So the thing about that one is that it's a mortgage REIT, not an actual REIT.
I think I wrote about those elsewhere, but the deal is that instead of owning actual houses or office blocks or whatever, it owns a heavily leveraged portfolio of mortgage-backed bonds (and because of a quirk in the US REIT laws, that means it can still call itself a REIT and get REIT-y tax treatment as long as it pays out all the mortgage bond coupons in dividends).
The phat coupon comes along because they are LEVERAGED UP TO THE EYEBALLS. They have somewhere around $200 million of equity supporting a portfolio of $1.4 billion in mortgage bonds, which for those of you who are playing along at home is an eye-watering 7:1 leverage ratio. Your tradeoff for that phat yield is that there's going to be some monstrous drawdowns whenever interest rates move
in either direction (this is where things start to get a little propellor-head-y, but suffice to say ORC's trading book will lose money in both directions, and it'll lose A LOT because it's so highly leveraged); and as short-term rates go up, the dividend will collapse because they'll have to pay out more cash to fund their leverage.
And it's not even particularly cheap in mREIT terms - it's trading at about 100% of its book value, and there are (I'm told) cheaper mREITs out there.
I wouldn't get involved.
