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Chimera Investment lost $194 million available to common shareholders in the third quarter as swings in interest rates and mortgage prices hit the value of its investments.
The mortgage-focused real estate investment trust reported book value of $14.82 a common share, down from $17.75 at the end of June. For investors buying the shares for income, the results show why a dividend does not erase the risk of a shrinking investment portfolio.
Chimera’s Thursday earnings release put its quarterly economic return at negative 13.98%. That measure combines the change in book value with the common dividend. It is not the stock’s market-price return.
Income did not offset valuation losses
The loss available to common shareholders was $2.31 a diluted share, compared with a loss of 27 cents a year earlier.
Earnings available for distribution, an adjusted measure, were $32 million, or 38 cents per adjusted diluted share. That compares with 46 cents in the second quarter, according to the company’s published financial figures.
Chimera says this adjusted measure helps assess the portfolio’s ability to generate income for common shareholders. It excludes certain items in reported earnings and is not the same as taxable income or a guarantee of future dividends.
Net interest income rose to $71.2 million from $65 million a year earlier. But the company recorded $391 million of unrealized losses on financial instruments carried at fair value. Gains on derivatives partly offset that pressure.
Chief executive Phillip Kardis said widening credit spreads and interest-rate volatility put pressure on book value. Chimera said it maintained a strong liquidity position during the quarter.
Mortgage lending expands
The company also continued to build its loan business. Its residential origination operation produced $1.1 billion of loans, up 27% from the comparable HomeXpress standalone period a year earlier.
That comparison needs care: Chimera acquired HomeXpress on October 1, 2025, so the earlier standalone figures were not part of Chimera’s consolidated results.
The origination business reported a $2 million net loss. Investor loans made up 55% of production, consumer non-qualified mortgages 42% and qualified mortgages 3%.
Chimera committed to purchase $797 million of loans during the quarter for its securitization program, bringing year-to-date purchases to $1.1 billion. It also shifted its agency mortgage-backed securities toward higher coupons, saying about 90% of its specified pools now carry coupons of at least 5%.
The company finances and invests in mortgages and mortgage-backed securities. Its results are a reading on that financing business, not a direct measure of home prices or rents.
JBizNews Desk | New York
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