Chimera Investment (CIM) has disclosed a new risk, in the Debt & Financing category.
Chimera Investment faces a notable risk concerning its potential investment in TBAs, as their qualification under REIT asset and income tests is uncertain. The lack of definitive guidance from tax authorities regarding the treatment of TBAs as real estate assets or U.S. Government securities for the REIT 75% asset test poses a significant challenge. If the IRS disputes Chimera’s position, arguing that TBAs do not qualify as intended, the company risks incurring penalty taxes or jeopardizing its REIT status. A considerable portion of its assets or income deriving from TBAs could lead to failure in maintaining its REIT qualification, affecting its operational and financial standing.
The average CIM stock price target is $16.50, implying 19.22% upside potential.
To learn more about Chimera Investment’s risk factors, click here.