Terms

Series

Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock

Liquidation Preference

$25.00

Rate Type

Fixed To Floating

Payment Frequency

Quarterly

Cumulative

Yes

Perpetual

Yes

Convertible

Yes

Callable

Yes

First Call Date

April 27, 2027

First Call Price

$25.00

Capital Stack Ranking

Junior To: Any Senior Stock Issued In The Future, All Existing And Future Indebtedness Of Two Harbors Investment Corp., Indebtedness Of Existing And Future Subsidiaries; Pari Passu With: Any Parity Stock Issued In The Future; Senior To: Common Stock, Any Junior Stock Issued In The Future

Regulatory (Basel III) Call

No

Tax Classification

Reit Passthrough

Qualifies for QDI

No

Qualifies for DRD

No

Prospectus Summary

Two Harbors Investment Corp., a Maryland-based mortgage REIT, is offering Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock with a $25.00 liquidation preference and $0.01 par value. The security pays a fixed dividend rate (left blank in this preliminary filing) through April 27, 2027, then converts to three-month LIBOR plus a fixed spread for the remaining life. It is callable at $25.00 on or after April 27, 2027. The stock is cumulative, meaning any missed dividends accumulate and must be paid in full before any distributions can be made to common shareholders — providing meaningful protection against temporary dividend suspensions. The Series A Preferred Stock sits above common equity but below all debt obligations in Two Harbors' capital stack. As of December 31, 2016, the company carried approximately $16.4 billion in consolidated indebtedness (repurchase agreements, FHLB advances, revolving credit facilities, and securitization borrowings), all of which is senior to this preferred. Critically, Two Harbors is a holding company whose cash flow depends on distributions from subsidiaries — creating structural subordination risk. There is no bank regulatory capital redemption provision; however, the issuer may redeem the preferred prior to April 27, 2027 solely to preserve its REIT tax status, and may also redeem within 120 days of a qualifying Change of Control. The exact coupon rate was not set at the time of this preliminary filing, so the precise yield at par cannot be stated. Dividends are paid quarterly on the 27th of April, July, October, and January, with record dates set by the board. As a REIT-issued preferred, dividends are generally taxed as ordinary income and do not qualify for the preferential 15%/20% qualified dividend income rate available to C-corporation preferred dividends, nor for the corporate dividends-received deduction. Dividend payments to common shareholders are blocked until all accumulated and unpaid Series A dividends are satisfied, and holders gain the right to elect two board directors if six or more quarterly dividends are missed.

Summarized from the SEC prospectus filing.

Distribution History

Floating Rate Terms

Conversion Terms

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If dividends on the Series A Preferred Stock are not paid for six or more full quarterly periods, holders gain the right to elect two additional directors; as a cumulative preferred, unpaid dividends accumulate and no dividends may be paid on junior stock (common) until all accumulated preferred dividends are paid.

Other Preferreds from Two Harbors Investments Corp

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 48 (Average)