Angel Oak Mortgage REIT, Inc.

What they do

The company acquires first and second lien non-QM loans and other mortgage-related assets, primarily sourced from the proprietary lending platform of its affiliate, Angel Oak Mortgage Lending. It holds these loans on its balance sheet, finances them through warehouse facilities and securitizations, and earns net interest income. The company is externally managed by Falcons I, LLC, an affiliate of Angel Oak Capital, and has elected to be taxed as a REIT.

Revenue drivers

• Residential whole loans — The largest asset class; as of June 30, 2026, held $438.8 million in loans awaiting securitization. In Q2 2026, purchased $204 million of newly-originated loans and HELOCs with a weighted average coupon of 7.34%.
• Securitization income — The company executes securitizations to finance its loan portfolio and generate income; in July 2026 issued AOMT 2026-3 ($279.6 million) and in August 2026 participated in AOMT 2026-HB1 ($221.4 million).
• Net interest income — Q2 2026 net interest income was $10.7 million, up 8% year-over-year; six-month net interest income was $22.9 million, up 14.1%.
• Distributable Earnings — Q2 2026 Distributable Earnings were $9.0 million, or $0.37 per diluted share, supporting the declared dividend of $0.32 per share.

Recent performance

For Q2 2026, the company reported GAAP net income of $3.4 million, or $0.14 per diluted share. GAAP book value was $10.13 per share and economic book value was $12.24 per share. Total assets were $2.99 billion and shareholder equity was $234.9 million as of June 30, 2026. Annual net income for 2025 was $44.0 million, with diluted EPS of $1.80. Operating cash flow was negative $407.0 million in 2025.

Strategy

The company focuses on acquiring credit-sensitive, newly-originated non-QM loans from its affiliated platform, aiming for attractive risk-adjusted returns. In Q2 2026, it monetized delevered retained bonds from a legacy securitization and redeployed capital into higher-yielding newly originated loans. It also repurchased approximately $15 million of common stock from a pre-IPO investor at accretive levels and secured additional spread reductions on its largest warehouse financing facility. Management emphasizes disciplined credit, expanding earnings, and staying active in the securitization market.

Risks

• Dependence on Manager and key personnel — The company relies on Falcons I, LLC and Angel Oak key personnel; termination of the Management Agreement or loss of personnel could harm operations.
• Affiliate conflicts and loan sourcing — Angel Oak Mortgage Lending is not contractually obligated to sell loans to the company, and conflicts with Angel Oak affiliates may restrict investment opportunities.
• Interest rate and credit spread volatility — Changes in interest rates and credit spreads can materially affect the value of the loan portfolio and financing costs.
• Financing and securitization availability — The company depends on warehouse facilities and securitizations; adverse conditions could limit access to financing or increase costs.

Outlook

Management states that the strategic transaction with Brookfield is not expected to change day-to-day management or investment strategy. They plan to continue active securitization activity, including the issuance of AOMT 2026-3 and AOMT 2026-HB1, to repay debt and fund new loan purchases. The company aims to maintain disciplined credit and expand earnings, while managing liquidity and leverage. Forward-looking statements are subject to risks including market conditions and the economy.