Hanover Posts Big Loss, Needs Cap Infusion

Hanover Capital Mortgage Holdings, a mortgage investing REIT based in Edison, N.J., lost $37.7 million in the fourth quarter, signaling that it may not survive as a going concern unless it receives a capital infusion. "Additional sources of capital are required for the company to generate positive cash flow and continue operations beyond 2008," the real estate investment trust said in a statement. Hanover lost $80 million in all of 2007, compared to a slight loss in 2006. Hanover invests in prime mortgage securities and mortgage loans on a leveraged basis. Its portfolio of investments includes subordinated tranches of mortgage-backed securities whose value has slipped greatly over the past year. It noted that its net loss "is primarily due to an impairment expense of $73.6 million for other than temporary declines in fair value" of its MBS portfolio. Hanover said it is seeking additional capital and has engaged Keefe, Bruyette & Woods Inc. as an investment adviser.