1 as of December 31, 2016. Our leverage ratio may fluctuate period over period based on portfolio management decisions, market conditions, and the timing of security purchase and sale transactions. The majority of our borrowed funds are in the form of reverse repos. The weighted average remaining term on our reverse repos as of March 31, 2017 increased to 59 days from 56 days as of December 31, 2016. In addition to borrowings under reverse repos, we had other secured borrowings related to certain of our loan portfolios in the amount of $61.8 million and $24.1 million as of March 31, 2017 and December 31, 2016, respectively. Our borrowings outstanding under reverse repos were with a total of nineteen counterparties as of March 31, 2017. As of March 31, 2017, we held liquid assets in the form of cash and cash equivalents in the amount of $104.2 million. Our expense ratio, which we define as our annualized base management fee and other operating expenses, but excluding interest expense, other investment related expenses, and incentive fees, as a percentage of average equity, was 2.8% for the quarter ended March 31, 2017 and 3.1% for the quarter ended December 31, 2016. The decrease in our expense ratio was principally due to a quarter-over-quarter decrease in professional fees. We did not incur incentive fee expense for either the first quarter of 2017 or fourth quarter of 2016. On May 1, 2017, our Board of Directors declared a dividend of $0.45 per share for the first quarter of 2017, payable on June 15, 2017 to shareholders of record on June 1, 2017. We expect to continue to recommend quarterly dividends of $0.45 per share until conditions warrant otherwise. The declaration and amount of future dividends remain in the discretion of the Board of Directors. Our dividends are paid on a quarterly basis, in arrears. On March 6, 2017, our Board of Directors approved the adoption of a new share repurchase program under which we are authorized to repurchase up to 1.7 million common shares. The program, which is open-ended in duration, allows us to make repurchases from time to time on the open market or in negotiated transactions. Repurchases are at our discretion, subject to applicable law, share availability, price and our financial performance, among other considerations. This plan supersedes the previous plan that had been approved on August 3, 2015. During the three month period ended March 31, 2017, we repurchased 130,488 shares at an average price per share of $15.73 and a total cost of $2.1 million. Following March 31, 2017 and through May 3, 2017 we repurchased an additional 51,518 shares at an average price per share of $15.81 and a total cost of $0.8 million. In addition to making discretionary repurchases during our open trading windows, we also entered into a 10b5-1 plan to increase the number of trading days available to implement these repurchases. Through May 3, 2017, we have repurchased approximately 128,267 shares under the current share repurchase program, for an aggregate cost of $2.0 million. Ellington Financial LLC is a specialty finance company that primarily acquires and manages mortgage-related and consumer-related assets, including residential mortgage-backed securities, residential and commercial mortgage loans, consumer loans and asset-backed securities backed by consumer loans, commercial mortgage-backed securities, real property, and mortgage-related derivatives. The Company also invests in corporate debt and equity, including distressed debt, collateralized loan obligations, non-mortgage-related derivatives, and other financial assets, including private debt and equity investments in mortgage-related entities. Ellington Financial LLC is externally managed and advised by Ellington Financial Management LLC, an affiliate of Ellington Management Group, L.L.C. We will host a conference call at 11:00 a.m. Eastern Time on Friday, May 5, 2017, to discuss our financial results for the quarter ended March 31, 2017. To participate in the event by telephone, please dial (877) 241-1233 at least 10 minutes prior to the start time and reference the conference passcode 3333998. International callers should dial (810) 740-4657 and reference the same passcode. The conference call will also be webcast live over the Internet and can be accessed via the "For Our Shareholders" section of our web site at www.ellingtonfinancial.com. To listen to the live webcast, please visit www.ellingtonfinancial.com at least 15 minutes prior to the start of the call to register, download, and install necessary audio software. In connection with the release of these financial results, we also posted an investor presentation, that will accompany the conference call, on its website at www.ellingtonfinancial.com under "For Our Shareholders—Presentations." A dial-in replay of the conference call will be available on Friday, May 5, 2017, at approximately 2 p.m. Eastern Time through Friday, May 12, 2017 at approximately 11:59 p.m. Eastern Time. To access this replay, please dial (800) 585-8367 and enter the passcode 3333998. International callers should dial (404) 537-3406 and enter the same passcode. A replay of the conference call will also be archived on our web site at www.ellingtonfinancial.com. 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. Actual results may differ from our 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 management's beliefs regarding the current economic and investment environment and our ability to implement our investment and hedging strategies, performance of our investment and hedging strategies, our exposure to prepayment risk in our Agency portfolio, statements regarding our net Agency premium, estimated effects on the fair value of our holdings of a hypothetical change in interest rates, statements regarding the drivers of our returns, our expected ongoing annualized expense ratio, and statements regarding our intended dividend policy including the amount to be recommended by management, and our share repurchase program. Our results can fluctuate from month to month and from quarter to quarter depending on a variety of factors, some of which are beyond our control and/or are difficult to predict, including, without limitation, changes in interest rates and the market value of our securities, changes in mortgage default rates and prepayment rates, our ability to borrow to finance our assets, changes in government regulations affecting our business, our ability to maintain our exclusion from registration under the Investment Company Act of 1940 and other changes in market conditions and economic trends. Furthermore, forward-looking statements are subject to risks and uncertainties, including, among other things, those described under Item 1A of the our Annual Report on Form 10-K filed on March 16, 2017 which can be accessed through our website at www.ellingtonfinancial.com or at the SEC's website (www.sec.gov). Other risks, uncertainties, and factors that could cause actual results to differ materially from those projected or implied may be described from time to time in reports we file with the SEC, including reports on Forms 10-Q, 10-K and 8-K. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
News Article | May 4, 2017
William Gorin, MFA's CEO, said, "In the first quarter, we continued to execute our strategy of targeted investment within the residential mortgage universe with a focus on credit sensitive assets. We acquired 3 year step-up securities and Credit Risk Transfer securities during the quarter. Further, we opportunistically sold $21.6 million of Non-Agency MBS issued prior to 2008 ("Legacy Non-Agency MBS"), realizing gains of $10.0 million for the quarter. This is the nineteenth consecutive quarter we have realized gains through selected sales of Legacy Non-Agency MBS based on our projections of future cash flows relative to market pricing. "MFA remains well-positioned to generate attractive returns despite historically low interest rates. Through asset selection and hedging strategy, the estimated net effective duration, a gauge of MFA's interest rate sensitivity, remains low and measured 0.69 at quarter-end. MFA's book value per common share increased to $7.66 versus $7.62 at the end of 2016. Leverage, which reflects the ratio of our financing obligations to equity, was 2.9:1 at quarter-end." Craig Knutson, MFA's President and COO, added, "MFA's portfolio asset selection process continues to emphasize residential mortgage credit exposure while seeking to minimize sensitivity to interest rates. As housing prices maintain their upward trend and borrowers repair their credit and balance sheets, MFA's Legacy Non-Agency MBS portfolio continues to outperform our credit assumptions. In the first quarter of 2017, we reduced our credit reserve on this portfolio by $9.3 million. Also, our credit sensitive residential whole loans offer additional exposure to residential mortgage credit while affording us the opportunity to improve outcomes through sensible and effective servicing decisions." MFA's Legacy Non-Agency MBS had a face amount of $3.3 billion with an amortized cost of $2.4 billion and a net purchase discount of $921.6 million at March 31, 2017. This discount consists of a $653.3 million credit reserve and other-than-temporary impairments and a $268.2 million net accretable discount. We believe this credit reserve appropriately factors in remaining uncertainties regarding underlying mortgage performance and the potential impact on future cash flows. Our Legacy Non-Agency MBS have underlying mortgage loans that are on average approximately eleven years seasoned and approximately 12.4% are currently 60 or more days delinquent. The Agency MBS portfolio had an amortized cost basis of 103.8% of par as of March 31, 2017, and generated a 1.98% yield in the first quarter. The Legacy Non-Agency MBS portfolio had an amortized cost of 72.4% of par as of March 31, 2017, and generated a loss-adjusted yield of 8.90% in the first quarter. At the end of the first quarter, MFA held approximately $2.5 billion of 3 year step-up securities. These securities had an amortized cost of 99.9% of par and generated a 4.02% yield for the quarter. In addition, at March 31, 2017, our investments in credit sensitive residential whole loans totaled $1.3 billion. Of this amount, $573.7 million is recorded at carrying value, or 86.0% of the interest-bearing unpaid principal balance, and generated a loss-adjusted yield of 5.95% (5.65% net of servicing costs) during the quarter, and $775.2 million is recorded at fair value on our consolidated balance sheet. On this portion of the portfolio, we recorded gains for the quarter of approximately $13.8 million, primarily reflecting changes in the fair value of the underlying loans and coupon interest payments received during the quarter. For the three months ended March 31, 2017, MFA's costs for compensation and benefits and other general and administrative expenses were $12.0 million, or an annualized 1.57% of stockholders' equity as of March 31, 2017. The following table presents the weighted average prepayment speed on MFA's MBS portfolio. As of March 31, 2017, under its swap agreements, MFA had a weighted average fixed-pay rate of interest of 1.89% and a floating receive rate of 0.94% on notional balances totaling $2.9 billion, with an average maturity of 32 months. The following table presents MFA's asset allocation as of March 31, 2017, and the first quarter 2017 yield on average interest earning assets, average cost of funds and net interest rate spread for the various asset types. At March 31, 2017, MFA's $6.5 billion of Agency and Legacy Non-Agency MBS were backed by Hybrid, adjustable and fixed-rate mortgages. Additional information about these MBS, including average months to reset and three-month average CPR, is presented below: MFA Financial, Inc. plans to host a live audio webcast of its investor conference call on Thursday, May 4, 2017, at 11:00 a.m. (Eastern Time) to discuss its first quarter 2017 financial results. The live audio webcast will be accessible to the general public over the internet at http://www.mfafinancial.com through the "Webcasts & Presentations" link on MFA's home page. To listen to the conference call over the internet, please go to the MFA website at least 15 minutes before the call to register and to download and install any needed audio software. Earnings presentation materials will be posted on the MFA website prior to the conference call and an audio replay will be available on the website following the call. When used in this press release or other written or oral communications, statements which are not historical in nature, including those containing words such as "will," "believe," "expect," "anticipate," "estimate," "plan," "continue," "intend," "could," "would," "should," "may" or similar expressions, are intended to identify "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and, as such, may involve known and unknown risks, uncertainties and assumptions. Statements regarding the following subjects, among others, may be forward-looking: changes in interest rates and the market value of MFA's MBS; changes in the prepayment rates on the mortgage loans securing MFA's MBS, an increase of which could result in a reduction of the yield on MBS in our portfolio and could require us to reinvest the proceeds received by us as a result of such prepayments in MBS with lower coupons; credit risks underlying MFA's assets, including changes in the default rates and management's assumptions regarding default rates on the mortgage loans securing MFA's Non-Agency MBS and relating to MFA's residential whole loan portfolio; MFA's ability to borrow to finance its assets and the terms, including the cost, maturity and other terms, of any such borrowings; implementation of or changes in government regulations or programs affecting MFA's business; MFA's estimates regarding taxable income, the actual amount of which is dependent on a number of factors, including, but not limited to, changes in the amount of interest income and financing costs, the method elected by MFA to accrete the market discount on Non-Agency MBS and residential whole loans and the extent of prepayments, realized losses and changes in the composition of MFA's Agency MBS, Non-Agency MBS and residential whole loan portfolios that may occur during the applicable tax period, including gain or loss on any MBS disposals and whole loan modification, foreclosure and liquidation; the timing and amount of distributions to stockholders, which are declared and paid at the discretion of MFA's Board of Directors and will depend on, among other things, MFA's taxable income, its financial results and overall financial condition and liquidity, maintenance of its REIT qualification and such other factors as the Board deems relevant; MFA's ability to maintain its qualification as a REIT for federal income tax purposes; MFA's ability to maintain its exemption from registration under the Investment Company Act of 1940, as amended (or the "Investment Company Act"), including statements regarding the Concept Release issued by the Securities and Exchange Commission ("SEC") relating to interpretive issues under the Investment Company Act with respect to the status under the Investment Company Act of certain companies that are engaged in the business of acquiring mortgages and mortgage-related interests; MFA's ability to successfully implement its strategy to grow its residential whole loan portfolio, which is dependent on, among other things, the supply of loans offered for sale in the market; expected returns on our investments in non-performing residential whole loans ("NPLs"), which are affected by, among other things, the length of time required to foreclose upon, sell, liquidate or otherwise reach a resolution of the property underlying the NPL, home price values, amounts advanced to carry the asset (e.g., taxes, insurance, maintenance expenses, etc. on the underlying property) and the amount ultimately realized upon resolution of the asset; and risks associated with investing in real estate assets, including changes in business conditions and general economic conditions. These and other risks, uncertainties and factors, including those described in the annual, quarterly and current reports that MFA files with the SEC, could cause MFA's actual results to differ materially from those projected in any forward-looking statements it makes. All forward-looking statements speak only as of the date on which they are made. New risks and uncertainties arise over time and it is not possible to predict those events or how they may affect MFA. Except as required by law, MFA is not obligated to, and does not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/mfa-financial-inc-announces-first-quarter-2017-financial-results-300451082.html
News Article | February 16, 2017
Home Values, Long Term Appreciation Lower in High Risk Zip Codes; Underwater Rates, Share of Cash Sales Higher In High Risk Zip Codes IRVINE, CA--(Marketwired - February 16, 2017) - ATTOM Data Solutions, curator of the nation's largest fused property database, today released its third annual Environmental Hazards Housing Risk Index, which shows that 17.3 million single family homes and condos with a combined estimated market value of $4.9 trillion are in zip codes with high or very high risk for at least one of four environmental hazards: Superfunds, brownfields, polluters or poor air quality. The 17.3 million single family homes and condos in high-risk zip codes represented 25 percent of the 68.1 million single family homes and condos in the 8,642 zip codes analyzed. A risk index for each of the four environmental hazards was calculated for each of the 8,642 zip codes, and the indexes were each divided into five categories of risk: Very Low, Low, Moderate, High and Very High. See full methodology below. Of the 8,642 zip codes analyzed, 6,238 with 50.8 million single family homes and condos (75 percent) worth a combined $16.9 trillion did not have a High or Very High risk index for any of the four environmental hazards. "Home values are higher and long-term home price appreciation is stronger in zip codes without a high risk for any of the four environmental hazards analyzed," said Daren Blomquist, senior vice president at ATTOM Data Solutions. "Corresponding to that is a higher share of homes still seriously underwater in the zip codes with a high risk of at least one environmental hazard, indicating those areas have not regained as much of the home value lost during the downturn. "Conversely, home price appreciation over the past five years was actually stronger in the higher-risk zip codes, which could reflect the strong influence of investors during this recent housing recovery," Blomquist added. "Environmental hazards likely impact owner-occupants more directly than investors, making the latter more willing to purchase in higher-risk areas. The higher share of cash sales we're seeing in high-risk zip codes for environmental hazards also suggests that this is the case." "State and federal regulations require some specific environmental disclosures, when the seller has knowledge, however many buyers take environmental hazards into consideration when making an offer on a home or when negotiating the post inspection agreement," said Matthew L. Watercutter, senior regional vice president and broker of record for HER Realtors, covering the Dayton, Columbus and Cincinnati markets in Ohio. "The most common environmental hazards buyers inspect for are lead based paint, radon and mold. There are many other environmental issues buyers should consider, such as inspecting and testing for past meth labs in the property, the presence of asbestos and in rural areas and buried fuel tanks. Best practice as a buyer is to do your due diligence during the contract period, and know what you are buying." A total environmental hazard index combining the four individual hazard indexes was also calculated for each of the 8,642 zip codes nationwide. Zip codes with the 10 highest Total Environmental Hazard Index values were in Denver; San Bernardino, California; Curtis Bay, Maryland (in the Baltimore metro area); Santa Fe Springs, California (in the Los Angeles metro area); Fresno, California; Niagara Falls, New York; Saint Louis; Mira Loma, California (in the Riverside-San Bernardino metro area); Hamburg, Pennsylvania (in the Reading metro area); and Tampa, Florida. The Superfund Risk Index for each zip code was based on the number of Superfund sites on the National Priorities List in 2016 as determined by the Environmental Protection Agency (EPA). See full methodology below. Similar to the overall risk index, the Superfund Risk Index was divided into five categories of risk, from Very Low to Very High. Over the last 10 years median home prices have risen the most in Very Low risk zip codes, with the rise in prices lower in each subsequent category of higher risk. Median home prices in Very High risk zip codes are down 1.5 percent from 10 years ago. Homeowners in Very Low risk zip codes have seen the biggest percentage gain in home value since purchase (24.4 percent) while homeowners in High risk zip codes have seen the smallest percentage gain in home value since purchase (19.6 percent). Foreclosure rates are highest in Very High risk zip codes (1.0 percent), while foreclosure rates in Moderate zip codes are lowest (0.5 percent). The Brownfield Risk Index for each zip code was based on the number of Brownfield sites in 2016 as defined by the EPA, and the index was divided into five categories of risk from Very Low to Very High. See full methodology below. In zip codes in the Very High risk category, 17.2 percent of properties were seriously underwater, the highest of any risk category, with the share of underwater homes decreasing with each subsequent risk category lower. In zip codes in the Very Low risk category, 8.9 percent of properties were seriously underwater. Over the last 10 years, median home prices have risen the most in Very Low risk zip codes (2.8 percent), while median home prices in Very High risk zip codes are still 2.8 percent below 10 years ago, the biggest decrease of any risk category. Home sellers in 2016 in Very Low risk zip codes realized the biggest percentage gain in home price since purchase (25.3 percent), while homeowners in High risk zip codes realized the smallest gain (18.6 percent). Homeowners in Very High risk zip codes realized an average percent gain since purchase of 18.9 percent. The Polluters Risk Index for each zip code was based on the number of facilities included on the EPA's Toxic Release Inventory (TRI) list in 2015 (the most recent data available at the time of the analysis), and the index was divided into five categories of risk from Very Low to Very High. See full methodology below. Home sellers in 2016 in Very Low risk zip codes realized the biggest percentage gain in home price since purchase (27.7percent), with homeowners realizing lower percentage gains in each subsequent risk category higher. Homeowners in Very High risk zip codes realized a 16.6 percent average gain in home price since purchase. In zip codes in the Very High risk category for polluters, 12.7 percent of properties were seriously underwater, the highest of any risk category, with the share of underwater homes decreasing with each subsequent risk category lower. In zip codes in the Very Low risk category, 9.2 percent of properties were seriously underwater. The Air Quality Risk Index for each zip code was based on the percentage of days in 2015 that were deemed to not have good air quality by the EPA, and the index was divided into five categories of risk from Very Low to Very High. See full methodology below. There was only one zip code in the Very Low category, so not enough data to be statistically viable nationwide. Median home prices in Low risk zip codes for air quality have risen the most over the past year and past 10 years of any risk categories, with lower price appreciation in each subsequent risk category higher for both one year and 10 years. Home sales volume has increased 26 percent over the past five years in both Low and Moderate risk categories, while home sales volume has increased just 3.3 percent over the past five years in Very High risk zip codes and increased 16.5 percent in High risk zip codes. For the report, ATTOM Data Solutions analyzed 8,642 U.S. zip codes with sufficient housing trend data for the following four environmental hazards: poor air quality, superfund sites, polluters, brownfields and former drug labs. A housing risk index was calculated for each of the four types of hazards in each of the 8,642 zip codes. The maximum index value for each index was 250 and the minimum value was 0. A combined environmental hazard index comprised of these four factors and with a maximum possible score of 1,000 was assigned to each zip code. The highest actual score for any zip code was 455. Each individual natural hazard index accounted for 25 percent of the combined index. Poor Air Quality: This percentage is derived from the average percentage of days without significant traces of Carbon Monoxide, Fine Particles, Particulate Matter, Nitrogen Dioxide, Ozone, or Sulfur Dioxide in the air as reported by the Environmental Protection Agency. For more details, visit http://www.epa.gov/airquality/cleanair.html. Superfunds on National Priorities List: is the list of national priorities among the known releases or threatened releases of hazardous substances, pollutants, or contaminants throughout the United States and its territories. The NPL is intended primarily to guide the EPA in determining which sites warrant further investigation. For more details, visit http://www.epa.gov/superfund/sites/npl/. Brownfield Site: With certain legal exclusions and additions, the term "brownfield site" means real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant. For more details, visit http://epa.gov/brownfields/index.html. Polluters: Data from the Toxic Release Inventory (TRI) Program that requires certain industrial facilities that manufacture or process more than 25,000 pounds of a TRI-listed chemical or otherwise uses more than 10,000 pounds of a listed chemical in a given year to report that to the Environmental Protection Agency. For more details, visit http://www2.epa.gov/toxics-release-inventory-tri-program. ATTOM Data Solutions is the curator of the ATTOM Data Warehouse, a multi-sourced national property database that blends property tax, deed, mortgage, foreclosure, environmental risk, natural hazard, health hazards, neighborhood characteristics and other property characteristic data for more than 150 million U.S. residential and commercial properties. The ATTOM Data Warehouse delivers actionable data to businesses, consumers, government agencies, universities, policymakers and the media in multiple ways, including bulk file licenses, APIs and customized reports. ATTOM Data Solutions also powers consumer websites designed to promote real estate transparency: RealtyTrac.com is a property search and research portal for foreclosures and other off-market properties; Homefacts.com is a neighborhood research portal providing hyperlocal risks and amenities information; HomeDisclosure.com produces detailed property pre-diligence reports. ATTOM Data and its associated brands are cited by thousands of media outlets each month, including frequent mentions on CBS Evening News, The Today Show, CNBC, CNN, FOX News, PBS NewsHour and in The New York Times, Wall Street Journal, Washington Post, and USA TODAY. Investors, businesses and government institutions can contact ATTOM Data Solutions to purchase the full dataset behind the Environmental Hazards Housing Risk Index, including data at the state, metro, county and zip code level. The data is also available via bulk license or in customized reports. For more information contact our Data Solutions Department at 800.462.5125 or firstname.lastname@example.org.
News Article | March 1, 2017
Erosion caused by the impact of water droplets on component surfaces can lead to failures in key technological applications. For example, in steam generating plants, the leading edge of turbine blades suffer major erosion damage from the steam driving the turbines, requiring costly maintenance and repair with consequent loss of generating capacity. Similarly, erosion caused by the impact of rain drops on wind turbine rotor blades can change the profile of the blades, leading to significant loss in power generation capability. Blades are treated with low energy polymer coatings, but currently these coatings only last about 10 years before the blades need refurbishment. For both of these applications, new materials solutions are required. In response, NPL has designed and manufactured a rotating arm test system to evaluate the effectiveness of these new materials. The test system consists of an aerodynamically-shaped rotating arm with samples at either end, a metre apart. The arm is rotated at speeds up to 10,000 rpm in an evacuated chamber, and a jet of water droplets is injected across the samples, causing erosion from the impact with the droplets. The damage is monitored by measuring the progression of mass loss throughout the test and the wear mechanisms are assessed by optical and scanning electron microscopy. The test system has already been used in several collaborative projects looking at the development of new material systems. In one of these projects, new coatings for steam turbine blade applications were designed and tested, and good progress in extending the durability of the coatings was obtained, with the lifetime of some candidate coatings being ten times that of the uncoated steel. Further work to determine the relationship between the make-up of new advanced materials and their water droplet erosion performance is now being carried out using high-speed imaging, combined with advanced microstructural characterisation techniques. Explore further: Wind turbines with flexible blades found to be more efficient More information: Assessing the risk to engineering materials from water impact: www.adjacentopenaccess.org/research-science-innovation-news/assessing-risk-engineering-materials-water-impact/31741/