Ellington Financial has completed a $118.5 million common equity raise, marking a deliberate shift in how the mortgage REIT is positioning its capital structure. The company sold 8,775,000 shares of common stock, with underwriters holding a 30-day option to purchase additional shares, a standard mechanism that could modestly expand the raise if demand holds.

The primary use of proceeds is the redemption of all outstanding Series A preferred stock. By replacing higher-cost preferred capital with common equity, Ellington lowers its ongoing dividend burden and removes a layer of structural complexity from its balance sheet. Any remaining proceeds are earmarked for general corporate purposes, including new investments aligned with the firm’s mortgage credit and securitized products strategy.

The transaction arrives at a moment when mortgage REITs are navigating volatile funding conditions and uneven spread dynamics. While the equity raise does not materially alter the broader mortgage market, it does meaningfully affect Ellington’s internal economics—improving liquidity, increasing deployable capital, and sharpening its competitive posture in whole-loan and agency MBS markets.

Institutional participation from Morgan Stanley and Goldman Sachs underscores confidence in the firm’s repositioning, even as investors remain cautious across the mortgage credit landscape.

➤ TAKEAWAY

This is not growth capital—it’s structural repair. By retiring preferred equity, Ellington reduces friction in its capital stack and gains flexibility, potentially making it a more aggressive and disciplined buyer as mortgage credit opportunities evolve.