News Details

Second Quarter Highlights

• Purchased $210.2 million of re-performing mortgage loans (“RPL”) with an aggregate unpaid principal balance (“UPB”) of $249.0 million and underlying collateral value of $357.7 million; and originated $1.7 million of small-balance commercial mortgage loans (“SBC”) to end the quarter with $1,044.7 million of mortgage loans with an aggregate UPB of $1,257.1 million
• Issued $87.5 million of Convertible senior notes and a net increase in secured debt of $98.1 million
• Portfolio interest income of $21.7 million; net interest income of $12.4 million
• Net income attributable to common stockholders of $6.9 million
• Basic earnings per share (“EPS”) of $0.38
• Taxable income of $0.39 per share
• Book value per share of $15.49 at June 30, 2017
• $42.0 million of cash and cash equivalents at June 30, 2017

NEW YORK--(BUSINESS WIRE)-- Great Ajax Corp. (NYSE:AJX), a Maryland corporation that is a real estate investment trust, today announces results of operations for the quarter ended June 30, 2017. 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, non-performing mortgage loans (“NPL”). In addition to our continued focus on residential RPLs, we intend to increase our acquisitions and originations of SBCs secured by multi-family residential and commercial mixed use retail/residential properties.

Consolidated net income decreased $1.6 million for the quarter ended June 30, 2017, compared to the quarter ended March 31, 2017, primarily due to higher interest expense resulting from our issuance of $87.5 million in Convertible senior notes, partially offset by higher interest income on our increased loan portfolio. We also recorded a $0.2 million charge on the early extinguishment of debt from calling our 2015-A securitization and $0.6 million in impairments on REO. We continue to see a steady transition of NPLs to REO from the NPLs we purchased in the second half of 2014 and the first half of 2015. The largest concentrations of REO held-for-sale remain in New Jersey, New York, Florida and Maryland.

We collected $44.5 million on our mortgage loan and REO portfolios (including our equity method investments) through payments, payoffs and sales of REO during the quarter and ended the second quarter with $42.0 million in cash and cash equivalents. Our purchased RPL portfolio continues to experience significantly lower than expected re-default rates and higher than expected pre-payments.

On April 25, 2017, we completed the public offer and sale of $87.5 million aggregate principal amount of our 7.25% Convertible senior notes due 2024. The notes bear interest at a rate of 7.25% per annum, payable quarterly. The notes will mature on April 30, 2024, unless earlier converted, redeemed or repurchased. The conversion rate initially equals 1.6267 shares of common stock per $25.00 principal amount of notes (equivalent to a conversion price of approximately $15.37 per share of common stock), a 17.5% premium over our stock price on the issue date of the notes. We used the net proceeds of the offering to acquire loan pools that we purchased in late May and June of 2017. We expect to securitize a majority of these loans in the third or fourth quarter of 2017. We intend to use the resulting net proceeds to acquire additional loan pools and thus generate additional interest income to offset the interest expense on the convertible notes.

On May 25, 2017, we completed our ninth securitization, Ajax Mortgage Loan Trust 2017-A. An aggregate of $140.7 million of senior securities were issued in a private offering with respect to $216.4 million UPB of mortgage loans. We re-securitized $33.6 million of loans from the 2015-A securitization in the 2017-A transaction at a lower cost of funds and higher advance rate. Based on UPB, approximately 91.8% of these mortgage loans were RPLs and approximately 8.2% were NPLs. Net proceeds from the sale of the senior securities provided leverage of approximately 3.9 times the related equity.

We acquired $249.0 million UPB of RPLs and originated $1.7 million UPB of SBC loans during the quarter to end the period with $1,044.7 million of mortgage loans with an aggregate UPB of $1,257.1 million. Mortgage loans acquired during the second quarter and held as of quarter-end were on our consolidated balance sheet for a weighted average of 45 days during the quarter.

Subsequent Events

Since June 30, 2017, we purchased 88 RPLs with aggregate UPB of $28.8 million in two transactions from two different sellers. The loans were acquired at 80.4% of UPB and the estimated market value of the underlying collateral is $36.7 million. The purchase price equaled 63.1% of the estimated market value of the underlying collateral. We also acquired one SBC loan with UPB of $1.7 million. Our investment equaled 56.1% of the underlying collateral value of $3.0 million. The majority of the costs associated with these acquisitions were accrued as of June 30, 2017.

Additionally, we have agreed to acquire, subject to due diligence, 16 RPLs with aggregate UPB of $2.8 million in three transactions from three different sellers. The purchase price equals 86.8% of UPB and 65.0% of the estimated market value of the underlying collateral of $3.8 million. Any loans we purchase must meet our acquisition criteria, therefore there is no assurance that we will enter into a definitive agreement relating to these loans or, if such an agreement is executed, that we will actually close the acquisitions or that the terms will not change.

On July 24, 2017, our Board of Directors declared a dividend of $0.30 per share, which will be payable on August 30, 2017, to stockholders of record as of August 15, 2017.

On August 1, 2017, we issued 37,460 shares of our common stock to our manager, Thetis Asset Management LLC, in payment of the stock-based component of the management fee due for the second quarter of 2017 in a private transaction. The management fee expense associated with these shares was recorded as an expense in the second quarter of 2017.

On August 1, 2017, we issued each of our independent directors 605 shares of our common stock in payment of half of their quarterly director fees for the second quarter of 2017.

Conference Call

Great Ajax will host a conference call at 5:00 p.m. EDT, Tuesday, August 1, 2017, 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.great-ajax.com. An archive of the Webcast will be available for 90 days.

About Great Ajax Corp.

Great Ajax Corp. is a Maryland corporation that focuses primarily on acquiring, investing in and managing mortgage loans secured by single-family residences and, to a lesser extent, single-family properties themselves. We also invest in loans secured by multi-family residential and smaller commercial mixed use retail/residential properties, as well as in the properties directly. 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, the risk factors and other matters set forth in our Annual Report on Form 10-K for the period ended December 31, 2016 filed with the SEC on March 2, 2017. 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.

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Great Ajax Corp.
Lawrence Mendelsohn
Chief Executive Officer
or
Mary Doyle, 503-444-4224
Chief Financial Officer
[email protected]

Source: Great Ajax Corp.