Angel Oak Mortgage REIT, Inc. (NYSE: AOMN)

Angel Oak Mortgage REIT, Inc. is a real estate finance company that focuses on acquiring and investing in first and second lien non QM loans and other mortgage related assets in the United States mortgage market. The company seeks to make credit sensitive investments primarily in newly originated non QM loans and other mortgage assets that are made to higher quality borrowers. It sources these assets through the proprietary mortgage lending platform of its affiliate Angel Oak Mortgage Lending and through other originators via its relationship with Angel Oak Capital. Angel Oak Mortgage REIT, Inc. is externally managed and advised by Falcons I, LLC, a registered investment adviser under the Investment Advisers Act of 1940 and an affiliate of Angel Oak Capital. The company commenced operations in September 2018 and completed an initial public offering on June 21 2021, listing its common stock on the New York Stock Exchange. Angel Oak Mortgage REIT, Inc. elected to be taxed as a REIT for United States federal income tax purposes starting with its taxable year ended December 31 2019 and operates with the goal of generating attractive risk adjusted returns for shareholders through cash distributions and capital appreciation across interest rate and credit cycles.

Angel Oak Mortgage REIT, Inc. generates revenue primarily from the interest it earns on the mortgage loans it holds and from the returns on bonds that are retained after securitizing the underlying loan collateral. The company finances the acquisition of mortgage loans through short term funding lines and then seeks to secure long term securitization funding to lock in its cost of capital. In addition to interest income, the company may realize gains from hedging instruments such as interest rate swaps, caps, floors, futures, forwards and options that are used to mitigate interest rate risk and credit risk. As of December 31 2025 the company’s portfolio of target assets totaled approximately $2.7 billion, consisting mainly of residential mortgage loans owned directly, residential mortgage loans held in securitization trusts and mortgage backed securities. Since commencing operations in September 2018 through December 31 2025 the company has participated in 21 rated securitization transactions. The combination of interest spread and hedging results drives the cash distributions that are paid to shareholders as part of its REIT structure.

Angel Oak Mortgage REIT, Inc. operates in a competitive landscape that includes other mortgage REITs, specialty finance companies, public and private investment funds, commercial banks and various financial institutions. Many of these competitors have access to lower cost funding sources and are not bound by the same REIT compliance requirements or the Investment Company Act exclusion that the company must maintain. Despite these challenges Angel Oak Mortgage REIT, Inc. believes it possesses several competitive advantages derived from its close affiliation with Angel Oak Mortgage Lending and Angel Oak Capital. This relationship provides proprietary access to a steady flow of newly originated non QM loans, transparency in the underwriting process and the ability to select assets that meet its desired credit and return profile. Additionally the company benefits from Angel Oak’s analytical investment tools, extensive relationships in the financial community, financing and capital structuring expertise, investment surveillance capabilities and operational know how. The firm’s vertically integrated platform allows it to oversee loan origination, underwriting and financing, which enhances its ability to source high quality assets efficiently. These strengths enable the firm to identify attractive risk adjusted opportunities and to manage its portfolio effectively across changing interest rate and credit environments.

The company’s customers are primarily borrowers who obtain non QM mortgage loans to finance residential real estate purchases or refinancing. These borrowers are characterized as higher quality individuals who may not qualify for conventional qualified mortgages due to factors such as self employment income, limited documentation or unique credit profiles but who demonstrate sufficient ability to repay. In addition to borrowers, Angel Oak Mortgage REIT, Inc. indirectly serves investors who purchase the mortgage backed securities issued through its securitization trusts, as these investors receive cash flows derived from the underlying loan portfolios. The investor base includes insurance companies, pension funds, hedge funds and other institutional investors seeking exposure to non QM mortgage credit. While the filing does not disclose specific borrower or investor names, the description indicates a focus on residential mortgage consumers and institutional investors seeking exposure to non QM mortgage credit.