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Mortgage REIT deal prices 'not justified' recently, CEO says

AGNC Investment Corp. is "very willing" to do M&A, but not at the prices other mortgage REITs are paying, the company's CEO said.

AGNC was initially a suitor for MTGE Investment Corp. before that company signed a deal with Annaly Capital Management Inc. According to a regulatory filing, MTGE and AGNC came close to settling on a price around 98% of MTGE's book value, but Annaly was willing to agree to paying 100% of book value. The $900 million deal was announced in May.

"Honestly, we struggle with understanding how buying other mortgage REIT vehicles ... above book value is competitive versus just raising equity," AGNC CEO and Chief Investment Officer Gary Kain said during an earnings call, according to a transcript.

"We are very willing to participate in M&A activity, but where transactions have occurred, the levels are absolutely not justified relative to doing nothing, but also relative to just accessing the capital markets more generically as we have done," he said.

AGNC closed a common stock offering in late May that raised about $641.7 million before expenses.