Cherry Hill Mortgage Shifts to Risk-On Strategy, Partners with Real Genius Amid Strong Liquidity

Cherry Hill Mortgage Investment Corporation (CHMI) has shifted to a risk-on investment strategy and partnered with Real Genius as liquidity remains strong. President and CEO Jeffrey B. Lown described the quarter as volatile but stabilizing by quarter end. The company has been impacted by initial tariff announcements in April but has since stabilized.

Cherry Hill Mortgage Investment Corporation (CHMI) has reported its second quarter 2025 results, showcasing a strategic shift towards a risk-on investment strategy and a strategic partnership with Real Genius LLC. The company’s President and CEO, Jeffrey B. Lown, described the quarter as volatile but stabilizing by the end of June.

The company reported a GAAP net loss applicable to common stockholders of $0.9 million, or $0.03 per share. Despite this net loss, earnings available for distribution (EAD) attributable to common stockholders were $3.2 million, or $0.10 per diluted share. Common book value per share stood at $3.34 at June 30, 2025, following a quarterly dividend of $0.15 per share.

Cherry Hill Mortgage Investment Corporation also entered into a strategic partnership and financing agreement with Real Genius LLC, a Florida-based digital mortgage technology company, in May 2025. This partnership generated additional equity proceeds of approximately $8.9 million. The company’s aggregate portfolio leverage stood at 5.3x at June 30, 2025, while unrestricted cash amounted to $58.0 million.

The company’s net interest income for the second quarter was $2.6 million, and net servicing income was $9.0 million. However, the company reported a net realized loss on residential mortgage-backed securities (RMBS) of $2.1 million and a net unrealized loss on derivatives of $19.1 million. These losses were partially offset by a net unrealized gain on RMBS of $3.5 million and a net realized gain on derivatives of $14.8 million.

The unpaid principal balance for the mortgage servicing rights (MSR) portfolio stood at $16.6 billion as of June 30, 2025, with a carrying value of $224.6 million. The net interest spread for the RMBS portfolio was 2.61%, and the debt-to-equity ratio on the aggregate portfolio ended the quarter at 5.3x.

Cherry Hill Mortgage Investment Corporation has been impacted by initial tariff announcements in April but has since stabilized. The company has been prudent in managing its portfolio, using interest rate swaps, TBAs, and Treasury futures to mitigate duration and interest rate risks. As of June 30, 2025, the company held interest rate swaps with a notional amount of $799.7 million, TBAs with a notional amount of ($413.5) million, and Treasury futures with a notional amount of $60.2 million.

The company's GAAP book value was $3.34 per diluted share, net of the second quarter dividend. Dividends were declared and paid for common stockholders, as well as for holders of Series A and B Preferred Stock.

Cherry Hill Mortgage Investment Corporation believes that providing investors with EAD, in addition to related GAAP financial measures, may offer insights into the company’s ongoing operational performance. However, it is important to note that EAD is not a substitute for GAAP net income or a measure of the company’s liquidity.

References:
[1] https://www.businesswire.com/news/home/20250807020110/en/Cherry-Hill-Mortgage-Investment-Corporation-Announces-Second-Quarter-2025-Results