8-K
Rithm Property Trust Inc. (RPT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 4, 2021
GREAT AJAX CORP.
(Exact name of registrant as specified in charter)
| Maryland | 001-36844 | 47-1271842 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
13190 SW 68th Parkway
Suite 201
Tigard, OR 97223
(Address of principal executive offices)
Registrant’s telephone number, including area code:
503-505-5670
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbols | Name of each exchange on which registered |
|---|---|---|
| Common stock, par value $0.01 per share | AJX | New York Stock Exchange |
| 7.25% Convertible Senior Notes due 2024 | AJXA | New York Stock Exchange |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02. | Results of Operations and Financial Condition |
|---|
On March 4, 2021, Great Ajax Corp., a Maryland corporation (the “Company”), issued a press release regarding its financial results for the fourth quarter and year ended December 31, 2020 (the “Press Release”). A copy of the Press Release is attached hereto as Exhibit 99.1 and is available on the Company’s website.
The information provided in Item 2.02 of this report, including Exhibit 99.1, shall be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
| Item 7.01. | Regulation FD Disclosure |
|---|
On March 4, 2021, the Company will hold an investor conference call and webcast to discuss financial results for the fourth quarter and year ended December 31, 2020, including the Press Release and other matters relating to the Company.
The Company has also made available on its website presentation materials containing certain additional information relating to the Company and its financial results for the fourth quarter and year ended December 31, 2020 (the “Presentation Materials”). The Presentation Materials are furnished herewith as Exhibit 99.2, and are incorporated by reference in this Item 7.01. All information in Exhibit 99.2 is presented as of the particular date or dates referenced therein, and the Company does not undertake any obligation to, and disclaims any duty to, update any of the information provided.
The information provided in Item 7.01 of this report, including Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall the information or Exhibit 99.2 be deemed incorporated by reference in any filings under the Securities Act of 1933, as amended.
| Item 9.01. | Financial Statements and Exhibits |
|---|---|
| Exhibit | Description |
| --- | --- |
| 99.1 | Press Release dated March 4, 2021 |
| 99.2 | March 2021 Presentation Materials |
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document |
EXHIBIT INDEX
| Exhibit | Description |
|---|---|
| 99.1 | Press Release dated March 4, 2021 |
| 99.2 | March2021Presentation Materials |
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| GREAT AJAX CORP. | |
|---|---|
| By: | /s/ Mary Doyle |
| Name: | Mary Doyle |
| Title: | Chief Financial Officer |
Dated: March 4, 2021
Document
Exhibit 99.1
GREAT AJAX CORP. ANNOUNCES RESULTS FOR THE QUARTER
ENDED DECEMBER 31, 2020
Fourth Quarter Highlights
•Purchased $12.7 million re-performing mortgage loans ("RPLs"), with unpaid principal balance ("UPB") of $13.5 million and 52.3% of property value, $13.4 million of non-performing mortgage loans ("NPLs"), with UPB of $15.3 million and 50.0% of property value, and $18.0 million small-balance commercial loans ("SBCs"), with UPB of $18.4 million and 53.5% of property value, to end the quarter with $1.1 billion in net mortgage loans
•Interest income of $25.1 million; net interest income of $14.3 million excluding the impact of a net $7.6 million reversal of our provision for credit losses
•Net income attributable to common stockholders of $10.8 million
•Basic earnings per common share (“EPS”) of $0.47
•Book value per common share of $15.59 at December 31, 2020
•Taxable income of $0.47 per common share
•Collected total cash of $63.7 million from loan payments, sales of real estate owned ("REO") and investments in debt securities and beneficial interests
•Held $107.1 million of cash and cash equivalents at December 31, 2020; average daily cash balance for the quarter was $128.7 million
•At December 31, 2020, approximately 71.9% of portfolio based on current UPB made at least 12 out of the last 12 payments
New York, NY—March 4, 2021 —Great Ajax Corp. (NYSE: AJX), a Maryland corporation that is a real estate investment trust, today announces its results of operations for the quarter ended December 31, 2020. We focus primarily on acquiring, investing in and managing a portfolio of RPLs secured by single-family residences and commercial properties and, to a lesser extent, NPLs. In addition to our continued focus on residential RPLs, we also originate and acquire SBCs secured by multi-family retail/residential and mixed use properties.
Selected Financial Results (Unaudited)
($ in thousands except per share amounts)
| For the three months ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | December 31, 2019 | ||||||
| Loan interest income(1,2) | $ | 18,385 | $ | 18,603 | $ | 18,732 | $ | 22,121 | $ | 22,656 |
| Earnings from debt securities and beneficial interests(2,3) | $ | 6,338 | $ | 5,234 | $ | 5,028 | $ | 5,006 | $ | 4,203 |
| Other interest income/(loss) | $ | 407 | $ | 113 | $ | (55) | $ | 159 | $ | 254 |
| Interest expense | $ | (10,837) | $ | (11,727) | $ | (13,058) | $ | (13,070) | $ | (13,884) |
| Net interest income | $ | 14,293 | $ | 12,223 | $ | 10,647 | $ | 14,216 | $ | 13,229 |
| Provision for credit benefit/(losses) | $ | 7,594 | $ | 4,007 | $ | 4,328 | $ | (5,109) | $ | (561) |
| Other income, loss on sale of mortgage loans and income/(loss) from investments in affiliates | $ | 618 | $ | 512 | $ | 1,352 | $ | (1,070) | $ | 1,048 |
| Total revenue, net(1,4) | $ | 22,505 | $ | 16,742 | $ | 16,327 | $ | 8,037 | $ | 13,716 |
| Consolidated net income(1) | $ | 14,402 | $ | 8,892 | $ | 8,818 | $ | 1,496 | $ | 7,119 |
| Net income per basic share | $ | 0.47 | $ | 0.23 | $ | 0.27 | $ | 0.02 | $ | 0.31 |
| Average equity(1,5) | $ | 509,628 | $ | 503,967 | $ | 469,831 | $ | 356,539 | $ | 368,814 |
| Average total assets(1) | $ | 1,654,579 | $ | 1,642,090 | $ | 1,597,678 | $ | 1,559,821 | $ | 1,556,054 |
| Average daily cash balance(6,7) | $ | 128,687 | $ | 128,621 | $ | 125,739 | $ | 58,586 | $ | 66,072 |
| Average carrying value of RPLs(1) | $ | 1,044,997 | $ | 1,055,186 | $ | 1,048,704 | $ | 1,080,453 | $ | 1,098,477 |
| Average carrying value of NPLs(1) | $ | 39,958 | $ | 35,665 | $ | 33,683 | $ | 32,767 | $ | 31,973 |
| Average carrying value of SBC loans | $ | 8,751 | $ | 6,195 | $ | 5,413 | $ | 22,116 | $ | 25,002 |
| Average carrying value of debt securities and beneficial interests | $ | 367,389 | $ | 331,009 | $ | 333,359 | $ | 298,304 | $ | 245,701 |
| Average asset level debt balance(1,8) | $ | 1,025,717 | $ | 1,038,406 | $ | 1,041,673 | $ | 1,067,983 | $ | 1,068,164 |
____________________________________________________________
(1)Reflects the impact of consolidating the assets, liabilities and non-controlling interests of Ajax Mortgage Loan Trust 2017-D ("2017-D") and Ajax Mortgage Loan Trust 2018-C ("2018-C"), which are 50% and 37%, respectively, owned by third-party institutional investors as of December 31, 2020.
(2)All quarters for loan interest income and interest income on investment in debt securities and beneficial interests have been updated to reflect gross interest income before provision for credit benefit/(losses).
(3)Interest income on investment in debt securities and beneficial interests issued by our joint ventures is net of servicing fees.
(4)Total revenue includes net interest income, income from equity method investments and other income.
(5)Average equity includes the effect of an aggregate of $115.1 million of preferred stock issued during the three months ended December 31, 2020, September 30, 2020 and June 30, 2020.
(6)Average daily cash balance includes cash and cash equivalents, and excludes cash held in trust.
(7)For the three months ended September 30, 2020, the average daily cash balance excludes $51.0 million of funds on deposit in a non-interest bearing account for a transaction that closed on September 25, 2020. Including the $51.0 million on deposit, average daily cash was $148.0 million.
(8)All quarters have been updated to reflect average asset level debt balance from total average debt balance.
Our consolidated net income attributable to common stockholders increased $5.6 million for the quarter ended December 31, 2020 compared to the quarter ended September 30, 2020. Our gross interest income increased $1.2 million, and our interest expense declined $0.9 million. Our book value increased to $15.59 per common share from $15.35 at September 30, 2020 primarily from the increase in our consolidated net income during the quarter.
The increase in our earnings compared to the quarter ended September 30, 2020 was primarily driven by an increase in our net interest income as our interest income on our securities portfolio increased, our interest expense decreased and we recovered a net $7.6 million from our provision for credit losses on our loan and beneficial interest portfolios.
Our net interest income prior to the recovery of the provision for credit losses increased $2.1 million over the prior quarter primarily driven by an increase in the average balance and yield of our joint venture securities portfolio and a decrease in our overall cost of funds by approximately 26 basis points during the fourth quarter. We expect our cost of funds to continue to decrease in the current interest rate and credit environment as we are able to refinance existing debt at lower current rates.
Our net interest income after the recovery of the provision for credit losses increased $5.7 million over the prior quarter. We recovered a net $7.6 million from our provision for credit losses on our loan and beneficial interest portfolios on a consolidated basis in the fourth quarter. Of the $7.6 million, $1.0 million was allocated to non-controlling interests in 2017-D and 2018-C, both of which are consolidated for GAAP. This compares to a net recovery in the quarter ended September 30, 2020 of $4.0 million with $1.0 million allocated to non-controlling interests. The reversal of the provision for credit losses was driven primarily by recoveries on loans that paid off during the quarter as well as by an increase in expected cash flows on our loan portfolio.
During the quarter ended December 31, 2020, we acquired 34 RPLs for $12.7 million with UPB of $13.5 million and 52.3% of property value, 63 NPLs for $13.4 million with UPB of $15.3 million and 50.0% of property value. We acquired 12 SBC loans for $18.0 million with UPB of $18.4 million and 53.5% of property value. These loans were acquired and included on our consolidated balance sheet for a weighted average of 33 days of the quarter. We ended the quarter with $1.1 billion of mortgage loans with an aggregate UPB of $1.2 billion.
We recorded $0.2 million in impairments on our REO held-for-sale portfolio in real estate operating expense for the quarter ended December 31, 2020 compared to $0.2 million for the quarter ended September 30, 2020. We continue to liquidate our REO properties held-for-sale at a faster rate than we acquire properties, with 10 properties sold in the fourth quarter while eight were added to REO held-for-sale through foreclosures. Our inventory of REO held-for-sale declined by 42% year-to-date through December 31, 2020 as existing REO property sales are benefiting from the current low inventory in the real estate market and new foreclosure timelines are extended due to the COVID-19 pandemic.
We collected $63.7 million of cash during the quarter as a result of loan payments, loan payoffs, sales of REO and cash collections on our securities portfolio to end the fourth quarter with $107.1 million in cash and cash equivalents. $50.3 million of our cash collections were derived from our mortgage loan and REO portfolios as a result of loan payments, loan payoffs and sales of REO during the quarter and $13.4 million were derived from interest and principal payments on investments in debt securities and beneficial interests. Of the $50.3 million of cash collections from mortgage loans and REO, we received $26.5 million from loans paying the full amount of principal, past due interest and charges.
During the quarter ended December 31, 2020, we also repurchased 48,464 shares of our common stock in the open market for an average purchase price of $9.00 per share including commissions.
The following table provides an overview of our portfolio at December 31, 2020 ($ in thousands):
| No. of loans | 6,031 | Weighted average LTV(5) | 72.8 | % | |||
|---|---|---|---|---|---|---|---|
| Total UPB(1) | $ | 1,204,804 | Weighted average remaining term (months) | 297 | |||
| Interest-bearing balance | $ | 1,127,499 | No. of first liens | 5,973 | |||
| Deferred balance(2) | $ | 77,305 | No. of second liens | 58 | |||
| Market value of collateral(3) | $ | 1,967,419 | No. of rental properties | 6 | |||
| Original purchase price/total UPB | 82.2 | % | Capital invested in rental properties | $ | 710 | ||
| Original purchase price/market value of collateral | 53.7 | % | No. of REO held-for-sale | 32 | |||
| RPLs | 94.4 | % | Market value of REO held-for-sale(6) | $ | 8,105 | ||
| NPLs | 3.5 | % | Carrying value of debt securities and beneficial interests in trusts | $ | 369,330 | ||
| SBC loans(4) | 2.1 | % | Loans with 12 for 12 payments as an approximate percentage of UPB(7) | 71.9 | % | ||
| Weighted average coupon | 4.4 | % | Loans with 24 for 24 payments as an approximate percentage of UPB(8) | 65.1 | % |
____________________________________________________________
(1)Our loan portfolio consists of fixed rate (53.5% of UPB), ARM (8.9% of UPB) and Hybrid ARM (37.6% of UPB) mortgage loans.
(2)Amounts that have been deferred in connection with a loan modification on which interest does not accrue. These amounts generally become payable at maturity.
(3)As of date of acquisition.
(4)SBC loans includes both purchased and originated loans.
(5)UPB as of December 31, 2020 divided by market value of collateral and weighted by the UPB of the loan.
(6)Market value of other REO is the estimated expected gross proceeds from the sale of the REO less estimated costs to sell, including repayment of servicer advances.
(7)Loans that have made at least 12 of the last 12 payments, or for which the full dollar amount to cover at least 12 payments has been made in the last 12 months.
(8)Loans that have made at least 24 of the last 24 payments, or for which the full dollar amount to cover at least 24 payments has been made in the last 24 months.
Subsequent Events
Since quarter end we have acquired two residential RPLs with aggregate UPB of $0.2 million in two transactions from two sellers. The RPLs were acquired at 89.7% of UPB and 67.1% of the estimated market value of the underlying collateral of $0.3 million. We also acquired one SBC loan for $3.6 million, which equals 100.0% of UPB and 36.4% of the underlying collateral value of $9.9 million.
We have also agreed to acquire, subject to due diligence, 322 residential RPLs and four NPLs with aggregate UPB of $53.8 million and $0.8 million, respectively, in six transactions and two transactions, respectively, from six sellers and two sellers, respectively. The purchase price of the residential RPLs equals 86.1% of UPB and 56.9% of the estimated market value of the underlying collateral value of $81.4 million. The purchase price of the NPLs equals 84.8% of UPB and 60.8% of the estimated market value of the underlying collateral of $1.1 million.
On January 5, 2021, we repurchased an aggregate principal amount of $2.5 million of our convertible senior notes for a total purchase price of $2.4 million.
On January 8, 2021, we acquired the remaining 37% of our 2018-C securitization trust from our joint venture partner. After the close of the transaction we owned 100% of the trust.
On January 29, 2021, we priced Ajax Mortgage Loan Trust 2021-A with $146.2 million of AAA rated senior securities, $21.1 million of A rated securities and $7.8 million of BBB rated securities issued with respect to $206.5 million of mortgage loans. The AAA, A and BBB rated securities were issued at a weighted yield of 1.35% excluding transaction expenses, and represent 84.6% of the UPB of the underlying mortgage loans. A total of 1,082 of RPLs and NPLs with a collateral value of $368.1 million were securitized.
On February 12, 2021, we closed on Ajax Mortgage Loan Trust 2021-B with an aggregate of $215.9 million of senior securities and $20.2 million of subordinated securities issued with respect to $287.9 million of mortgage loans. The senior securities were issued at a yield of 2.25% excluding transaction expenses, and represent 75.0% of UPB of the underlying mortgage loans. A total of 1,384 of RPLs and NPLs with a collateral value of $473.2 million were securitized.
On February 25, 2021, we called the outstanding bonds of Ajax Mortgage Loan Trust 2017-B and 2018-C.
On March 4, 2021, our board of directors declared a cash dividend of $0.17 per share, to be paid on March 31, 2021 to stockholders of record as of March 18, 2021.
On March 4, 2021, our Board of Directors appointed Mary Haggerty to a newly created position on our Board of Directors. Ms. Haggerty will be an independent director, as defined by the rules of the New York Stock Exchange, and also serve as a member of the Audit Committee. The appointment will become effective on Monday March 8, 2021. Ms. Haggerty served as a Managing Director of J.P. Morgan Chase from July 2008 until her retirement in March 2020. In connection with her appointment, Ms. Haggerty will receive a stock award of 2,000 shares of our common stock subject to a one-year vesting period pursuant to our 2014 Director Equity Plan.
Conference Call
Great Ajax Corp. will host a conference call at 5:00 p.m. EST on Thursday, March 4, 2021 to review our financial results for the quarter. A live Webcast of the conference call will be accessible from the Investor Relations section of our website www.greatajax.com. An archive of the Webcast will be available for 90 days.
About Great Ajax Corp.
Great Ajax Corp. is a Maryland corporation that is a real estate investment trust, that focuses primarily on acquiring, investing in and managing RPLs secured by single-family residences and commercial properties and, to a lesser extent, NPLs. We also originate and acquire loans secured by multi-family residential and smaller commercial mixed use retail/residential properties and acquire multi-family retail/residential and mixed use and commercial properties. We are externally managed by Thetis Asset Management LLC. Our mortgage loans and other real estate assets are serviced by Gregory Funding LLC, an affiliated entity. We have elected to be taxed as a real estate investment trust under the Internal Revenue Code.
Forward-Looking Statements
This press release contains certain forward-looking statements. Words such as “believes,” “intends,” “expects,” “projects,” “anticipates,” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions, many of which are beyond the control of Great Ajax, including, without limitation, risks relating to the impact of the COVID-19 outbreak and the risk factors and other matters set forth in our Annual Report on Form 10-K for the period ended December 31, 2020 when filed with the SEC. The COVID-19 outbreak has caused significant volatility and disruption in the financial markets both globally and in the United States. If the COVID-19 outbreak continues to spread or the response to contain it is unsuccessful, Great Ajax could experience material adverse effects on its business, financial condition, liquidity and results of operations. Great Ajax undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.
| CONTACT: | Lawrence Mendelsohn |
|---|---|
| Chief Executive Officer | |
| Or | |
| Mary Doyle | |
| Chief Financial Officer | |
| Mary.Doyle@aspencapital.com | |
| 503-444-4224 |
GREAT AJAX CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except per share amounts)
| Three months ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| December 31, 2020 | September 30, 2020 | June 30, 2020 | March 31, 2020 | |||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||
| INCOME: | ||||||||
| Interest income | $ | 25,130 | $ | 23,950 | $ | 23,705 | $ | 27,286 |
| Interest expense | (10,837) | (11,727) | (13,058) | (13,070) | ||||
| Net interest income | 14,293 | 12,223 | 10,647 | 14,216 | ||||
| Provision for credit benefit/(losses) | 7,594 | 4,007 | 4,328 | (5,109) | ||||
| Net interest income after provision for credit benefit/(losses) | 21,887 | 16,230 | 14,975 | 9,107 | ||||
| Income/(loss) from investments in affiliates | 310 | (25) | 672 | (1,112) | ||||
| Loss on sale of mortgage loans(1) | — | — | — | (705) | ||||
| Other income | 308 | 537 | 680 | 747 | ||||
| Total revenue, net | 22,505 | 16,742 | 16,327 | 8,037 | ||||
| EXPENSE: | ||||||||
| Related party expense – loan servicing fees | 1,880 | 1,848 | 1,936 | 2,014 | ||||
| Related party expense – management fee | 2,250 | 2,264 | 2,143 | 1,799 | ||||
| Loan transaction expense | 5 | (178) | 65 | (103) | ||||
| Professional fees | 721 | 576 | 732 | 805 | ||||
| Real estate operating expenses | 209 | 173 | 188 | 912 | ||||
| Other expense | 2,948 | 2,930 | 2,325 | 1,025 | ||||
| Total expense | 8,013 | 7,613 | 7,389 | 6,452 | ||||
| Loss on debt extinguishment | — | 253 | — | 408 | ||||
| Income before provision for income taxes | 14,492 | 8,876 | 8,938 | 1,177 | ||||
| Provision for income taxes (benefit) | 90 | (16) | 120 | (319) | ||||
| Consolidated net income | 14,402 | 8,892 | 8,818 | 1,496 | ||||
| Less: consolidated net income attributable to the non-controlling interest | 1,619 | 1,662 | 735 | 1,096 | ||||
| Consolidated net income attributable to Company | 12,783 | 7,230 | 8,083 | 400 | ||||
| Less: dividends on preferred stock | 1,949 | 1,950 | 1,841 | — | ||||
| Consolidated net income attributable to common stockholders | $ | 10,834 | $ | 5,280 | $ | 6,242 | $ | 400 |
| Basic earnings per common share | $ | 0.47 | $ | 0.23 | $ | 0.27 | $ | 0.02 |
| Diluted earnings per common share | $ | 0.41 | $ | 0.23 | $ | 0.27 | $ | 0.02 |
| Weighted average shares – basic | 22,838,664 | 22,844,192 | 22,808,943 | 22,070,354 | ||||
| Weighted average shares – diluted | 36,105,656 | 22,989,616 | 22,929,849 | 22,189,984 |
____________________________________________________________
(1)We sold no mortgage loans during the three months ended December 31, 2020, September 30, 2020 and June 30, 2020. During the three months ended March 31, 2020, we sold 26 SBC mortgage loans with a carrying value of $26.1 million and UPB of $26.2 million for a loss of $0.7 million.
GREAT AJAX CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except per share amounts)
| December 31, 2019 | |||
|---|---|---|---|
| ASSETS | |||
| Cash and cash equivalents | 107,147 | $ | 64,343 |
| Cash held in trust | 20 | ||
| Mortgage loans, net(1,2) | 1,151,469 | ||
| Property held-for-sale, net(3) | 13,537 | ||
| Rental property, net | 1,534 | ||
| Investments in securities at fair value(4) | 231,685 | ||
| Investments in beneficial interests(5) | 57,954 | ||
| Receivable from servicer | 17,013 | ||
| Investment in affiliates | 30,441 | ||
| Prepaid expenses and other assets | 8,845 | ||
| Total assets | 1,653,732 | $ | 1,576,841 |
| LIABILITIES AND EQUITY | |||
| Liabilities: | |||
| Secured borrowings, net(1,2,6) | 585,403 | $ | 652,747 |
| Borrowings under repurchase transactions | 414,114 | ||
| Convertible senior notes, net(6) | 118,784 | ||
| Management fee payable | 1,634 | ||
| Accrued expenses and other liabilities | 5,478 | ||
| Total liabilities | 1,192,757 | ||
| Equity: | |||
| Preferred stock 0.01 par value; 25,000,000 shares authorized | |||
| Series A 7.25% Fixed-to-Floating Rate Cumulative Redeemable, 25.00 liquidation preference per share, 2,307,400 shares issued and outstanding at December 31, 2020 and no shares issued or outstanding at December 31, 2019 | — | ||
| Series B 5.00% Fixed-to-Floating Rate Cumulative Redeemable, 25.00 liquidation preference per share, 2,892,600 shares issued and outstanding at December 31, 2020 and no shares issued or outstanding at December 31, 2019 | — | ||
| Common stock 0.01 par value; 125,000,000 shares authorized, 22,978,339 shares issued and outstanding at December 31, 2020 and 22,142,143 shares issued and outstanding at December 31, 2019 | 222 | ||
| Additional paid-in capital | 309,395 | ||
| Treasury stock | (458) | ||
| Retained earnings | 49,446 | ||
| Accumulated other comprehensive income | 1,277 | ||
| Equity attributable to stockholders | 359,882 | ||
| Non-controlling interests(7) | 24,202 | ||
| Total equity | 384,084 | ||
| Total liabilities and equity | 1,653,732 | $ | 1,576,841 |
All values are in US Dollars.
____________________________________________________________
(1)Mortgage loans, net include $842.2 million and $908.6 million of loans at December 31, 2020 and December 31, 2019, respectively, transferred to securitization trusts that are variable interest entities (“VIEs”); these loans can only be used to settle obligations of the VIEs. Secured borrowings consist of notes issued by VIEs that can only be settled with the assets and cash flows of the VIEs. The creditors do not have recourse to the primary beneficiary (Great Ajax Corp.). Mortgage loans, net include $13.7 million and $2.0 million of allowance for loan credit losses at December 31, 2020 and December 31, 2019, respectively.
(2)As of December 31, 2020, balances for Mortgage loans, net includes $307.1 million and Secured borrowings, net of deferred costs includes $250.6 million from the 50.0% and 63.0% owned joint ventures. As of December 31, 2019, balances for Mortgage loans, net includes $341.8 million and Secured borrowings, net of deferred costs includes $284.8 million from a 50.0% and 63.0% owned joint ventures, all of which we consolidate under GAAP.
(3)Property held-for-sale, net, includes valuation allowances of $1.4 million and $1.8 million at December 31, 2020 and December 31, 2019, respectively.
(4)As of December 31, 2020 and December 31, 2019 Investments in securities at fair value include amortized cost basis of $273.4 million and $230.4 million, respectively, and unrealized gains of $0.4 million and $1.3 million, respectively.
(5)Investments in beneficial interests includes allowance for credit losses of $4.5 million at December 31, 2020. No allowance for credit losses were recorded as of December 31, 2019.
(6)Secured borrowings and convertible senior notes are presented net of deferred issuance costs.
(7)Non-controlling interests includes $27.4 million at December 31, 2020, from 50.0% and 63.0% owned joint ventures. Non-controlling interests includes $22.4 million at December 31, 2019, from a 50.0% and 63.0% owned joint ventures, all of which we consolidate under GAAP.
8
exhibit992-20210304
Fourth Quarter and Year-End 2020 Investor Presentation March 4, 2021
Safe Harbor Disclosure 2 We make forward-looking statements in this presentation that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, cash flow and plans and objectives. When we use the words “believe,” “expect,” “anticipate,” “estimate,” “plan,” “continue,” “intend,” “should,” “may” or similar expressions, we intend to identify forward-looking statements. Statements regarding the following subjects, among others, may be forward-looking: market trends in our industry, interest rates, real estate values, the debt financing markets or the general economy or the demand for and availability of residential and small-balance commercial real estate loans; our business and investment strategy; our projected operating results; actions and initiatives of the U.S. government and changes to U.S. government policies and the execution and impact of these actions, initiatives and policies; the state of the U.S. economy generally or in specific geographic regions; economic trends and economic recoveries; our ability to obtain and maintain financing arrangements; changes in the value of our mortgage portfolio; changes to our portfolio of properties; impact of and changes in governmental regulations, tax law and rates, accounting guidance and similar matters; our ability to satisfy the real estate investment trust qualification requirements for U.S. federal income tax purposes; availability of qualified personnel; estimates relating to our ability to make distributions to our stockholders in the future; general volatility of the capital markets and the market price of our shares of common stock; and the degree and nature of our competition. The forward-looking statements included in this presentation are based on our current beliefs, assumptions and expectations of our future performance. Forward-looking statements are not predictions of future events. Our beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are currently known to us or reasonably expected to occur at this time. If a change in our beliefs, assumptions or expectations occurs, our business, financial condition, liquidity and results of operations may vary materially from the forward-looking statements included in this presentation. Forward-looking statements are subject to risks and uncertainties, including, among other things, those resulting from the pandemic caused by the global novel coronavirus outbreak and those described under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020, which can be accessed through the link to our Securities and Exchange Commission ("SEC") filings on our website (www.greatajax.com) or at the SEC's website (www.sec.gov). Other risks, uncertainties and factors that could cause actual results to differ materially from the forward-looking statements included in this presentation may be described from time to time in reports we file with the SEC. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Unless stated otherwise, financial information included in this presentation is as of December 31, 2020.
Business Overview 3 Leverage longstanding relationships to acquire mortgage loans through privately negotiated transactions from a diverse group of customers and in joint venture investments with institutional investors – Acquisitions made in 326 transactions since inception. Twelve transactions closed in Q4 2020 Use our manager’s proprietary analytics to price each mortgage pool on an asset-by-asset basis – We own 19.8% of our manager – Adjust individual loan bid price to accumulate clusters of loans in attractive demographic metropolitan areas Our affiliated servicer services the loans asset-by-asset and borrower-by-borrower – We own 8% and hold warrants to purchase up to an additional 12% of our affiliated servicer – Analytics and processes of our manager and servicer enable us to broaden our reach through joint ventures with third-party institutional investors We use modest mark to market leverage to fund our investments in debt securities and primarily non mark to market leverage to fund our mortgage portfolio We own a 23% equity interest in Gaea Real Estate Corp., an equity REIT that invests in multifamily and mixed use properties with a focus on property appreciation and triple net lease pet clinics
Highlights – Quarter Ended December 31, 2020 4 Purchased $12.7 million re-performing mortgage loans ("RPLs"), with unpaid principal balance ("UPB") of $13.5 million and 52.3% of property value, $13.4 million of non-performing mortgage loans ("NPLs"), with UPB of $15.3 million and 50.0% of property value, and $18.0 million small-balance commercial loans ("SBCs") with UPB of $18.4 million and 53.5% of property value, to end the quarter with $1.1 billion in net mortgage loans Interest income of $25.1 million; net interest income of $14.3 million excluding the impact of a net $7.6 million reversal of our provision for credit losses Net income attributable to common stockholders of $10.8 million Basic earnings per common share of $0.47 Book value per common share of $15.59 at December 31, 2020 Taxable income of $0.47 per common share Collected total cash of $63.7 million from loan payments, sales of real estate owned ("REO") and investments in debt securities and beneficial interests Held $107.1 million of cash and cash equivalents at December 31, 2020; average daily cash balance for the quarter was $128.7 million At December 31, 2020, approximately 71.9% of portfolio based on current UPB made at least 12 out of the last 12 payments
Portfolio Overview – as of December 31, 2020 5 $1,204.8 MM RPL: $1,158.1 MM NPL: $ 46.7 MM $1,976.2 MM RPL: $1,894.1 MM NPL: $ 73.3 MM REO & Rental2: $ 8.8 MM 1 Includes $326.3 million UPB in joint ventures with third-party institutional investors that are required to be consolidated for GAAP 2 Real estate owned (“REO”) and rental property value is presented at estimated property fair value less expected liquidation costs 96% 4% Unpaid Principal Balance1 RPL NPL 95.8% 3.7% 0.4% Property Value RPL NPL REO
Portfolio Growth 6 RPL UPB includes $30.1 million of SBC loans, which are performing loans. Includes $321.7million UPB in RPLs included in joint ventures with third-party institutional investors that are required to be consolidated for GAAP RPL status stays constant based on initial purchase status $617 $994 $1,412 $1,436 $1,230 $1,158 $710 $1,210 $1,891 $1,966 $1,733 $1,894 $466 $775 $1,151 $1,183 $1,076 $1,019 0 500 1,000 1,500 2,000 2,500 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020 M ill io ns Re-performing Loans UPB Property Value Price
Portfolio Growth 7 NPL status stays constant based on initial purchase status Includes $4.6million UPB in NPLs included in joint ventures with third-party institutional investors that are required to be consolidated for GAAP $111 $76 $53 $46 $38 $47 $117 $84 $63 $59 $50 $73 $68 $48 $35 $33 $28 $37 0 20 40 60 80 100 120 140 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020 M ill io ns Non-performing Loans UPB Property Value Price
Portfolio Concentrated in Attractive Markets 8 Clusters of loans in attractive, densely populated markets Stable liquidity and home prices Over 80% of the portfolio in our target markets Target States Target Markets Los Angeles San Diego Dallas Portland Phoenix Washington DC Metro Area Atlanta Orlando Tampa Miami, Ft. Lauderdale, W. Palm Beach New York / New Jersey Metro Area REIT, Servicer & Manager Headquarters Property Management Business Management Houston
Portfolio Migration 9 24 for 24: Loans that have made at least 24 of the last 24 payments, or for which the full dollar amount to cover at least 24 payments has been made in the last 24 months 12 for 12: Loans that have made at least 12 of the last 12 payments, or for which the full dollar amount to cover at least 12 payments has been made in the last 12 months 7 for 7: Loans that have made at least 7 of the last 7 payments, or for which the full dollar amount to cover at least 7 payments has been made in the last 7 months NPL: <1 full payment in the last three months
Subsequent Events 10 1 While these acquisitions are expected to close, there can be no assurance that these acquisitions will close or that the terms thereof may not change. Acquisitions Under Contract1 RPL UPB: $53.8MM Collateral Value: $81.4MM Price/UPB: 86.1% Price/Collateral Value: 56.9% 322 loans in 6 transactions NPL UPB: $766.8K Collateral Value: $1,069.5K Price/UPB: 84.8% Price/Collateral Value: 60.8% 4 loans in 2 transactions Acquisitions Closed since 12/31/2020 RPL UPB: $190.8K Collateral Value: $255.1K Price/UPB: 89.7% Price/Collateral Value: 67.1% 2 loans in 2 transactions SBC UPB: $3.6MM Collateral Value: $9.9MM Price/UPB: 100.0% Price/Collateral Value: 36.4% 1 loans in 1 transaction On January 5, 2021, we repurchased an aggregate principal amount of $2.5 million of our convertible notes for a total purchase price of $2.4 million On January 29, 2021, we closed Ajax Mortgage Loan Trust 2021-A with $146.2 million of AAA rated senior securities, $21.1 million of A rated securities and $7.8 million of BBB rated securities issued with respect to $206.5 million of mortgage loans. The AAA, A, and BBB rated securities were issued at a weighted average yield of 1.318% and represent 84.8% of the UPB of the underlying mortgage loans. On February 12, 2021, we closed Ajax Mortgage Loan Trust 2021-B with $215.9 million of senior securities and $20.2 million of subordinated securities issued with respect to $287.9 million of mortgage loans. The senior securities were issued at 2.25% yield and represent 75.0% of UPB of the underlying mortgage loans. A dividend of $0.17 per share, to be paid on March 31, 2021 to common stockholders of record as of March 18, 2021
Financial Metrics – Excluding consolidation of the portion of securitizations owned by third-party institutional investors* 11 *The Company believes these financial metrics provide investors with useful supplemental information relating to the Company’s results of operation and financial performance. These adjusted financial metrics are non-GAAP financial measures and should be considered in addition to, but not as a substitute for, the financial measures prepared in accordance with GAAP as reflected on other slides in this presentation. The following slide provides a reconciliation of these financial metrics to the most comparable GAAP measure.
Financial Metrics - Reconciliation of GAAP consolidated financial metrics to non-GAAP financial metrics excluding the portion of securitizations owned by third-party institutional investors 12 1Includes the impact of the credit loss expense 2Interest income on debt securities is net of servicing fee 3Includes the impact of the reversal of/(increase in) provision for credit losses on mortgage loans and beneficial interests 4Excludes the impact of consolidating trusts and convertible debt 5Excludes the impact of consolidating trusts
Securities and Loan Repurchase Agreement Funding 13
Consolidated Statements of Income 14 (1) We sold no mortgage loans during the three months ended December 31, 2020, September 30, 2020 and June 30, 2020. During the three months ended March 31, 2020, we sold 26 SBC mortgage loans with a carrying value of $26.1 million and UPB of $26.2 million for a loss of $0.7 million.
Consolidated Balance Sheets 15
Consolidated Balance Sheets Footnotes 16 (1) Mortgage loans net include $842.2 million and $908.6 million of loans at December 31, 2020 and December 31, 2019, respectively, transferred to securitization trusts that are variable interest entities (“VIEs”); these loans can only be used to settle obligations of the VIEs. Secured borrowings consist of notes issued by VIEs that can only be settled with the assets and cash flows of the VIEs. The creditors do not have recourse to the primary beneficiary (Great Ajax Corp.). Mortgage loans, net include $13.7 million and $2.0 million of allowance for loan credit losses at December 31, 2020 and December 31, 2019, respectively. (2) As of December 31, 2020, balances for Mortgage loans, net includes $307.1 million and Secured borrowings, net of deferred costs includes $250.6 million from the 50% and 63% owned joint ventures, respectively. As of December 31, 2019, balances for Mortgage loans, net include $341.8 million and Secured borrowings, net of deferred costs includes $284.8 million from a 50% and 63% owned joint ventures, all of which the Company consolidates under U.S. Generally Accepted Accounting Principles ("U.S. GAAP"). (3) Property held-for-sale, net, includes valuation allowances of $1.4 million and $1.8 million at December 31, 2020 and December 31, 2019, respectively. (4) As of December 31, 2020 and December 31, 2019 Investments in securities at fair value include amortized cost basis of $273.4 million and $230.4 million, respectively, and unrealized gains of $0.4 million and $1.3 million, respectively. (5) Investments in beneficial interests includes allowance for credit losses of $4.5 million at December 31, 2020. No allowance for credit losses were recorded as of December 31, 2019. (6) Secured borrowings and convertible senior notes are presented net of deferred issuance costs. (7) $25.00 liquidation preference per share, 2,307,400 shares issued and outstanding at December 31, 2020 and no shares issued and outstanding at December 31, 2019. (8) $25.00 liquidation preference per share, 2,892,600 shares issued and outstanding at December 31, 2020 and no shares issued and outstanding at December 31, 2019. (9) 125,000,000 shares authorized, 22,978,339 shares issued and outstanding at December 31, 2020 and 22,142,143 shares issued and outstanding at December 31, 2019. (10) As of December 31, 2020 and December 31, 2019 non-controlling interests includes $27.4 million and $22.4 million, respectively, from the 50% and 63% owned joint ventures, which the Company consolidates under U.S. GAAP.
Fair Value Balance Sheet1 17 1Fair Value explanations are included in Note 6 – Fair Value in the Company’s Form 10-K for the year ended December 31, 2020.