Newspaper article The Florida Times Union

Company Comfortable in Realm of REITs

Newspaper article The Florida Times Union

Company Comfortable in Realm of REITs

Article excerpt

Byline: Mark Basch, The Times-Union

Stock investors like to pore over the daily market listings in the newspaper to check the prices of their shares. But if you're checking up on Sunset Financial Resources Inc., you're probably not going to see much movement in the price, President and Chief Executive Officer Bert Watson says.

As a real estate investment trust, or REIT, Sunset is required to distribute at least 90 percent of its earnings to shareholders as dividends. So Watson says Sunset should appeal more to long-term investors interested in quarterly dividend checks, rather than big capital gains after a run-up in the stock price.

"We're a good investment vehicle for a dividend person," he said.

"I call us a retirement stock."

And even though Sunset has been in business for less than four months, Sunset shareholders should begin seeing those dividend checks soon. The Jacksonville-based company, which was formed to invest in mortgage loans, went public on March 17. Normally, shareholders can expect a few years of start-up losses from newly formed companies. But Sunset will be reporting a profit for the second quarter ended June 30, its first full quarter in business.

That's because of Sunset's basic business strategy of purchasing mortgage loans. The company expects to have 75 percent of its loan portfolio in residential loans (the rest will be commercial mortgage loans), which are considered a generally stable investment.

"The stock is backing what is the greatest asset in America," said Watson, referring to the individual homes that serve as collateral for the mortgage loans.

Sunset will make money from the spread between the interest homeowners pay on the mortgage loans and the costs Sunset incurs from acquiring the loans. As long as the borrowers are making the payments on the loans, Sunset will make money, and that's why it has become instantly profitable. …

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