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Section 1: 8-K (8-K)

Document


 

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): November 6, 2018


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.)


9400 SW Beaverton—Hillsdale Hwy
Suite 131
Beaverton, OR 97005
(Address of principal executive offices)


Registrant’s telephone number, including area code:
503 505 5670
 

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 November 6, 2018, Great Ajax Corp., a Maryland corporation (the “Company”), issued a press release regarding its financial results for the quarter ended September 30, 2018 (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 November 6, 2018, the Company will hold an investor conference call and webcast to discuss financial results for the third quarter ended September 30, 2018, 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 third quarter ended September 30, 2018 (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 November 6, 2018
99.2
 
November 2018 Presentation Materials








EXHIBIT INDEX

Exhibit
 
Description
 
 
 
99.1
 
99.2
 







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: November 6, 2018



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1 
395661631_logoa04.jpg
GREAT AJAX CORP. ANNOUNCES RESULTS FOR THE QUARTER
ENDED SEPTEMBER 30, 2018
 
Third Quarter Highlights
Purchased $64.4 million of re-performing mortgage loans ("RPLs") and $1.4 million non-performing mortgage loans ("NPLs") with an aggregate unpaid principal balance (“UPB”) of $70.9 million and underlying collateral value of $106.1 million; and originated $4.8 million of small-balance commercial mortgage loans ("SBCs").
Interest income of $27.4 million; net interest income of $14.1 million.
Net income attributable to common stockholders of $6.6 million.
Basic earnings per share (“EPS”) of $0.35.
Taxable income of $0.35 per share.
Book value per share of $15.61 at September 30, 2018.
Collected $55.8 million of cash from our portfolio and held $59.8 million of cash and cash equivalents at September 30, 2018.

New York, NY—November 6, 2018 —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 September 30, 2018. 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 residential and commercial mixed use retail/residential properties.
 
Financial Results (Unaudited)
($ in thousands except per share amounts)
 
 
September 30, 2018
 
June 30, 2018
 
March 31, 2018
 
December 31, 2017
 
September 30, 2017
Loan interest income(1,2)
 
$
26,261

 
$
26,158

 
$
25,445

 
$
24,231

 
$
24,396

Total revenue(1,3)
 
$
14,750

 
$
14,777

 
$
14,743

 
$
13,797

 
$
14,226

Consolidated net income(1)
 
$
7,495

 
$
8,213

 
$
8,322

 
$
6,638

 
$
7,716

Net income per basic share
 
$
0.35

 
$
0.40

 
$
0.41

 
$
0.34

 
$
0.41

Average equity(1)
 
$
323,750

 
$
319,815

 
$
318,839

 
$
302,482

 
$
292,640

Average total assets(1)
 
$
1,381,742

 
$
1,362,843

 
$
1,377,537

 
$
1,230,026

 
$
1,157,223

Average daily cash balance(4)
 
$
40,674

 
$
41,617

 
$
51,540

 
$
47,717

 
$
43,666

Average carrying value of RPLs(1)
 
$
1,177,586

 
$
1,182,904

 
$
1,199,638

 
$
1,046,126

 
$
998,692

Average carrying value of NPLs(1)
 
$
38,237

 
$
40,767

 
$
40,593

 
$
43,400

 
$
44,919

Average carrying value of originated SBC loans
 
$
11,439

 
$
11,784

 
$
11,629

 
$
11,273

 
$
8,427

Average asset level debt balance(1,5)
 
$
948,893

 
$
941,533

 
$
961,853

 
$
840,882

 
$
791,377

____________________________________________________________

(1)
Reflects the impact of consolidating the assets, liabilities and non-controlling interest of Ajax Mortgage Loan Trust 2017-D ("2017-D") and Ajax Mortgage Loan Trust 2018-C ("2018-C"), which is 50% and 37%, respectively, owned by third-party institutional investors.
(2)
Loan interest income excludes interest income from debt securities and bank account balances.
(3)
Total revenue includes net interest income, income from equity method investments and other income.
(4)
Average daily cash balance includes cash and cash equivalents, and excludes cash held in trust.
(5)
All quarters have been updated to reflect average asset level debt balance from total average debt balance.







Our consolidated net income decreased $0.7 million for the quarter ended September 30, 2018 compared to the quarter ended June 30, 2018, primarily due to the acceleration of deferred issuance costs of $0.8 million, or $0.04 per share, as a result of the call of our senior bonds from our Ajax Mortgage Loan Trust 2016-A and Ajax Mortgage Loan Trust 2016-B securitizations, as well as realized and unrealized losses for properties held for sale and impairments of our 2014 NPL loan pools, offset by lower operating expenses.

The weighted average yield on our loan portfolio increased to 8.84% compared to 8.74%, for the quarter ended June 30, 2018 resulting in a $0.4 million increase in interest income. The $0.4 million increase in interest income is net of the negative impact of $0.4 million in impairments recorded on our 2014 NPL loan pools. The $0.4 million in impairments were based on a reduction in forecasted cash flows that caused a 40 basis point drop in yield over the remaining life of the two loan pools. These two pools total approximately $24.4 million in remaining carrying value. Despite the impact of the impairments, net interest margin increased to 3.80% from 3.75% compared to the prior quarter.

Other income was lower for the quarter ended September 30, 2018 compared to the quarter ended June 30, 2018 due to lower Home Affordable Modification Program ("HAMP") fees received on HAMP eligible loans due to seasonal timing.

We recorded $0.9 million in impairments on our real estate owned ("REO") portfolio in real estate operating expense for the quarter ended September 30, 2018 as compared to $0.7 million for the quarter ended June 30, 2018. The increase is primarily attributable to certain properties in judicial foreclosure states that experienced longer than expected foreclosure timelines and significant damage during the foreclosure and eviction process.

We collected $55.8 million on our mortgage loan and REO portfolios through loan payments, loan payoffs and sales of REO during the quarter, and ended the third quarter with $59.8 million in cash and cash equivalents. Of the $55.8 million in cash collections, we received $19.4 million from loans paying the full amount of principal, past due interest and charges.

During the quarter ended September 30, 2018, we acquired $64.4 million of RPLs with an aggregate UPB of $69.2 million, and underlying collateral values of $103.8 million and we acquired $1.4 million of NPLs with an aggregate UPB of $1.7 million and underlying collateral values of $2.3 million. We originated six SBC loans with UPB of $4.8 million that represented 72.7% of the underlying collateral value of $6.7 million, and ended the quarter with $1,272.6 million of mortgage loans with an aggregate UPB of $1,449.8 million. Mortgage loans purchased during the third quarter and held as of quarter-end were on our consolidated Balance Sheet for a weighted average of nine days during the quarter. During the quarter, we also acquired two commercial properties, consisting of a ten-unit apartment building acquired for $1.6 million and a single-tenant commercial property acquired for $0.8 million.

During the quarter ended September 30, 2018, we closed on Ajax Mortgage Loan Trust 2018-C with institutional third parties on September 25, 2018 with an aggregate of $170.5 million senior securities, and $15.9 million of subordinated equity issued with respect to $227.4 million of mortgage loans. The senior securities represent 75% of the UPB of the underlying mortgage loans and carry a 4.36% interest rate. We retained 5% of the senior securities, 63% of the subordinated securities and 63% of the equity certificates of the trust. The non-retained securities were issued to institutional third parties. As the primary beneficiary of the trust, we have included 2018-C in our consolidated financial statements at September 30, 2018.  As a result, we included 100% of the mortgages on our consolidated Balance Sheet in our mortgage loans account offset by a liability in secured borrowings of $167.9 million and equity of $6.7 million in non-controlling interest. We include the interest accretion and interest expense offset by the non-controlling interest in our consolidated Statements of Income. We recorded a deferred gain of $2.1 million on the transaction, which will be recognized over the life of the transaction through a reduction in the amount of non-controlling interest.

During the quarter ended September 30, 2018, we co-invested with a third-party institutional investor to acquire 20.0% of each class of Ajax Mortgage Loan Trust 2018-D ("2018-D"), which acquired 470 RPLs with UPB of $100.8 million and an aggregate property value of $149.1 million in two separate transactions. The first transaction consisted of a pool of 371 mortgage loans with UPB of $72.5 million which closed during the quarter ended September 30, 2018, and the second consisted of a pool of 99 mortgage loans with UPB of $28.3 million which closed in October, 2018. The senior securities represent 80% of the UPB of the underlying mortgage loans and carry a 3.75% interest rate. The remaining ownership interest in 2018-D was acquired by the third-party institutional investor. Based on the structure of the transaction we do not consolidate 2018-D under GAAP.

Portfolio Acquisitions
($ in thousands)





 
 
September 30, 2018(1)
 
June 30, 2018
 
March 31, 2018
 
December 31, 2017(2)
 
September 30, 2017
RPLs
 
 
 
 
 
 
 
 
 
 

Count
 
271

 
64

 
87


1,211

 
109

UPB
 
$
69,211

 
$
15,549

 
$
19,699

 
$
241,309

 
$
32,718

Purchase price
 
$
64,428

 
$
14,313

 
$
17,566

 
$
219,236

 
$
26,645

Purchase price % of UPB
 
93.1
%
 
92.1
%
 
89.2
%
 
90.9
%
 
81.4
%
NPLs
 
 
 
 
 
 
 
 
 
 
Count
 
11

 

 

 

 

UPB
 
$
1,700

 
$

 
$

 
$

 
$

Purchase price
 
$
1,431

 
$

 
$

 
$

 
$

Purchase price % of UPB
 
84.2
%
 
%
 
%
 
%
 
%
 
____________________________________________________________

(1)
Includes the impact of 256 mortgage loans with a purchase price of $47.4 million and UPB of $52.8 million acquired through a 63% owned joint venture that we consolidate.
(2)
Includes the impact of 1,003 mortgage loans with a purchase price of $177.3 million and UPB of $194.3 million acquired in the fourth quarter of 2017 through a 50% owned joint venture that we consolidate.

The following table provides an overview of our portfolio at September 30, 2018 ($ in thousands):
No. of loans
 
6,858

 
Weighted average LTV(4)
 
86.2
%
Total UPB
 
$
1,449,800

 
Weighted average remaining term (months)
 
314

Interest-bearing balance
 
$
1,355,022

 
No. of first liens
 
6,834

Deferred balance(1)
 
$
94,779

 
No. of second liens
 
24

Market value of collateral(2)
 
$
1,983,629

 
No. of rental properties
 
17

Price/total UPB(3)
 
81.7
%
 
Market value of rental properties
 
$
8,704

Price/market value of collateral
 
61.7
%
 
Capital invested in rental properties
 
$
8,245

Re-performing loans
 
96.1
%
 
Price/market value of rental properties
 
94.7
%
Non-performing loans
 
2.9
%
 
No. of other REO
 
116

Originated SBC loans
 
1.0
%
 
Market value of other REO(5)
 
$
22,746

Weighted average coupon
 
4.49
%
 
 
 
 

 
____________________________________________________________

(1)
Amounts that have been deferred in connection with a loan modification on which interest does not accrue. These amounts generally become payable at maturity.
(2)
As of date of acquisition.
(3)
Our loan portfolio consists of fixed rate (52.8% of UPB), ARM (10.5% of UPB) and Hybrid ARM (36.7% of UPB) mortgage loans.
(4)
UPB as of September 30, 2018 divided by market value of collateral and weighted by the UPB of the loan.
(5)
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.

Subsequent Events
Since quarter end we acquired 413 residential RPLs with aggregate UPB of $75.3 million in four transactions from four sellers for our own account. The RPLs were acquired at 89.3% of UPB and the estimated market value of the underlying collateral is $109.9 million. The purchase price equaled 67.3% of the estimated market value of the underlying collateral. In a joint venture with a third party institutional investor, we have also acquired 99 RPLs with aggregate UPB of $28.3 million from a single seller. The RPLs were acquired at 92.2% of UPB and the estimated market value of the underlying collateral is $45.6 million. The purchase price equaled 57.3% of the estimated market value of the underlying collateral.

Additionally, we agreed to acquire, subject to due diligence, 2,069 residential RPLs, four SBC RPLs and 486 NPLs with UPB of $561.1 million, $3.4 million and $105.0 million, respectively, in six transactions from six different sellers. The purchase price of the residential RPLs equals 91.0% of UPB and 55.0% of the estimated market value of the underlying collateral of $928.4 million. The purchase price of the SBC RPLs equals 100.0% of UPB and 65.0% of the estimated market value of the underlying collateral of $5.2 million. The purchase price of the NPLs equals 93.5% of UPB, 68.8% of the





borrowers' total amount due and 57.5% of the estimated market value of the underlying collateral of $170.7 million. Some of these loans are expected to be acquired through joint ventures with institutional investors.

We also agreed to acquire three commercial properties for an aggregate purchase price of $10.0 million and collateral value of $10.0 million in three separate transactions from three different sellers.

On October 25, 2018, Oileus Residential Loan Trust called the subordinate debt securities held by the Company as investments. The debt securities were called at par value resulting in no gain or loss from the carrying value at September 30, 2018.
On October 30, 2018, our Board of Directors declared a dividend of $0.32 per share, to be paid on November 30, 2018 to common stockholders of record as of November 16, 2018.
 
Conference Call
Great Ajax Corp. will host a conference call at 5:00 p.m. EST, Tuesday, November 6, 2018 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 is a real estate investment trust, that focuses primarily on acquiring, investing in and managing RPLs secured by single-family residences and, to a lesser extent, NPLs. We also originate 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 Corp., 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, 2017 filed with the SEC on March 8, 2018. Great Ajax Corp. 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
 
 
503-444-4224





GREAT AJAX CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except per share amounts)  
 
 
 
Three months ended
 
 
September 30, 2018
 
June 30, 2018
 
March 31, 2018
 
December 31, 2017
 
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
INCOME:
 
 
 
 
 
 
 
 

Interest income
 
$
27,416

 
$
26,690

 
$
25,591

 
$
24,367

Provision for loan losses
 
(365
)
 

 

 

Interest expense
 
(12,997
)
 
(12,799
)
 
(12,494
)
 
(11,382
)
Net interest income
 
14,054

 
13,891

 
13,097

 
12,985

 
 
 
 
 
 
 
 
 
Income from equity method investments
 
239

 
197

 
192

 
163

Other income
 
457

 
689

 
1,454

 
649

Total income
 
14,750

 
14,777

 
14,743

 
13,797

 
 
 
 
 
 
 
 
 
EXPENSE:
 
 
 
 
 
 

 
 

Related party expense - loan servicing fees
 
2,457

 
2,672

 
2,469

 
2,242

Related party expense - management fee
 
1,456

 
1,440

 
1,532

 
1,510

Loan transaction expense
 
(25
)
 
35

 
355

 
214

Professional fees
 
482

 
506

 
609

 
856

Real estate operating expense
 
1,001

 
944

 
449

 
518

Other expense
 
964

 
965

 
991

 
871

Total expense
 
6,335

 
6,562

 
6,405

 
6,211

Loss on debt extinguishment
 
836

 

 

 
913

Income before provision for income tax
 
7,579

 
8,215

 
8,338

 
6,673

Provision for income tax
 
84

 
2

 
16

 
35

Consolidated net income
 
7,495

 
8,213

 
8,322

 
6,638

Less: consolidated net income attributable to non-controlling interests
 
937

 
692

 
657

 
454

Consolidated net income attributable to common stockholders
 
$
6,558

 
$
7,521

 
$
7,665

 
$
6,184

Basic earnings per common share
 
$
0.35

 
$
0.40

 
$
0.41

 
$
0.34

Diluted earnings per common share
 
$
0.34

 
$
0.37

 
$
0.38

 
$
0.33

 
 
 
 
 
 
 
 
 
Weighted average shares – basic
 
18,691,393

 
18,595,769

 
18,508,089

 
18,236,488

Weighted average shares – diluted
 
26,592,806

 
26,476,817

 
26,395,158

 
26,111,202







GREAT AJAX CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except per share amounts)
 
ASSETS
 
September 30, 2018
 
December 31, 2017
 
 
(Unaudited)
 
 
Cash and cash equivalents
 
$
59,758

 
$
53,721

Cash held in trust
 
45,527

 
27,041

Mortgage loans, net(1,4)
 
1,272,644

 
1,253,541

Property held-for-sale, net(2)
 
20,463

 
24,947

Rental property, net
 
8,080

 
1,284

Investments at fair value
 
51,751

 
6,285

Receivable from servicer
 
13,106

 
17,005

Investments in affiliates
 
8,737

 
7,020

Prepaid expenses and other assets
 
12,410

 
4,894

Total assets
 
$
1,492,476

 
$
1,395,738

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 

Liabilities:
 
 
 
 

Secured borrowings, net(1,3,4)
 
$
631,207

 
$
694,040

Borrowings under repurchase transactions
 
420,461

 
276,385

Convertible senior notes, net(3)
 
103,162

 
102,571

Management fee payable
 
777

 
750

Accrued expenses and other liabilities
 
4,704

 
4,554

Total liabilities
 
1,160,311

 
1,078,300

 
 
 
 
 
Equity:
 
 
 
 

Preferred stock $0.01 par value; 25,000,000 shares authorized, none issued or outstanding
 

 

Common stock $0.01 par value; 125,000,000 shares authorized, 18,856,601 shares at September 30, 2018 and 18,588,228 shares at December 31, 2017 issued and outstanding
 
189

 
186

Additional paid-in capital
 
258,854

 
254,847

Treasury stock
 
(232
)
 

Retained earnings
 
40,518

 
35,556

Accumulated other comprehensive income/(loss)
 
(203
)
 
(233
)
Equity attributable to stockholders
 
299,126

 
290,356

Non-controlling interests(5)
 
33,039

 
27,082

Total equity
 
332,165

 
317,438

Total liabilities and equity
 
$
1,492,476

 
$
1,395,738

___________________________________________________________
​(1)
Mortgage loans, net include $914.2 million and $996.2 million of loans at September 30, 2018 and December 31, 2017, 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 $0.4 million and $0 of allowance for loan losses at September 30, 2018 and December 31, 2017, respectively.
(2)
Property held-for-sale, net, includes valuation allowances of $2.0 million and $1.8 million at September 30, 2018 and December 31, 2017, respectively.
(3)
Secured borrowings and convertible senior notes are presented net of deferred issuance costs.
​(4)
As of September 30, 2018, balances for Mortgage loans, net include​s $338.7 million and Secured borrowings, net of deferred costs includes $237.0 million from the 50% and 63% owned joint ventures. As of December 31, 2017, balances for Mortgage loans, net include​s $177.1 million and Secured borrowings, net of deferred costs includes $88.4 million from the 50% owned joint venture, all of which we consolidate under U.S. GAAP.





​(5)
Non-controlling interests includes $19.9 million at September 30, 2018, from the 50% and 63% owned joint ventures. Non-controlling interests includes $14.0 million at December 31, 2017, from a 50% owned joint venture, all of which we consolidate under U.S. GAAP.


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Section 3: EX-99.2 (EXHIBIT 99.2)

investorpresentation2018
Third Quarter Investor Presentation November 6, 2018


 
Safe Harbor Disclosure  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 are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Forward-looking statements are not predictions of future events. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. Furthermore, forward-looking statements are subject to risks and uncertainties, including, among other things, those described under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2017, which can be accessed through the link to our Securities and Exchange Commission ("SEC") filings on our website (www.great-ajax.com) or at the SEC's website (www.sec.gov). Other risks, uncertainties, and factors that could cause actual results to differ materially from those projected may be described from time to time in reports we file with the SEC, including reports on Forms 10-Q and 8-K. 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 September 30, 2018. 2


 
Business Overview  Leverage long-standing relationships to acquire mortgage loans through privately negotiated transactions from a diverse group of customers – Over 90% of our acquisitions since inception have been privately negotiated – Acquisitions made in 252 transactions since inception. 14 transactions closed in Q3 20181  Use our manager’s proprietary analytics to price each pool on an asset-by-asset basis  Adjust individual loan bid price to accumulate clusters of loans in attractive demographic metropolitan areas – Typical acquisition contains 25 – 100 loans with total market value between $5 – $20 million  Our affiliated servicer services the loans asset-by-asset and borrower-by-borrower  Objective is to maximize returns for each asset by utilizing a full menu of loss mitigation and asset optimization techniques  Analytics and processes of our manager and servicer enable us to broaden our reach through securitizations with institutional investors  Use moderate non-mark-to-market leverage 1Includes transactions Great Ajax Operating Partnership L.P. made through joint venture arrangements with third-party institutional investors 3


 
Highlights – Quarter Ended September 30, 2018  Purchased $64.4 million of re-performing mortgage loans ("RPLs") and $1.4 million of non- performing mortgage loans ("NPLs") with an aggregate unpaid principal balance (“UPB”) of $70.9 million and underlying collateral value of $106.1 million 1; and originated $4.8 million of small-balance commercial mortgage loans ("SBCs").  Mortgage loans purchased during the third quarter and held as of quarter-end were on our consolidated Balance Sheet for a weighted average of nine days during the quarter.  Interest income of $27.4 million; net interest income of $14.1 million.  Net income attributable to common stockholders of $6.6 million.  Basic earnings per share (“EPS”) of $0.35.  $0.04 per share of accelerated amortization of deferred issuance costs for calling of our senior bonds from our Ajax Mortgage Loan Trust 2016-A and Ajax Mortgage Loan Trust 2016-B securitizations  Taxable income of $0.35 per share.  Book value per share of $15.61 at September 30, 2018.  Collected $55.8 million of cash on our portfolio and held $59.8 million of cash and cash equivalents at September 30, 2018. 1Excludes transactions Great Ajax Operating Partnership L.P. made through non-consolidated joint venture arrangements with third-party institutional investors 4


 
Portfolio Overview – as of September 30, 2018 Unpaid Principal Balance1 Property Value2 1% 3% 3% RPL RPL NPL NPL REO 96% 97% $1,449.8 MM $2,015.1 MM RPL: $1,405.4 MM RPL: $1,927.4 MM NPL: $ 44.4 MM NPL: $ 56.3 MM REO & Rental: $ 31.5 MM 1 Includes $358.5 million UPB in RPLs included in joint ventures with third-party institutional investors that are required to be consolidated for GAAP purposes 2 Real estate owned (“REO”) and rental property value is presented at estimated property fair value less expected liquidation costs 5


 
Portfolio Growth Re-performing Loans UPB 2,500 Property Value Price Millions 2,000 $1,927 $1,567 1,500 $1,405 $1,201 $1,193 $1,029 $975 1,000 $864 $643 $669 $567 500 $435 $64 $73 $49 0 Initial Assets (07/08/14) 9/30/2015 9/30/2016 9/30/2017 9/30/2018  RPL UPB as of 09/30/2018 includes $13.7 million of small-balance commercial originations, which are performing loans. Includes $358.5 million UPB in RPLs included in joint ventures with third-party institutional investors that are required to be consolidated for GAAP purposes  RPL status stays constant based on initial purchase status 6


 
Portfolio Growth Non-performing Loans 140 UPB Property Value $122 Millions $118 Price 120 $99 100 $93 80 $70 $66 $63 $58 60 $56 $46 $39 40 $30 20 0 Initial Assets (07/08/14) 9/30/2015 9/30/2016 9/30/2017 9/30/2018  NPL status stays constant based on initial purchase status 7


 
Portfolio Concentrated in Attractive Markets  Clusters of loans in attractive, densely populated markets  Stable liquidity and home prices  Over 80% of the portfolio in our target markets Portland New York / Chicago New Jersey Metro Area Las Vegas Washington DC Metro Area Los Angeles San Diego Phoenix Atlanta Dallas Target Markets Houston Target States Orlando Property Management Tampa Miami, Business Management Ft. Lauderdale, REIT, Servicer & Manager Headquarters W. Palm Beach 8


 
Portfolio Migration Total Pre 3Q2018 Acquisitions ($$ in thousands) Acquisition Current Based on Count UPB Count UPB Liquidated - - 1500 312,446 24for24 416 74,273 3152 697,858 12for12 305 64,002 1633 355,566 7for7 3123 699,895 644 133,112 4f4-6f6 1628 359,340 147 29,611 Less than 4f4 2168 450,651 457 89,366 REO - - 129 32,323 NPL 512 124,914 521 128,908 Purchased REO 34 8,074 3 1,958 8,186 1,781,148 8,186 1,781,148  24 for 24: Loan that has made 24 full payments in the last 24 months  12 for 12: Loan that has made 12 full payments in the last 12 months  7 for 7: Loan that has made 7 full payments in the last 7 months 9  NPL: <1 full payment in the last three months


 
Subsequent Events  Acquisitions Closed since 9/30/20181  Acquisitions Under Contract2  RPL  RPL  UPB: $103.6MM  UPB: $561.1MM  Collateral Value: $155.5MM  Collateral Value: $928.4MM  Price/UPB: 90.1%  Price/UPB: 91.0%  Price/Collateral Value: 60.1%  Price/Collateral Value: 55.0%  512 loans in 5 transactions  2,069 loans in 3 transactions  NPL  UPB: $105.0MM  Collateral Value: $170.7MM  Price/UPB: 93.5%  Price/Total Owed Balance: 68.8%  Price/Collateral Value: 57.5%  486 loans in 1 transaction  SBC  UPB: $3.4MM  Collateral Value: $5.2MM  Price/UPB: 100.0%  Price/Collateral Value: 65.0%  4 loans in 2 transactions  SBC – Properties Under Contract  Price: $10.0MM  3 properties in 3 transactions A dividend of $0.32 per share, to be paid on November 30, 2018 to common stockholders of record as of November 16, 2018 1 $28.3 MM UPB was acquired through a non-consolidated joint venture with third-party institutional investors 2 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. Loans under contract include 10 $560.0MM UPB of RPLs and $105.0MM UPB of NPLs that will be incorporated into joint ventures with third-party institutional investors .


 
Financial Metrics – Excluding consolidation of the portion of securitizations owned by third-party institutional investors Quarter over Quarter Comparison Excluding the Impact of the Consolidation of 2017 D & 2018 C Excluding the consolidation of 2017 D and 2018 C Excluding the consolidation of 2017 D ($ in thousands) Q3-18 Q2-18 Q1-18 Q4-17 Interest Income on Loans 24,626 24,757 24,124 23,778 Average Loans 1,138,599 1,149,225 1,163,970 1,071,415 Average Loan Yield 8.9% 8.9% 8.6% 9.2% Total Interest Expense 12,196 12,031 11,683 11,136 Asset Level Interest Expense 10,037 9,877 9,533 8,990 Average Asset Level Debt 871,443 865,787 881,587 817,316 Average Asset Level Debt Cost 4.7% 4.6% 4.4% 4.5% Asset Level Net Interest Margin 4.2% 4.3% 4.2% 4.7% Total Average Debt 974,472 968,618 984,224 919,763 Total Average Debt Cost 5.1% 5.1% 4.8% 5.0% Total Net Interest Margin 3.8% 3.8% 3.7% 4.1% Non-Interest Operating Expenses 5,143 5,395 5,813 5,693 Non-Interest Operating Expenses/Avg Assets 1.7% 1.7% 2.1% 1.9% ROAA - ex net REO impairments and losses 3.1% 2.7% 2.7% 2.6% ROAA - Net REO Impairments, gains and losses -0.6% -0.3% 0.1% -0.4% ROAA - Total 2.5% 2.4% 2.8% 2.2% ROAE - ex net REO impairments and losses 12.1% 11.5% 10.1% 10.7% ROAE - Net REO Impairments, gains and losses -2.3% -1.2% 0.3% -1.4% ROAE - Total 9.8% 10.3% 10.4% 9.3% Average Leverage Ratio - Asset Backed 2.7 2.8 2.9 2.7 Average Leverage Ratio - Convertible Debt 0.3 0.3 0.3 0.3 Average Leverage Ratio - Total 3.0 3.2 3.2 3.1 Ending Leverage Ratio - Asset Backed 3.0 2.8 2.8 2.9 Ending Leverage Ratio - Convertible Debt 0.3 0.3 0.3 0.3 Ending Leverage Ratio - Total 3.3 3.1 3.1 3.2 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. 11


 
Financial Metrics - Reconciliation of GAAP consolidated financial metrics to non-GAAP financial metrics excluding the portion of securitizations owned by third-party institutional investors Reconciliation of GAAP Consolidated to GAAP Consolidated Excluding the Consolidation of 2017 D and 2018 C Q3-18 Excluding Q2-18 Excluding Q1-18 Excluding Q3-18 GAAP Consolidation Consolidation the Consolidation the Consolidation the Consolidation ($ in thousands) Consolidated Impact of 2017 D Impact of 2018 C of 2017 D & 2018 C of 2017 D of 2017 D Interest Income on Loans 26,261 1,407 228 24,626 24,757 24,124 Average Loans 1,227,262 84,558 4,105 1,138,599 1,149,225 1,163,970 Average Loan Yield 8.8% 0.1% 0.0% 8.9% 8.9% 8.6% Total Interest Expense 12,997 744 57 12,196 12,031 11,683 Asset Level Interest Expense 10,838 744 57 10,037 9,877 9,533 Average Asset Level Debt 948,893 73,453 3,997 871,443 865,787 881,587 Average Asset Level Debt Cost 4.6% 0.0% 0.0% 4.7% 4.6% 4.4% Asset Level Net Interest Margin 4.2% 0.1% 0.0% 4.2% 4.3% 4.2% Total Average Debt 1,051,922 73,453 3,997 974,472 968,618 984,224 Total Average Debt Cost 5.0% 0.1% 0.0% 5.1% 5.1% 4.8% Total Net Interest Margin 3.8% 0.1% 0.0% 3.8% 3.8% 3.7% Non-Interest Operating Expenses - excluding REO 5,334 146 45 5,143 5,395 5,813 Non-Interest Operating Expenses/Avg Assets 1.6% 0.1% 0.1% 1.7% 1.7% 2.1% ROAA - ex net REO impairments and losses 2.8% 0.2% 0.2% 3.1% 2.7% 2.7% ROAA - Net REO impairments, gains and losses -0.6% 0.0% 0.0% -0.6% -0.3% 0.1% ROAA - Total 2.2% 0.1% 0.1% 2.5% 2.4% 2.8% ROAE - ex net REO impairments and losses 12.1% 0.0% 0.0% 12.1% 11.5% 10.1% ROAE - Net REO impairments, gains and losses -2.3% 0.0% 0.0% -2.3% -1.2% 0.3% ROAE - Total 9.8% 0.0% 0.0% 9.8% 10.3% 10.4% Average Leverage Ratio - Asset Backed 2.9 (0.2) (0.0) 2.7 2.8 2.9 Average Leverage Ratio - Convertbile Debt 0.3 - - 0.3 0.3 0.3 Average Leverage Ratio - Total 3.3 (0.2) (0.0) 3.0 3.2 3.2 Ending Leverage Ratio - Asset Backed 3.2 (0.1) (0.1) 3.0 2.8 2.8 Ending Leverage Ratio - Convertible Debt 0.3 0.0 0.0 0.3 0.3 0.3 Ending Leverage Ratio - Total 3.5 (0.1) (0.1) 3.3 3.1 3.1 12


 
Consolidated Statements of Income (Dollars in thousands except per share amounts) (Unaudited) Three months ended September 30, 2018 June 30, 2018 March 31, 2018 December 31, 2017 (unaudited) (unaudited) (unaudited) (unaudited) INCOME: Interest income $ 27,416 $ 26,690 $ 25,591 $ 24,367 Provision for loan losses (365) - - - Interest expense (12,997) (12,799 ) (12,494 ) (11,382 ) Net interest income 14,054 13,891 13,097 12,985 Income from equity method investments 239 197 192 163 Other income 457 689 1,454 649 Total income 14,750 14,777 14,743 13,797 EXP ENS E: Related party expense - loan servicing fees 2,457 2,672 2,469 2,242 Related party expense - management fee 1,456 1,440 1,532 1,510 Loan transaction expense (25 ) 35 355 214 Professional fees 482 506 609 856 Real estate operating expense 1001 944 449 518 Other expense 964 965 991 871 Total expense 6,335 6,562 6,405 6,211 Loss on debt extinguishment 836 — — 913 Income before provision for income tax 7,579 8,215 8,338 6,673 Provision for income tax 84 2 16 35 Consolidated net income 7,495 8,213 8,322 6,638 Less: consolidated net income attributable to 937 692 657 454 non-controlling interests Consolidated net income attributable to $ 6,558 $ 7,521 $ 7,665 $ 6,184 common stockholders Basic earnings per common share $ 0.35 $ 0.40 $ 0.41 $ 0.34 Diluted earnings per common share $ 0.34 $ 0.37 $ 0.38 $ 0.33 Weighted average shares – basic 18,691,393 18,595,769 18,508,089 18,236,488 Weighted average shares – diluted 26,592,806 26,476,817 26,395,158 26,111,202 13


 
Consolidated Balance Sheets (Dollars in thousands except per share amounts) ASSETS September 30, 2018 December 31, 2017 (Unaudited) Cash and cash equivalents $ 59,758 $ 53,721 Cash held in trust 45,527 27,041 Mortgage loans, net(1,4) 1,272,644 1,253,541 Property held-for-sale, net(2) 20,463 24,947 Rental property, net 8,080 1,284 Investments at fair value 51,751 6,285 Receivable from servicer 13,106 17,005 Investment in affiliates 8,737 7,020 Prepaid expenses and other assets 12,410 4,894 Total assets $ 1,492,476 $ 1,395,738 LIABILITIES AND EQUITY Liabilities: Secured borrowings, net(1,3,4) $ 631,207 $ 694,040 Borrowings under repurchase transactions 420,461 276,385 Convertible senior notes, net(3) 103,162 102,571 Management fee payable 777 750 Accrued expenses and other liabilities 4,704 4,554 Total liabilities 1,160,311 1,078,300 Equity: Preferred stock $0.01 par value; 25,000,000 shares authorized, — — none issued or outstanding Common stock $0.01 par value; 125,000,000 shares authorized, 18,856,601 shares at September 30, 2018 and 18,588,228 shares at 189 186 December 31, 2017 issued and outstanding Additional paid-in capital 258,854 254,847 Treasury stock (232) — Retained earnings 40,518 35,556 Accumulated other comprehensive loss (203) (233 ) Equity attributable to stockholders 299,126 290,356 Non-controlling interests(5) 33,039 27,082 Total equity 332,165 317,438 Total liabilities and equity $ 1,492,476 $ 1,395,738 (1) Mortgage loans includes $914.2 million and $996.2 million of loans at September 30, 2018 and December 31, 2017, 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 $0.4 million and $0 of allowance for loan losses at September 30,2018 and December 31,2017 respectively (2) Property held for sale, net, includes valuation allowances of $2.0 million and $1.8 million at September 30, 2018 , and December 31, 2017, respectively. (3) Secured borrowings and Convertible senior notes are presented net of deferred issuance costs (4) As of September 30, 2018, balances for Mortgage loans, net include​s $338.7 million and Secured borrowings, net of deferred costs includes $237.0 million from the 50% and 63% owned joint ventures. As of December 31, 2017, balances for Mortgage loans, net include​s $177.1 million and Secured 14 borrowings, net of deferred costs includes $88.4 million from the 50% owned joint venture, all of which we consolidate under U.S. GAAP. (5) Non-controlling interests includes $19.9 million at September 30, 2018, from the 50% and 63% owned joint ventures. Non-controlling interests includes $14.0 million at December 31, 2017, from a 50% owned joint venture, all of which we consolidate under U.S. GAAP.


 
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