Arbor Realty Trust upgraded to Neutral while AGNC Investment and KKR Real Estate Finance Trust downgraded amid higher rate expectations.
J.P. Morgan revised its ratings on three mortgage real estate investment trusts ahead of second-quarter earnings. Arbor Realty Trust (ABR) was upgraded to Neutral, while AGNC Investment (AGNC) and KKR Real Estate Finance Trust (KREF) were downgraded to Neutral and Underweight, respectively.
The adjustments reflect shifting market expectations toward prolonged elevated interest rates. Mortgage REITs have faced pressure from higher borrowing costs, impacting net interest margins. The firm’s preview noted sector-specific risks tied to rate volatility and credit conditions.
No immediate market reaction was disclosed in the report.