Invesco Mortgage Capital reported a sharp decline in book value and a negative economic return for the third quarter, as wider mortgage-security spreads and increased interest-rate volatility weighed on its portfolio. The mortgage real estate investment trust posted a net loss per common share after earning a profit in the prior quarter, while its dividend and earnings available for distribution edged down or remained steady.
The results cover the quarter ended Sept. 30, 2026. Management said it shifted some investments from Agency commercial mortgage-backed securities into Agency mortgage-backed securities late in the quarter.
Key details
- Net loss per common share was $0.92, compared with net income of $0.34 per share in the second quarter.
- Earnings available for distribution were $0.47 per common share, down from $0.50 in the prior quarter.
- Common dividends totaled $0.36 per share for the quarter, unchanged from the second quarter.
- Book value per common share fell to $6.74 from $8.03 at June 30, a decline of 16.1%.
- Economic return was negative 11.6%, compared with a positive 3.8% in the second quarter. The company’s measure combines the change in book value with dividends.
- Leverage increased: the debt-to-equity ratio rose to 7.6 times from 6.3 times, while the economic debt-to-equity ratio increased to 8.3 times from 7.5 times.
- The investment portfolio totaled $8.0 billion at quarter-end: $6.6 billion in Agency residential mortgage-backed securities (RMBS), $700 million in Agency “to-be-announced” securities (TBA), and $700 million in Agency commercial mortgage-backed securities (CMBS).
- The company had $401.3 million of unrestricted cash and unencumbered investments at quarter-end.
- Late in the quarter, Invesco Mortgage Capital reduced its Agency CMBS holdings and redeployed the proceeds into Agency RMBS.
Management said short- and long-term Treasury yields rose during the quarter, while interest-rate volatility picked up. Wider spreads on Agency RMBS, and more modest widening in Agency CMBS, hurt portfolio performance relative to Treasuries; improvement in swap spreads partly offset the impact.
Plain-English implications
The quarter brought a substantial reduction in per-share book value and a negative total economic return, even after dividends. Leverage also rose relative to equity. The company maintained its quarterly common dividend total, while shifting part of its portfolio toward Agency RMBS.