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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): May 7, 2019


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 May 7, 2019, Great Ajax Corp., a Maryland corporation (the “Company”), issued a press release regarding its financial results for the quarter ended March 31, 2019 (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 May 7, 2019, the Company will hold an investor conference call and webcast to discuss financial results for the first quarter ended March 31, 2019, 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 first quarter ended March 31, 2019 (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 May 7, 2019
99.2
 
May 2019 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: May 7, 2019



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1 
397837616_logoa10.jpg
GREAT AJAX CORP. ANNOUNCES RESULTS FOR THE QUARTER
ENDED MARCH 31, 2019
 
First Quarter Highlights
Purchased $7.2 million of re-performing mortgage loans ("RPLs") with an unpaid principal balance (“UPB”) of $8.5 million and underlying collateral values of $12.2 million; and acquired $17.8 million of small-balance commercial mortgage loans ("SBCs") with collateral values of $28.7 million
Formed joint ventures that acquired $388.2 million in UPB of mortgage loans with collateral values of $671.7 million and retained $64.0 million of varying classes of related securities issued by the joint ventures to end the quarter with $182.9 million of investments in debt securities and beneficial interests
Acquired one multi-family property for $2.3 million
Interest income of $29.5 million net of $0.3 million in servicing fee expense on loans held in certain of our joint ventures; Net interest income after provision for loan losses is $13.6 million
Net income attributable to common stockholders of $7.3 million
Basic earnings per share (“EPS”) of $0.39
Taxable income of $0.11 per share
Book value per share of $15.59 at March 31, 2019
Collected total cash of $63.2 million; including $49.8 million from our mortgage loan and REO portfolio and $13.4 million from our investments in debt securities and beneficial interests
Sold $39.6 million of joint venture senior debt securities, and held $41.5 million of cash and cash equivalents at March 31, 2019

New York, NY—May 7, 2019 —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 March 31, 2019. 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 loans (“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 and acquire multi-family retail/residential and mixed use and commercial properties.
 





Financial Results (Unaudited)
($ in thousands except per share amounts)
 
 
For the three months ended
 
 
March 31, 2019
 
December 31, 2018
 
September 30, 2018
 
June 30, 2018
 
March 31, 2018
Loan interest income(1,2,3)
 
$
26,557

 
$
26,146

 
$
26,261

 
$
26,158

 
$
25,445

Debt securities and beneficial interests(4)
 
$
2,416

 
$
1,155

 
$
444

 
$
238

 
$
131

Total revenue, net(1,5)
 
$
15,184

 
$
13,894

 
$
14,750

 
$
14,777

 
$
14,743

Consolidated net income(1)
 
$
8,121

 
$
7,307

 
$
7,495

 
$
8,213

 
$
8,322

Net income per basic share
 
$
0.39

 
$
0.35

 
$
0.35

 
$
0.40

 
$
0.41

Average equity(1)
 
$
336,050

 
$
332,002

 
$
323,750

 
$
319,815

 
$
318,839

Average total assets(1)
 
$
1,587,871

 
$
1,525,759

 
$
1,381,742

 
$
1,362,843

 
$
1,377,537

Average daily cash balance(6)
 
$
59,484

 
$
68,926

 
$
40,674

 
$
41,617

 
$
51,540

Average carrying value of RPLs(1,7)
 
$
1,230,512

 
$
1,226,491

 
$
1,161,709

 
$
1,175,466

 
$
1,191,611

Average carrying value of NPLs(1)
 
$
39,807

 
$
41,438

 
$
38,237

 
$
40,767

 
$
40,593

Average carrying value of SBC loans(7)
 
$
36,181

 
$
35,372

 
$
27,316

 
$
19,222

 
$
19,656

Average carrying value of debt securities and beneficial interests
 
$
135,449

 
$
72,535

 
$
32,693

 
$
16,262

 
$
6,543

Average asset level debt balance(1,8)
 
$
1,127,673

 
$
1,089,285

 
$
948,893

 
$
941,533

 
$
961,853

____________________________________________________________

(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 accredited investors.
(2)
Loan interest income excludes interest income from debt securities and beneficial interests and bank account balances.
(3)
Loan interest income for the quarters ended March 31, 2019 and December 31, 2018 is net of impairments of $0.2 million and $0.8 million, respectively, on our loan pools.
(4)
Interest income on investment in debt securities and beneficial interests issued by our joint ventures is net of servicing fees.
(5)
Total revenue includes net interest income, income from equity method investments and other income.
(6)
Average daily cash balance includes cash and cash equivalents, and excludes cash held in trust.
(7)
The average carrying value of RPLs and the average carrying value of SBC loans has been recast for all prior periods to reflect all SBC loans in the average carrying value of SBC loans. Previously, certain SBC loans acquired in accretable loan pools were included in RPLs.
(8)
All quarters have been updated to reflect average asset level debt balance from total average debt balance.

Our consolidated net income increased $0.8 million for the quarter ended March 31, 2019 compared to the quarter ended December 31, 2018, primarily driven by lower impairments on our loan pools and our REO held for sale, offset by higher professional fees due to year-end activity. Additionally, net interest income before the impact of loan pool impairments was $0.3 million higher as we increased our investments in debt securities and beneficial interests issued by our joint ventures.
 
Our interest income on loans increased for the quarter ended March 31, 2019 primarily due to impairments in the amount of $0.2 million on certain of our 2014 and 2015 NPL pools versus $0.8 million for the quarter ended December 31, 2018.  The impairments are driven by small remaining pool size in which cash flow fluctuations on individual loans is not offset by the small remaining value of loans in the pool. 
 
The majority of our new investments during the quarter were recorded as investments in debt securities and beneficial interests in our joint ventures that were on our balance sheet for a weighted average of only 2.5 days of the quarter.  Interest income from our investments in debt securities and beneficial interests issued by our non-consolidated joint ventures is recognized net of servicing fees, which are incurred by each joint venture.  This is different than our investments in mortgage loans where interest income is recognized on a gross basis with the offsetting servicing fee recorded as expense in a separate income statement line.  The impact of netting the servicing fee against gross interest income reduces the weighted average yield, the gross and net interest income on our investments, and our servicing fee expense for the quarter ended March 31, 2019 by approximately 86 basis points on an annualized basis compared to a similar investment in a whole loan mortgage pool. The impact for the quarter ended December 31, 2018 was approximately 77 basis points on an annualized basis.






We recorded $0.5 million in impairments on our REO held-for-sale portfolio in real estate operating expense for the quarter ended March 31, 2019 compared to $0.7 million for the quarter ended December 31, 2018. We continue to liquidate our REO properties held-for-sale at a faster rate than they are being acquired through foreclosures, with 33 properties sold in the first quarter while 26 were added to REO held-for-sale.

We collected $63.2 million of cash during the quarter, to end the first quarter with $41.5 million in cash and cash equivalents. $49.8 million of our cash collections derived from our mortgage loan and REO portfolios through loan payments, loan payoffs and sales of REO during the quarter and $13.4 million in interest and payments from our investments in debt securities and beneficial interests. We also sold $39.6 million of senior debt securities issued by our joint ventures. Of the $49.8 million of cash collections from mortgage loans and REO, we received $17.7 million from loans paying the full amount of principal, past due interest and charges.

During the quarter ended March 31, 2019, we acquired $7.2 million of RPLs with an aggregate UPB of $8.5 million, and underlying collateral values of $12.2 million. We also acquired 19 SBC loans with UPB of $17.8 million that represented 62.0% of the underlying collateral value of $28.7 million. We ended the quarter with $1.3 billion of mortgage loans with an aggregate UPB of $1.5 billion. Mortgage loans acquired during the first quarter and held as of quarter-end were on our consolidated balance sheet for a weighted average of 37 days during the quarter.

We also acquired a 16-unit multi-family property in Atlanta, GA for a purchase price of $2.3 million.

During the quarter ended March 31, 2019, we co-invested with a third-party institutional accredited investor to purchase $388.2 million of mortgage loans with collateral values of $671.7 million through newly-formed joint ventures, and retained $64.0 million of varying classes of related securities issued by the joint ventures, to end the quarter with $152.1 million of investments in securities at fair value and $30.8 million in beneficial interests. We acquired 20.0% of each class of Ajax Mortgage Loan Trust 2019-A ("2019-A") for a net investment of $32.6 million and 15.0% of each class of Ajax Mortgage Loan Trust 2019-B ("2019-B") for a net investment of $31.4 million.

2019-A acquired 485 RPLs and NPLs with UPB of $170.4 million and an aggregate property value of $299.1 million. The senior securities represent 75% of the UPB of the underlying mortgage loans and carry a 3.75% interest rate. Based on the structure of the transaction we do not consolidate 2019-A under GAAP.

2019-B acquired 1,200 RPLs with UPB of $217.8 million and an aggregate property value of $372.6 million. The senior securities represent 75% of the UPB of the underlying mortgage loans and carry a 3.75% interest rate. Based on the structure of the transaction we do not consolidate 2019-B under GAAP.

Portfolio Acquisitions
($ in thousands)
 
 
For the three months ended
 
 
March 31, 2019
 
December 31, 2018
 
September 30, 2018(1)
 
June 30, 2018
 
March 31, 2018
RPLs
 
 
 
 
 
 
 
 
 
 
Count
 
38

 
388

 
271

 
64

 
87

UPB
 
$
8,495

 
$
71,049

 
$
69,211

 
$
15,549

 
$
19,699

Purchase price
 
$
7,205

 
$
63,304

 
$
64,428

 
$
14,313

 
$
17,566

Purchase price % of UPB
 
84.8
%
 
89.1
%
 
93.1
%
 
92.1
%
 
89.2
%
NPLs
 
 
 
 
 
 
 
 
 
 
Count
 

 
25

 
11

 

 

UPB
 
$

 
$
4,269

 
$
1,700

 
$

 
$

Purchase price
 
$

 
$
3,979

 
$
1,431

 
$

 
$

Purchase price % of UPB
 
%
 
93.2
%
 
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.






The following table provides an overview of our portfolio at March 31, 2019 ($ in thousands):
No. of loans
 
7,018

 
Weighted average coupon
 
4.60
%
Total UPB
 
$
1,470,383

 
Weighted average LTV(5)
 
85.0
%
Interest-bearing balance
 
$
1,375,912

 
Weighted average remaining term (months)
 
310

Deferred balance(1)
 
$
94,471

 
No. of first liens
 
6,989

Market value of collateral(2)
 
$
2,026,989

 
No. of second liens
 
29

Price/total UPB(3)
 
82.3
%
 
No. of rental properties
 
20

Price/market value of collateral
 
62.3
%
 
Capital invested in rental properties
 
$
19,545

Re-performing loans
 
93.5
%
 
No. of REO held-for-sale
 
97

Non-performing loans
 
2.7
%
 
Market value of REO held-for-sale(6)
 
$
20,308

Small-balance commercial loans(4)
 
3.8
%
 
 
 
 
 
____________________________________________________________

(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 (54.1% of UPB), ARM (10.0% of UPB) and Hybrid ARM (35.9% of UPB) mortgage loans.
(4)
SBC loans includes both purchased and originated loans.
(5)
UPB as of March 31, 2019 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.

Subsequent Events
Since quarter end, we acquired 66 residential RPLs with aggregate UPB of $13.9 million in two transactions from two sellers. The RPLs were acquired at 87.9% of UPB and the estimated market value of the underlying collateral is $21.1 million. The purchase price equaled 57.8% of the estimated market value of the underlying collateral.

Additionally, we have also agreed to acquire, subject to due diligence, 106 residential RPLs with UPB of $21.3 million in four transactions from four different sellers. The purchase price of the residential RPLs equals 84.2% of UPB and 55.9% of the estimated market value of the underlying collateral of $32.2 million. We also agreed to acquire two SBC loans with UPB of $0.7 million. The purchase price of the SBC loans equals 99.0% of UPB.

We also agreed to acquire three commercial properties for an aggregate purchase price of $7.1 million in three separate transactions from three different sellers.

On April 30, 2019, our Board of Directors declared a dividend of $0.32 per share to be paid on May 31, 2019 to our common stockholders of record as of May 17, 2019.
 
Conference Call
Great Ajax Corp. will host a conference call at 5:00 p.m. EST, Tuesday, May 7, 2019 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, 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, 2018 when filed with the SEC. 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
 
 
503-444-4224





GREAT AJAX CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except per share amounts)  
 
 
 
Three months ended
 
 
March 31, 2019
 
December 31, 2018
 
September 30, 2018
 
June 30, 2018
 
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
INCOME:
 
 
 
 
 
 
 
 
Interest income
 
$
29,452

 
$
28,484

 
$
27,416

 
$
26,690

Interest expense
 
(15,685
)
 
(15,045
)
 
(12,997
)
 
(12,799
)
Net interest income
 
13,767

 
13,439

 
14,419

 
13,891

Provision for loan losses
 
(154
)
 
(799
)
 
(365
)
 

Net interest income after provision for loan losses
 
13,613

 
12,640

 
14,054

 
13,891

 
 
 
 
 
 
 
 
 
Income from equity method investments
 
461

 
134

 
239

 
197

Other income
 
1,110

 
1,120

 
457

 
689

Total income
 
15,184

 
13,894

 
14,750

 
14,777

 
 
 
 
 
 
 
 
 
EXPENSE:
 
 
 
 
 
 
 
 
Related party expense - loan servicing fees
 
2,506

 
2,550

 
2,457

 
2,672

Related party expense - management fee
 
1,688

 
1,597

 
1,456

 
1,440

Loan transaction expense
 
69

 
24

 
(25
)
 
35

Professional fees
 
862

 
582

 
482

 
506

Real estate operating expense
 
786

 
858

 
1,001

 
944

Other expense
 
1,081

 
1,014

 
964

 
965

Total expense
 
6,992

 
6,625

 
6,335

 
6,562

Loss on debt extinguishment
 

 

 
836

 

Income before provision for income tax
 
8,192

 
7,269

 
7,579

 
8,215

Provision for income tax (benefit)
 
71

 
(38
)
 
84

 
2

Consolidated net income
 
8,121

 
7,307

 
7,495

 
8,213

Less: consolidated net income attributable to non-controlling interests
 
791

 
711

 
937

 
692

Consolidated net income attributable to common stockholders
 
$
7,330

 
$
6,596

 
$
6,558

 
$
7,521

Basic earnings per common share
 
$
0.39

 
$
0.35

 
$
0.35

 
$
0.40

Diluted earnings per common share
 
$
0.36

 
$
0.34

 
$
0.34

 
$
0.37

 
 
 
 
 
 
 
 
 
Weighted average shares – basic
 
18,811,713

 
18,771,423

 
18,691,393

 
18,595,769

Weighted average shares – diluted
 
27,829,448

 
27,163,859

 
26,592,806

 
26,476,817







GREAT AJAX CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except per share amounts)
 
 
 
March 31, 2019
 
December 31, 2018
ASSETS
 
 
 
 
Cash and cash equivalents
 
$
41,542

 
$
55,146

Cash held in trust
 
23

 
24

Mortgage loans, net(1,4)
 
1,313,677

 
1,310,873

Property held-for-sale, net(2)
 
18,580

 
19,402

Rental property, net
 
19,242

 
17,635

Investments at fair value
 
152,083

 
146,811

Investments in beneficial interests
 
30,809

 
22,086

Receivable from servicer
 
18,746

 
14,587

Investments in affiliates
 
8,904

 
8,653

Prepaid expenses and other assets
 
12,576

 
7,654

Total assets
 
$
1,616,182

 
$
1,602,871

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 

Liabilities:
 
 
 
 

Secured borrowings, net(1,3,4)
 
$
593,121

 
$
610,199

Borrowings under repurchase transactions
 
560,404

 
534,089

Convertible senior notes, net(3)
 
117,838

 
117,525

Management fee payable
 
951

 
881

Accrued expenses and other liabilities
 
7,193

 
5,898

Total liabilities
 
1,279,507

 
1,268,592

 
 
 
 
 
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, 18,967,223 shares at March 31, 2019 and 18,909,874 shares at December 31, 2018 issued and outstanding
 
190

 
189

Additional paid-in capital
 
261,527

 
260,427

Treasury stock
 
(310
)
 
(270
)
Retained earnings
 
41,372

 
41,063

Accumulated other comprehensive loss
 
(178
)
 
(575
)
Equity attributable to stockholders
 
302,601

 
300,834

Non-controlling interests(5)
 
34,074

 
33,445

Total equity
 
336,675

 
334,279

Total liabilities and equity
 
$
1,616,182

 
$
1,602,871

___________________________________________________________
​(1)
Mortgage loans, net include $883.1 million and $897.8 million of loans at March 31, 2019 and December 31, 2018, 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 $1.3 million and $1.2 million of allowance for loan losses at March 31, 2019 and December 31, 2018, respectively.
(2)
Property held-for-sale, net, includes valuation allowances of $1.9 million and $1.8 million at March 31, 2019 and December 31, 2018, respectively.
(3)
Secured borrowings and convertible senior notes are presented net of deferred issuance costs.
​(4)
As of March 31, 2019, balances for Mortgage loans, net include​s $370.5 million and Secured borrowings, net of deferred costs includes $227.3 million from the 50% and 63% owned joint ventures. As of December 31, 2018, balances for Mortgage loans, net include​s $377.0 million and Secured borrowings, net of deferred costs includes $231.9 million from a 50% and 63% owned joint ventures, all of which we consolidate under U.S. GAAP.





​(5)
Non-controlling interests includes $20.9 million at March 31, 2019, from 50% and 63% owned joint ventures. Non-controlling interests includes $20.4 million at December 31, 2018, from a 50% and 63% owned joint ventures, all of which we consolidate under U.S. GAAP.


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Section 3: EX-99.2 (EXHIBIT 99.2)

investorpresentation
First Quarter Investor Presentation May 7, 2019


 
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, 2018, 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 March 31, 2019. 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 273 transactions since inception. Twelve transactions closed in Q1 20191  Use our manager’s proprietary analytics to price each 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 – Typical acquisition contains 25 – 100 loans with a total market value between $5 – $20 million  Our affiliated servicer services the loans asset-by-asset and borrower-by-borrower – We own 8% and have warrants to purchase up to an additional 12% of the servicer  Our 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 joint ventures with institutional accredited investors  Use moderate non-mark-to-market leverage 1 Includes transactions Great Ajax Operating Partnership L.P. made through joint venture arrangements with third-party institutional accredited investors 3


 
Highlights – Quarter Ended March 31, 2019  Purchased $7.2 million of re-performing mortgage loans ("RPLs") with an unpaid principal balance (“UPB”) of $8.5 million and underlying collateral values of $12.2 million; and acquired $17.8 million of small-balance commercial mortgage loans ("SBCs") with collateral values of $28.7 million  Formed joint ventures that acquired $388.2 million in UPB of mortgage loans with collateral values of $671.7 million and retained $64.0 million of varying classes of related securities issued by the joint ventures to end the quarter with $182.9 million of investments in debt securities and beneficial interests  Acquired one multi-family property for $2.3 million  Interest income of $29.5 million net of $0.3 million in servicing fee expense on loans held in certain of our joint ventures; Net interest income after provision for loan losses is $13.6 million  Net income attributable to common stockholders of $7.3 million  Basic earnings per share (“EPS”) of $0.39  Taxable income of $0.11 per share  Book value per share of $15.59 at March 31, 2019  Collected total cash of $63.2 million; including $49.8 million from our mortgage loan and REO portfolio and $13.4 million from our investments in debt securities and beneficial interests  Sold $39.6 million of joint venture senior debt securities, and held $41.5 million of cash and cash equivalents at March 31, 2019 4


 
Portfolio Overview – as of March 31, 2019 Unpaid Principal Balance1 Property Value2 2% 3% 3% RPL RPL NPL NPL REO 95% 97% $1,470.4 MM $2,066.8 MM RPL: $1,426.7 MM RPL: $1,969.5 MM NPL: $ 43.7 MM NPL: $ 57.5 MM REO & Rental: $ 39.9 MM 1 Includes $391.1 million UPB in RPLs included in joint ventures with third-party institutional accredited 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  RPL UPB as of 03/31/2019 includes $50.1 million of small-balance commercial loans which are performing loans. Includes $391.1 million UPB in RPLs included in joint ventures with third-party institutional accredited investors that are required to be consolidated for GAAP purposes  RPL status stays constant based on initial purchase status 6


 
Portfolio Growth $51 $44 $46 $46  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 / New Jersey Metro Area Las Vegas Washington DC Metro Area Los Angeles San Diego Phoenix Atlanta Dallas Target Markets Houston Orlando Target States Property Management Tampa Miami, Business Management Ft. Lauderdale, REIT, Servicer & Manager Headquarters W. Palm Beach 8


 
Portfolio Migration Total Pre 1Q2019 Acquisitions ($$ in thousands)2 Acquisition Current Based on Count UPB Count UPB Liquidated- Loans - - 1802 377,955 Liquidated- Purch REO 31 6,114 24for24 806 143,917 4279 926,603 12for12 399 86,996 1416 298,707 7for7 3159 709,400 141 38,390 4f4-6f6 1663 366,984 134 28,763 Less than 4f4 2261 479,983 446 92,777 REO - - 111 29,690 NPL 561 133,221 520 127,618 Purchased REO 34 8,074 3 1,958 8,883 1,928,575 8,883 1,928,575  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 03/31/2019  Acquisitions Under Contract1  RPL  RPL  UPB: $13.9MM  UPB: $21.3MM  Collateral Value: $21.1MM  Collateral Value: $32.2MM  Price/UPB: 87.9%  Price/UPB: 84.2%  Price/Collateral Value: 57.8%  Price/Collateral Value: 55.9%  66 loans in 2 transactions  106 loans in 4 transactions  SBC Origination  UPB: $0.7MM  Price/UPB: 99.0%  2 loans in 2 transactions  SBC Properties  Price: $7.1MM  3 properties in 3 transactions A dividend of $0.32 per share, to be paid on May 31, 2019 to common stockholders of record as of May 17, 2019 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. 10


 
Financial Metrics – Excluding consolidation of the portion of securitizations owned by third-party institutional accredited investors Excluding the consolidation of 2017 D and 2018 C ($ in thousands) Q1-19 Q4-18 Q3-18 Q2-18 Interest Income on Loans 1 24,112 23,681 24,626 24,757 Interest Income on Debt Securities and Beneficial Interests2 2,416 1,155 444 238 Average Loans 1,147,220 1,145,739 1,138,599 1,149,225 Average Loan Yield (net of impairments) 8.7% 8.5% 8.9% 8.9% Average Debt Securities and Beneficial Interests 135,449 72,535 32,693 16,262 Average Debt Securities and Beneficial Interests Yield 7.3% 6.5% 5.5% 6.0% Average Total Asset Yield 8.5% 8.4% 8.8% 8.9% Total Interest Expense 14,166 13,472 12,196 12,031 Asset Level Interest Expense 11,608 11,116 10,037 9,877 Average Asset Level Debt 1,000,461 958,606 871,443 865,787 Average Asset Level Debt Cost 4.7% 4.7% 4.7% 4.6% Asset Level Net Interest Margin 3.8% 3.7% 4.2% 4.2% Total Average Debt 1,118,095 1,068,658 974,472 968,618 Total Average Debt Cost 5.2% 5.1% 5.1% 5.1% Total Net Interest Margin 3.4% 3.3% 3.7% 3.8% Non-Interest Operating Expenses/Avg Assets 1.7% 1.6% 1.7% 1.7% ROAA - ex net REO and loan impairments and losses 2.5% 2.6% 3.3% 2.7% ROAA - Net REO and loan impairments, gains and losses -0.2% -0.5% -0.7% -0.3% ROAA - Total 2.3% 2.2% 2.5% 2.4% ROAE - ex net REO and loan impairments and losses 11.1% 11.1% 12.6% 11.5% ROAE - Net REO and loan impairments, gains and losses -1.0% -1.8% -2.8% -1.2% ROAE - Total 10.1% 9.3% 9.8% 10.3% Average Leverage Ratio - Asset Backed 3.0 2.9 2.7 2.8 Average Leverage Ratio - Convertible Debt 0.4 0.3 0.3 0.3 Average Leverage Ratio - Total 3.3 3.2 3.0 3.2 Ending Leverage Ratio - Asset Backed3 3.3 3.2 3.0 2.8 Ending Leverage Ratio - Convertible Debt 0.4 0.4 0.3 0.3 Ending Leverage Ratio - Total4 3.6 3.6 3.3 3.1 ¹Interest income on loans is net of impairments 2Interest income on debt securities is net of servicing fee 3Excludes the impact of consolidating trusts and convertible debt 4Excludes the impact of consolidating trusts 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 accredited investors Reconciliation of GAAP Consolidated to GAAP Consolidated Excluding the Consolidation of 2017 D and 2018 C Q1-19 Excluding the Q4-18 Excluding the Q3-18 Excluding the Q2-18 Excluding the Q1-19 GAAP Consolidation Consolidation Consolidation of Consolidation of Consolidation of Consolidation of ($ in thousands) Consolidated Impact of 2017 D Impact of 2018 C 2017 D and 2018 C 2017 D and 2018 C 2017 D and 2018 C 2017 D Interest Income on Loans 1 26,557 1,340 1,105 24,112 23,681 24,626 24,757 Interest Income on Debt Securities and Beneficial Interests2 2,416 - - 2,416 1,155 444 238 Average Loans 1,306,500 81,217 78,063 1,147,220 1,145,739 1,138,599 1,149,225 Average Loan Yield (net of impairments) 8.4% 0.1% 0.2% 8.7% 8.5% 8.9% 8.9% Average Debt Securities and Beneficial Interests 135,449 - - 135,449 72,535 32,693 16,262 Average Debt Securities and Beneficial Interests Yield 7.3% 0.0% 0.0% 7.3% 6.5% 5.5% 6.0% Average Total Asset Yield 8.3% 0.1% 0.1% 8.5% 8.4% 8.8% 8.9% Total Interest Expense 15,685 687 832 14,166 13,472 12,196 12,031 Asset Level Interest Expense 13,127 687 832 11,608 11,116 10,037 9,877 Average Asset Level Debt 1,127,673 68,828 58,384 1,000,461 958,606 871,443 865,787 Average Asset Level Debt Cost 4.7% 0.0% -0.1% 4.7% 4.7% 4.7% 4.6% Asset Level Net Interest Margin 3.5% 0.0% 0.2% 3.8% 3.7% 4.2% 4.2% Total Average Debt 1,245,307 68,828 58,384 1,118,095 1,068,658 974,472 968,618 Total Average Debt Cost 5.1% 0.1% 0.0% 5.2% 5.1% 5.1% 5.1% Total Net Interest Margin 3.1% 0.0% 0.2% 3.4% 3.3% 3.7% 3.8% Non-Interest Operating Expenses/Avg Assets 1.6% 0.1% 0.0% 1.7% 1.6% 1.7% 1.7% ROAA - ex net REO and loan impairments and losses 2.3% 0.1% 0.1% 2.5% 2.6% 3.3% 2.7% ROAA - Net REO and loan impairments, gains and losses -0.2% 0.0% 0.0% -0.2% -0.5% -0.7% -0.3% ROAA - Total 2.1% 0.1% 0.1% 2.3% 2.2% 2.5% 2.4% ROAE - ex net REO and loan impairments and losses 11.1% 0.0% 0.0% 11.1% 11.1% 12.6% 11.5% ROAE - Net REO and loan impairments, gains and losses -1.0% 0.0% 0.0% -1.0% -1.8% -2.8% -1.2% ROAE - Total 10.1% 0.0% 0.0% 10.1% 9.3% 9.8% 10.3% Average Leverage Ratio - Asset Backed 3.4 (0.2) (0.2) 3.0 2.9 2.7 2.8 Average Leverage Ratio - Convertbile Debt 0.4 - - 0.4 0.3 0.3 0.3 Average Leverage Ratio - Total 3.7 (0.2) (0.2) 3.3 3.2 3.0 3.2 Ending Leverage Ratio - Asset Backed3 3.4 (0.1) (0.1) 3.3 3.2 3.0 2.8 Ending Leverage Ratio - Convertible Debt 0.4 0.0 0.0 0.4 0.4 0.3 0.3 Ending Leverage Ratio - Total4 3.8 (0.0) (0.1) 3.6 3.6 3.3 3.1 ¹Interest income on loans is net of impairments 2Interest income on debt securities is net of servicing fee 3Excludes the impact of consolidating trusts and convertible debt 4Excludes the impact of consolidating trusts 12


 
Consolidated Statements of Income (Dollars in thousands except per share amounts) (Unaudited) Three months ended March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2018 (unaudited) (unaudited) (unaudited) (unaudited) INCOME: Interest income $ 29,452 $ 28,484 $ 27,416 $ 26,690 Interest expense (15,685) (15,045) (12,997) (12,799) Net interest income 13,767 13,439 14,419 13,891 Provision for loan losses (154) (799) (365) - Net interest income after provision for loan losses 13,613 12,640 14,054 13,891 Income from equity method investments 461 134 239 197 Other income 1,110 1,120 457 689 Total income 15,184 13,894 14,750 14,777 EXPENSE: Related party expense - loan servicing fees 2,506 2,550 2,457 2,672 Related party expense - management fee 1,688 1,597 1,456 1,440 Loan transaction expense 69 24 (25) 35 Professional fees 862 582 482 506 Real estate operating expense 786 858 1,001 944 Other expense 1,081 1,014 964 965 Total expense 6,992 6,625 6,335 6,562 Loss on debt extinguishment - - 836 - Income before provision for income tax 8,192 7,269 7,579 8,215 Provision for income tax 71 (38) 84 2 Consolidated net income 8,121 7,307 7,495 8,213 Less: consolidated net income attributable to non- 791 711 937 692 controlling interests Consolidated net income attributable to common $ 7,330 $ 6,596 $ 6,558 $ 7,521 stockholders Basic earnings per common share $ 0.39 $ 0.35 $ 0.35 $ 0.40 Diluted earnings per common share $ 0.36 $ 0.34 $ 0.34 $ 0.37 Weighted average shares – basic 18,811,713 18,771,423 18,691,393 18,595,769 Weighted average shares – diluted 27,829,448 27,163,859 26,592,806 26,476,817 13


 
Consolidated Balance Sheets (Dollars in thousands except per share amounts) ASSETS March 31, 2019 December 31, 2018 (Unaudited) (Unaudited) Cash and cash equivalents $ 41,542 $ 55,146 Cash held in trust 23 24 Mortgage loans, net(1,4) 1,313,677 1,310,873 Property held-for-sale, net(2) 18,580 19,402 Rental property, net 19,242 17,635 Investments at fair value 152,083 146,811 Investments in beneficial interests 30,809 22,086 Receivable from servicer 18,746 14,587 Investment in affiliates 8,904 8,653 Prepaid expenses and other assets 12,576 7,654 Total assets $ 1,616,182 $ 1,602,871 LIABILITIES AND EQUITY Liabilities: Secured borrowings, net(1,3,4) $ 593,121 $ 610,199 Borrowings under repurchase transactions 560,404 534,089 Convertible senior notes, net(3) 117,838 117,525 Management fee payable 951 881 Accrued expenses and other liabilities 7,193 5,898 Total liabilities 1,279,507 1,268,592 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, 18,967,223 shares at March 31, 2019 and 18,909,874 shares at 190 189 December 31, 2018 issued and outstanding Additional paid-in capital 261,527 260,427 Treasury stock (310) (270) Retained earnings 41,372 41,063 Accumulated other comprehensive loss (178) (575) Equity attributable to stockholders 302,601 300,834 Non-controlling interests (5) 34,074 33,445 Total equity 336,675 334,279 Total liabilities and equity $ 1,616,182 $ 1,602,871 (1) Mortgage loans, net include $883.1 million and $897.8 million of loans at March 31, 2019 and December 31, 2018, 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 $1.3 million and $1.2 of allowance for loan losses at March 31, 2019 and December 31, 2018, respectively. Property held-for-sale, net, includes valuation allowances of $1.8 million and $1.8 million at December 31, 2018 and December 31, 2017, respectively. (2) Secured borrowings and Convertible senior notes are presented net of deferred issuance costs (3) As of March 31, 2019, balances for Mortgage loans, net include​s $370.5 million and Secured borrowings, net of deferred costs includes $227.3 million from the 50.0% and 63.0% owned joint ventures. As of December 31, 2018, balances for Mortgage loans, net include​s $377.0 million and Secured 14 borrowings, net of deferred costs includes $231.9 million from the 50.0% and 63.0% owned joint venture, all of which we consolidate under U.S. GAAP. (4) Non-controlling interests includes $20.9 million at March 31, 2019, from the 50.0% and 63.0% owned joint ventures. Non-controlling interests includes $20.4 million at December 31, 2018, from a 50% and 63.0% owned joint venture, all of which we consolidate under U.S. GAAP.


 
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