Company: MFAN
Filing Date: 2025-02-20
Form Type: 10-K
Source: 0001055160-25-000004
Chunk: 217

Company: MFA FINANCIAL, INC.
Filing Date: 2025-02-20
Form: 10-K
Item: Item 1
Chunk 217
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. federal income tax purposes.  In order to maintain our qualification as a REIT, we must comply with a number of requirements under federal tax law, including that we must distribute at least 90% of our annual REIT taxable income to our stockholders.  We have elected to treat certain of our subsidiaries as taxable REIT subsidiaries (or TRS).  In general, a TRS may hold assets and engage in activities that a REIT or qualified REIT subsidiary (or QRS) cannot hold or engage in directly, and a TRS may generally engage in any real estate or non-real estate related business.  

We are a holding company and conduct our real estate finance businesses primarily through wholly-owned subsidiaries, so as to maintain an exemption from registration under the Investment Company Act of 1940, as amended (or the Investment Company Act) by ensuring that less than 40% of the value of our total assets, exclusive of U.S. Government securities and cash items (which we refer to as our adjusted total assets for Investment Company Act purposes), on an unconsolidated basis, consist of “investment securities” as defined by the Investment Company Act.  We refer to this test as the “40% Test.”  

INVESTMENT STRATEGY

We primarily invest in and finance, through our various subsidiaries, residential mortgage assets.  During 2024 we acquired approximately $2.6 billion of residential whole loans.  This includes $1.5 billion of loans originated by our wholly-owned subsidiary, Lima One, which has funded more than $6.4 billion of loans since July 2021, when we fully acquired Lima One.  At the end of 2024, residential whole loan investments comprised approximately 77% of our assets and 62% of our allocated net equity.  During 2025, assuming economic conditions continue to support markets for residential mortgage assets, we expect to continue pursuing investment opportunities primarily focused on residential whole loans as market opportunities arise.  We expect that our investment activities will continue to be financed primarily through a combination of securitization transactions, term loan warehouse financing and repurchase agreement financing. 

At December 31, 2024, our total investment-related assets were comprised of the following: $8.8 billion, or approximately 83%, of residential whole loans (compared to $9.0 billion, or 90%, at December 31, 2023); $1.5 billion, or 14%,