Investment Strategy

Our objective is to provide consistent returns to our investments through a combination of dividends and capital appreciation.

We invest in commercial real estate that has solid returns either issued or guaranteed as to principal and interest by or Agency, we typically have a coupon rate that is fixed for an initial period (typically three, five seven or ten years) and thereafter resets at regular intervals, or fixed rate mortgage loans.

Our investment strategy is designed to:

• build an investment portfolio consistlly seeking to generate an attractive risk-adjusted investment income;

• manage financing, interest and prepayment rate risks;

• capitalize on discrepancies in the relative valuations in the market;

• manage cash flow so as to provide for regular quarterly distributions to stockholders;

• limit credit risk;

• minimize the impact that changing interest rates have on our net investment income;

• cause us to maintain our qualification as a real estate investment

• cause us to remain exempt from the registration requirements

Our income is generated primarily from the net spread, or difference, between the interest income we earn on our investment portfolio and the cost of our borrowings and hedging activities. We believe that the best approach to generating a positive net spread is to manage our liabilities to mirror, as often as possible, the interest rate risks of our investments. To seek to achieve this result, we employ short-term financing in combination with hedging techniques.