Terms

Series

7.25% Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock

Liquidation Preference

$25.00

Coupon Rate

7.25%

Rate Type

Fixed To Floating

Annual Dividend

$1.81

Payment Frequency

Quarterly

Cumulative

Yes

Perpetual

Yes

Convertible

Yes

Callable

Yes

First Call Date

January 27, 2025

First Call Price

$25.00

Capital Stack Ranking

Junior To: All Existing And Future Indebtedness Of Two Harbors Investment Corp., All Indebtedness And Liabilities Of Subsidiaries, Any Future Senior Stock; Pari Passu With: Series A Preferred Stock (8.125% Fixed-To-Floating), Series B Preferred Stock (7.625% Fixed-To-Floating), Any Future Parity Stock; Senior To: Common Stock, Any Future Junior Stock

Regulatory (Basel III) Call

No

Tax Classification

Reit Passthrough

Qualifies for QDI

No

Qualifies for DRD

No

Shares Offered

11,000,000

Prospectus Summary

Two Harbors Investment Corp. (NYSE: TWO), a Maryland REIT focused on Agency RMBS, non-agency securities, and mortgage servicing rights, is offering 11,000,000 shares of its 7.25% Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock at a $25.00 liquidation preference. The stock pays a fixed 7.25% per annum ($1.8125/share annually, $0.453125 quarterly) until January 27, 2025, after which the rate converts to three-month LIBOR plus 501.1 basis points, paid quarterly on the 27th of January, April, July, and October. The first call date is January 27, 2025 at $25.00. The preferred is cumulative — meaning any missed dividends accrue and must be paid in full before any distributions can be made on common stock or other junior securities, providing holders meaningful protection against dividend interruption. The Series C Preferred Stock ranks senior to Two Harbors' common stock and any future junior stock, and on parity with its outstanding Series A (8.125%) and Series B (7.625%) preferred stock. It is, however, effectively junior to all existing and future indebtedness of Two Harbors and its subsidiaries — as of September 30, 2017, that indebtedness totaled approximately $23.4 billion (largely repurchase agreements and FHLB advances). Because Two Harbors is a holding company whose cash flow depends entirely on distributions from operating subsidiaries, holders face structural subordination risk: subsidiary creditors must be satisfied before any funds can flow up to service the preferred. There is no bank regulatory capital call; instead, the issuer may redeem early solely if necessary to preserve its REIT tax qualification — a narrower and less issuer-favorable trigger than a typical Tier 1 capital call. At par, the Series C yields 7.25% in the fixed period, with quarterly payments on the 27th of each quarter month; record dates are set by the board in accordance with the articles supplementary. Because Two Harbors is a REIT, its dividends are generally treated as ordinary income rather than qualified dividend income (QDI) — investors cannot apply the preferential 15%/20% QDI tax rate, nor can corporate holders claim the dividends-received deduction (DRD). Dividend interruption could occur if Two Harbors lacks distributable cash, though the cumulative structure ensures arrears accumulate rather than being permanently forfeited. After six missed quarterly payments, preferred holders gain the right to elect two directors — a governance remedy rather than a contractual payment remedy.

Summarized from the SEC prospectus filing.

Distribution History

Floating Rate Terms

Conversion Terms

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

As a cumulative preferred, unpaid dividends on the Series C accrue and must be paid in full before any dividends may be paid on junior stock (common stock or future junior preferred). If six or more quarterly dividends are in arrears, holders gain the right to elect two additional board directors until arrears are cleared.

Other Preferreds from Two Harbors Investments Corp

Div Score Breakdown

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