Company: AOMN
Filing Date: 2025-05-16
Form Type: 424B5
Source: 0001104659-25-050029
Chunk: 124

Company: Angel Oak Mortgage REIT, Inc.
Filing Date: 2025-05-16
Form: 424B5
Chunk 124
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 offered to us and purchased by us as regular interests in REMICs, and we intend to treat such CRT securities as qualifying assets that produce qualifying income under the respective 75% tests applicable to assets and income for REIT qualification purposes.

Subject to qualifying and maintaining our qualification as a REIT under the Code, we may also invest in consumer loans and securities collateralized by a pool of assets, such as loans, credit card debt, royalties or receivables, but typically excluding mortgages. We will not treat these items as qualifying for purposes of the 75% asset test and the income from such items as qualifying for purposes of the 75% gross income test. However, we will, to the extent permitted, treat the income from such items as qualifying for purposes of the 95% gross income test. Additionally, these items will be subject to the limitations with respect to securities of a single issuer set forth above. See “— Asset Tests” above.

Phantom Income from Our Acquisition and Holding of Subordinated RMBS and CMBS and Excess MSRs

The tax accounting rules with respect to the timing and character of income and losses from our acquisition and holding of subordinated RMBS and commercial mortgage-backed securities (“CMBS”) may result in adverse tax consequences. We will be required to include in income accrued interest, original issue discount (“OID”) and, potentially, market discount (each of which will be ordinary income), with respect to subordinated RMBS and CMBS we hold, in accordance with the accrual method of accounting. Income will be required to be accrued and reported, without giving effect to delays or reductions in distributions attributable to defaults or delinquencies on the underlying loans, except to the extent it can be established that such losses are uncollectible. Accordingly, we may incur a diminution in actual or projected cash flow in a given year as a result of an actual or anticipated default or delinquency but may not be able to take a deduction for the corresponding loss until a subsequent tax year. While we generally may cease to accrue interest income if it reasonably appears that the interest will be uncollectible, the IRS may take the position that OID must continue to be accrued in spite of its uncollectibility until our investments in subordinated RMBS and CMBS are disposed of in a taxable transaction or become worthless.

In addition to the foregoing, we intend to treat excess MSRs that we acquire as ownership interests in the interest payments made on the underlying pool of mortgage loans, akin to an “interest only