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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): August 6, 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

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbols
 
Name of each exchange on which registered
Common stock, par value $0.01 per share
 
AJX
 
New York Stock Exchange
7.25% Convertible Senior Notes due 2024
 
AJXA
 
New York Stock Exchange
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
 

Item 2.02.
Results of Operations and Financial Condition

On August 6, 2019, Great Ajax Corp., a Maryland corporation (the “Company”), issued a press release regarding its financial results for the quarter ended June 30, 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 August 6, 2019, the Company will hold an investor conference call and webcast to discuss financial results for the second quarter ended June 30, 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 second quarter ended June 30, 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 August 6, 2019
99.2
 
August 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: August 6, 2019



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1 
399077969_logoa11.jpg
GREAT AJAX CORP. ANNOUNCES RESULTS FOR THE QUARTER
ENDED JUNE 30, 2019
 
Second Quarter Highlights
Purchased $90.7 million of re-performing mortgage loans ("RPLs") with an unpaid principal balance (“UPB”) of $106.6 million and underlying collateral values of $163.2 million; and acquired $0.7 million of small balance commercial mezzanine mortgage loans
Sold $176.9 million of loans with $200.1 million in UPB and collateral values of $320.1 million to a joint venture with third party accredited institutional investors for a gain of $7.0 million, and retained $20.1 million in varying classes of securities issued by the joint venture
Ended the quarter with $1.2 billion in net mortgage loans and $198.0 million of investments in debt securities and beneficial interests in joint ventures
Acquired one multi-family rental property for $2.3 million
Interest income of $28.1 million net of $0.4 million in servicing fee expense on loans held in joint ventures; Net interest income after provision for loan losses of $12.6 million
Net income attributable to common stockholders of $13.0 million
Basic earnings per share (“EPS”) of $0.67
Taxable income of $0.75 per share
Book value per share of $15.85 at June 30, 2019
Collected total cash of $59.9 million, exclusive of the results of our loan sale, including $52.4 million from our mortgage loan and REO portfolio and $7.5 million from our investments in debt securities and beneficial interests
Held $55.7 million of cash and cash equivalents at June 30, 2019

New York, NY—August 6, 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 June 30, 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 small-balance commercial loans ("SBCs") secured by multi-family retail/residential and mixed use properties and acquire multi-family retail/residential and mixed use and commercial properties.
 





Selected Financial Results (Unaudited)
($ in thousands except per share amounts)
 
 
For the three months ended
 
 
June 30, 2019
 
March 31, 2019
 
December 31, 2018
 
September 30, 2018
 
June 30, 2018
Loan interest income(1,2,3)
 
$
24,621

 
$
26,557

 
$
26,146

 
$
26,261

 
$
26,158

Earnings from debt securities and beneficial interests(4)
 
$
3,140

 
$
2,416

 
$
1,155

 
$
444

 
$
238

Total revenue, net(1,5)
 
$
20,703

 
$
15,184

 
$
13,894

 
$
14,750

 
$
14,777

Consolidated net income(1)
 
$
13,626

 
$
8,121

 
$
7,307

 
$
7,495

 
$
8,213

Net income per basic share
 
$
0.67

 
$
0.39

 
$
0.35

 
$
0.35

 
$
0.40

Average equity(1)
 
$
340,470

 
$
336,050

 
$
332,002

 
$
323,750

 
$
319,815

Average total assets(1)
 
$
1,559,729

 
$
1,587,871

 
$
1,525,759

 
$
1,381,742

 
$
1,362,843

Average daily cash balance(6)
 
$
48,907

 
$
59,484

 
$
68,926

 
$
40,674

 
$
41,617

Average carrying value of RPLs(1,7)
 
$
1,136,133

 
$
1,230,512

 
$
1,226,491

 
$
1,161,709

 
$
1,175,466

Average carrying value of NPLs(1)
 
$
35,213

 
$
39,807

 
$
41,438

 
$
38,237

 
$
40,767

Average carrying value of SBC loans(7)
 
$
28,075

 
$
36,181

 
$
35,372

 
$
27,316

 
$
19,222

Average carrying value of debt securities and beneficial interests
 
$
192,129

 
$
135,449

 
$
72,535

 
$
32,693

 
$
16,262

Average asset level debt balance(1,8)
 
$
1,107,812

 
$
1,127,673

 
$
1,089,285

 
$
948,893

 
$
941,533

____________________________________________________________

(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 June 30, 2019, March 31, 2019, December 31, 2018 and September 30, 2018 is net of impairments of $0.1 million, $0.2 million, $0.8 million and $0.4 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 SBCs has been recast for all prior periods to reflect all SBCs in the average carrying value of SBCs. Previously, certain SBCs 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 attributable to common stockholders increased $5.7 million for the quarter ended June 30, 2019 compared to the quarter ended March 31, 2019. On May 1, 2019, we sold 962 primarily non-clean-pay mortgage loans with a carrying value of $176.9 million, and UPB of $200.1 million and aggregate property value of $320.1 million to Ajax Mortgage Loan Trust 2019-C ("2019-C") a joint venture with third party accredited institutional investors for a gain of $7.0 million. The senior securities represent 75% of the UPB of the underlying mortgage loans and carry a 3.95% interest rate. Based on the structure of the transaction we do not consolidate 2019-C under GAAP. We retained 34% or $8.0 million of the equity of the trust and also retained $12.1 million in debt securities. On May 25, 2019, we used a portion of the proceeds from the sale to retire the bonds issued by Ajax Mortgage Trust 2016-C and pay down our borrowings under repurchase transactions. The mortgage loans from 2016-C constituted approximately 55% of the loans sold to 2019-C. We estimate that the sale added approximately $5.2 million to net income for the quarter after netting out the impact of foregone interest income, reduced interest expense and other loan related expenses. We did not sell any loans during the quarter ended March 31, 2019.
 
Our operating expenses for the quarter declined primarily as a result of lower accounting fees and lower servicing fees as the average balance of our investments in mortgage loans declined as a result of the loan sale. Additionally, our interest income from our investments in debt securities and beneficial interests in joint ventures is recorded net of servicing fees further reducing servicing fee expense versus an investment in whole loans.






As a result of the sale, net interest income declined by $1.1 million. While we acquired $90.7 million of RPLs with an aggregate UPB of $106.6 million, and underlying collateral values of $163.2 million and two mezzanine SBCs with total UPB of $0.7 million that represented 18.2% of the underlying collateral value of $3.6 million, these loans were only on our consolidated balance sheet for 20 days during the quarter and provided minimal offset to the 60 days of lost interest income from the loan sale. We ended the quarter with $1.2 billion of mortgage loans with an aggregate UPB of $1.3 billion.
 
Impairments on loan pools for the quarter ended June 30, 2019 decreased to $0.1 million from $0.2 million for the quarter ended March 31, 2019.  The impairments are primarily 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.
 
Our investments in debt securities and beneficial interests in our joint ventures continue to grow as we enter into new transactions with our joint venture partners.  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 that have interest income 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 June 30, 2019 by approximately 83 basis points on an annualized basis compared to a similar investment in a whole loan mortgage pool. The impact for the quarter ended March 31, 2019 was approximately 86 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 June 30, 2019 compared to $0.5 million for the quarter ended March 31, 2019. We continue to liquidate our REO properties held-for-sale at a faster rate than they are being acquired through foreclosures, with 21 properties sold in the second quarter while 19 were added to REO held-for-sale.

We collected $59.9 million of cash during the quarter exclusive of the results of our loan sale, to end the second quarter with $55.7 million in cash and cash equivalents. $52.4 million of our cash collections were derived from our mortgage loan and REO portfolios as a result of loan payments, loan payoffs and sales of REO during the quarter and $7.5 million were derived from interest and principal payments on investments in debt securities and beneficial interests. Of the $52.4 million of cash collections from mortgage loans and REO, we received $22.6 million from loans paying the full amount of principal, past due interest and charges.

We also acquired a 20-unit multi-family rental property in Baltimore, MD for a purchase price of $2.3 million.

Portfolio Acquisitions
($ in thousands)
 
 
For the three months ended
 
 
June 30, 2019
 
March 31, 2019
 
December 31, 2018
 
September 30, 2018(1)
 
June 30, 2018
RPLs
 
 
 
 
 
 
 
 
 
 
Count
 
496

 
38

 
388

 
271

 
64

UPB
 
$
106,559

 
$
8,495

 
$
71,049

 
$
69,211

 
$
15,549

Purchase price
 
$
90,694

 
$
7,205

 
$
63,304

 
$
64,428

 
$
14,313

Purchase price % of UPB
 
85.1
%
 
84.8
%
 
89.1
%
 
93.1
%
 
92.1
%
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 June 30, 2019 ($ in thousands):
No. of loans
 
6,398

 
Weighted average coupon
 
4.57
%
Total UPB
 
$
1,333,890

 
Weighted average LTV(5)
 
83.8
%
Interest-bearing balance
 
$
1,255,139

 
Weighted average remaining term (months)
 
308

Deferred balance(1)
 
$
78,751

 
No. of first liens
 
6,330

Market value of collateral(2)
 
$
1,859,672

 
No. of second liens
 
68

Price/total UPB(3)
 
83.0
%
 
No. of rental properties
 
19

Price/market value of collateral
 
62.0
%
 
Capital invested in rental properties
 
$
21,260

Re-performing loans
 
94.2
%
 
No. of REO held-for-sale
 
97

Non-performing loans
 
2.4
%
 
Market value of REO held-for-sale(6)
 
$
23,797

Small-balance commercial loans(4)
 
3.4
%
 
 
 
 
 
____________________________________________________________

(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 (52.5% of UPB), ARM (10.1% of UPB) and Hybrid ARM (37.4% of UPB) mortgage loans.
(4)
SBC loans includes both purchased and originated loans.
(5)
UPB as of June 30, 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 June 30, 2019, we have agreed to acquire, subject to due diligence, eight residential RPLs with aggregate UPB of $1.8 million in two transactions from two sellers for our own account. The purchase price of the RPLs equals 100.5% of UPB and the estimated market value of the underlying collateral is $2.9 million. The purchase price equals 61.2% of the estimated market value of the underlying collateral.

We also agreed to acquire six commercial properties for an aggregate purchase price of $17.9 million in six separate transactions from six different sellers.

We also agreed to acquire, in joint ventures with third party accredited institutional investors, 737 RPLs with aggregate UPB of $161.7 million. The purchase price of the RPLs equals 92.6% of UPB and the estimated market value of the underlying collateral is $270.6 million. The purchase price equals 55.3% of the estimated market value of the underlying collateral.
    
On July 22, 2019, our Board of Directors declared a dividend of $0.32 per share to be paid on August 30, 2019 to our common stockholders of record as of August 19, 2019.

On July 26, 2019, we closed Ajax Mortgage Loan Trust 2019-D with $140.4 million of AAA rated senior securities, and aggregate of $16.2 million of AA and A rated securities issued with respect to $193.3 million of mortgage loans, all of which were RPLs. The AAA, AA and A rated securities have a weighted average coupon of 3.0124% and represent 81.05% of the UPB of the underlying mortgage loans.

Conference Call
Great Ajax Corp. will host a conference call at 5:00 p.m. EST, Tuesday, August 6, 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 commercial properties and, to a lesser extent, NPLs. We also originate and acquire loans secured by multi-family residential and smaller commercial mixed use retail/residential properties and acquire multi-family retail/residential and mixed use and commercial properties. We are externally managed by Thetis Asset





Management LLC. Our mortgage loans and other real estate assets are serviced by Gregory Funding LLC, an affiliated entity. We have elected to be taxed as a real estate investment trust under the Internal Revenue Code.

Forward-Looking Statements
This press release contains certain forward-looking statements. Words such as “believes,” “intends,” “expects,” “projects,” “anticipates,” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions, many of which are beyond the control of Great Ajax, including, without limitation, the risk factors and other matters set forth in our Annual Report on Form 10-K for the period ended December 31, 2018 filed with the SEC on March 6, 2019. Great Ajax undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

 
CONTACT:
Lawrence Mendelsohn
 
Chief Executive Officer
 
or
 
Mary Doyle
 
Chief Financial Officer
 
Mary.Doyle@aspencapital.com
 
503-444-4224





GREAT AJAX CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except per share amounts)  
 
 
 
Three months ended
 
 
June 30, 2019
 
March 31, 2019
 
December 31, 2018
 
September 30, 2018
 
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
INCOME:
 
 
 
 
 
 
 
 
Interest income
 
$
28,128

 
$
29,452

 
$
28,484

 
$
27,416

Interest expense
 
(15,439
)
 
(15,685
)
 
(15,045
)
 
(12,997
)
Net interest income
 
12,689

 
13,767

 
13,439

 
14,419

Provision for loan losses
 
(85
)
 
(154
)
 
(799
)
 
(365
)
Net interest income after provision for loan losses
 
12,604

 
13,613

 
12,640

 
14,054

 
 
 
 
 
 
 
 
 
Income from equity method investments
 
257

 
461

 
134

 
239

Gain on sale of mortgage loans
 
7,014

 

 

 

Other income
 
828

 
1,110

 
1,120

 
457

Total income
 
20,703

 
15,184

 
13,894

 
14,750

 
 
 
 
 
 
 
 
 
EXPENSE:
 
 
 
 
 
 
 
 
Related party expense - loan servicing fees
 
2,274

 
2,506

 
2,550

 
2,457

Related party expense - management fee
 
1,652

 
1,688

 
1,597

 
1,456

Loan transaction expense
 
191

 
69

 
24

 
(25
)
Professional fees
 
634

 
862

 
582

 
482

Real estate operating expense
 
887

 
786

 
858

 
1,001

Other expense
 
1,219

 
1,081

 
1,014

 
964

Total expense
 
6,857

 
6,992

 
6,625

 
6,335

Loss on debt extinguishment
 
182

 

 

 
836

Income before provision for income tax
 
13,664

 
8,192

 
7,269

 
7,579

Provision for income tax (benefit)
 
38

 
71

 
(38
)
 
84

Consolidated net income
 
13,626

 
8,121

 
7,307

 
7,495

Less: consolidated net income attributable to non-controlling interests
 
599

 
791

 
711

 
937

Consolidated net income attributable to common stockholders
 
$
13,027

 
$
7,330

 
$
6,596

 
$
6,558

Basic earnings per common share
 
$
0.67

 
$
0.39

 
$
0.35

 
$
0.35

Diluted earnings per common share
 
$
0.56

 
$
0.36

 
$
0.34

 
$
0.34

 
 
 
 
 
 
 
 
 
Weighted average shares – basic
 
19,169,941

 
18,811,713

 
18,771,423

 
18,691,393

Weighted average shares – diluted
 
27,732,587

 
27,829,448

 
27,163,859

 
26,592,806







GREAT AJAX CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except per share amounts)
 
 
 
June 30, 2019
 
December 31, 2018
 
 
(unaudited)
 
 
ASSETS
 
 
 
 
Cash and cash equivalents
 
$
55,728

 
$
55,146

Cash held in trust
 
22

 
24

Mortgage loans, net(1,4)
 
1,198,140

 
1,310,873

Property held-for-sale, net(2)
 
21,335

 
19,402

Rental property, net
 
20,883

 
17,635

Investments at fair value
 
157,763

 
146,811

Investments in beneficial interests
 
40,231

 
22,086

Receivable from servicer
 
18,686

 
14,587

Investments in affiliates
 
8,799

 
8,653

Prepaid expenses and other assets
 
9,643

 
7,654

Total assets
 
$
1,531,230

 
$
1,602,871

 
 
 
 
 
LIABILITIES AND EQUITY
 
 
 
 

Liabilities:
 
 
 
 

Secured borrowings, net(1,3,4)
 
$
506,741

 
$
610,199

Borrowings under repurchase transactions
 
554,122

 
534,089

Convertible senior notes, net(3)
 
118,148

 
117,525

Management fee payable
 
814

 
881

Accrued expenses and other liabilities
 
5,819

 
5,898

Total liabilities
 
1,185,644

 
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, 19,654,330 shares at June 30, 2019 and 18,909,874 shares at December 31, 2018 issued and outstanding
 
197

 
189

Additional paid-in capital
 
273,438

 
260,427

Treasury stock
 
(352
)
 
(270
)
Retained earnings
 
48,301

 
41,063

Accumulated other comprehensive gain/(loss)
 
532

 
(575
)
Equity attributable to stockholders
 
322,116

 
300,834

Non-controlling interests(5)
 
23,470

 
33,445

Total equity
 
345,586

 
334,279

Total liabilities and equity
 
$
1,531,230

 
$
1,602,871

___________________________________________________________
​(1)
Mortgage loans, net include $764.5 million and 897.8 million of loans at June 30, 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 $1.4 million and $1.2 million of allowance for loan losses at June 30, 2019 and December 31, 2018, respectively.
(2)
Property held-for-sale, net, includes valuation allowances of $2.1 million and $1.8 million at June 30, 2019 and December 31, 2018, respectively.
(3)
Secured borrowings and convertible senior notes are presented net of deferred issuance costs.
​(4)
As of June 30, 2019, balances for Mortgage loans, net include​s $360.8 million and Secured borrowings, net of deferred costs includes $221.6 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 $21.4 million at June 30, 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)

exhibit992-investorprese
Second Quarter Investor Presentation August 6, 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 June 30, 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 284 transactions since inception. Eleven transactions closed in Q2 2019  Use our manager’s proprietary analytics to price each mortgage pool on an asset-by-asset basis – We own 19.8% of our manager  Adjust individual loan bid price to accumulate clusters of loans in attractive demographic metropolitan areas – 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 hold 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 third-party institutional accredited investors  Use moderate non-mark-to-market leverage 3


 
Highlights – Quarter Ended June 30, 2019  Purchased $90.7 million of re-performing mortgage loans ("RPLs") with an unpaid principal balance (“UPB”) of $106.6 million and underlying collateral values of $163.2 million; and acquired $0.7 million of small balance commercial mezzanine mortgage loans  Sold $176.9 million of loans with $200.1 million in UPB and collateral values of $320.1 million to a joint venture with third-party accredited institutional investors for a gain of $7.0 million, and retained $20.1 million in varying classes of securities issued by the joint venture  Ended the quarter with $1.2 billion in net mortgage loans and $198.0 million of investments in debt securities and beneficial interests in joint ventures  Acquired one multi-family rental property for $2.3 million  Interest income of $28.1 million net of $0.4 million in servicing fee expense on loans held in joint ventures; Net interest income after provision for loan losses of $12.6 million  Net income attributable to common stockholders of $13.0 million  Basic earnings per share (“EPS”) of $0.67  Taxable income of $0.75 per share  Book value per share of $15.85 at June 30, 2019  Collected total cash of $59.9 million, exclusive of the results of our loan sale, including $52.4 million from our mortgage loan and REO portfolio and $7.5 million from our investments in debt securities and beneficial interests  Held $55.7 million of cash and cash equivalents at June 30, 2019 4


 
Portfolio Overview – as of June 30, 2019 Unpaid Principal Balance1 Property Value2 2% 3% 3% RPL RPL NPL NPL REO 95% 97% $1,334 MM $1,905 MM RPL: $1,299 MM RPL: $1,814 MM NPL: $ 35 MM NPL: $ 46 MM REO & Rental: $ 45 MM 1 Includes $378.1 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 includes $40.4 million of SBC loans , which are performing loans. Includes $378.1 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 Non-performing Loans  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 2Q 2019 Acquisitions ($ in thousands) Acquisition Current Based on Count UPB Count UPB Liquidated- Loans - - 1,966 414,445 Liquidated- Purch REO - - 31 6,114 24for24 808 144,141 4,393 949,794 12for12 407 88,420 1,176 250,115 7for7 3,165 711,201 150 37,732 4f4-6f6 1,673 369,672 163 35,023 Less than 4f4 2,273 482,349 432 90,579 REO - - 106 32,717 NPL 561 133,221 501 118,601 Purchased REO 34 8,074 3 1,958 8,921 1,937,078 8,921 1,937,078  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 Under Contract1  RPL  UPB: $163.5MM2  Collateral Value: $273.6MM  Price/UPB: 92.7%  Price/Collateral Value: 55.4%  745 loans in 4 transactions  SBC – Properties Under Contract  Price: $17.9MM  6 properties in 6 transactions  On July 26, 2019, we closed Ajax Mortgage Loan Trust 2019-D with $140.4 million of AAA rated senior securities, and aggregate of $16.2 million of AA and A rated securities issued with respect to $193.3 million of mortgage loans, all of which were RPLs. The AAA, AA and A rated securities have a weighted average coupon of 3.0124% and represent 81.05% of the UPB of the underlying mortgage loans  A dividend of $0.32 per share, to be paid on August 30, 2019 to common stockholders of record as of August 19, 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. 2Approximately $161.7 million UPB is expected to close through joint ventures with third-party institutional accredited investors 10


 
Financial Metrics – Excluding consolidation of the portion of securitizations owned by third-party institutional accredited investors1 Excluding the consolidation of 2017 D and 2018 C ($ in thousands) Q2-19 Q1-19 Q4-18 Q3-18 Q2-18 Interest Income on Loans 1 22,268 24,112 23,681 24,626 24,757 Interest Income on Debt Securities and Beneficial Interests2 3,140 2,416 1,155 444 238 Average Loans 1,043,463 1,147,220 1,145,739 1,138,599 1,149,225 Average Loan Yield (net of impairments) 8.8% 8.7% 8.5% 8.9% 8.9% Average Debt Securities and Beneficial Interests 192,129 135,449 72,535 32,693 16,262 Average Debt Securities and Beneficial Interests Yield 6.7% 7.3% 6.5% 5.5% 6.0% Average Total Asset Yield 8.5% 8.5% 8.4% 8.8% 8.9% Total Interest Expense 13,955 14,166 13,472 12,196 12,031 Asset Level Interest Expense 11,401 11,608 11,116 10,037 9,877 Average Asset Level Debt 983,585 1,000,461 958,606 871,443 865,787 Average Asset Level Debt Cost 4.7% 4.7% 4.7% 4.7% 4.6% Asset Level Net Interest Margin 3.8% 3.8% 3.7% 4.2% 4.2% Total Average Debt 1,101,627 1,118,095 1,068,658 974,472 968,618 Total Average Debt Cost 5.2% 5.2% 5.1% 5.1% 5.1% Total Net Interest Margin 3.3% 3.4% 3.3% 3.7% 3.8% Non-Interest Operating Expenses/Avg Assets 1.6% 1.7% 1.6% 1.7% 1.7% ROAA - ex net REO and loan impairments and losses 4.3% 2.5% 2.6% 3.3% 2.7% ROAA - Net REO and loan impairments, gains and losses -0.3% -0.2% -0.5% -0.7% -0.3% ROAA - Total 4.0% 2.3% 2.2% 2.5% 2.4% ROAE - ex net REO and loan impairments and losses 18.5% 11.1% 11.1% 12.6% 11.5% ROAE - Net REO and loan impairments, gains and losses -1.3% -1.0% -1.8% -2.8% -1.2% ROAE - Total 17.2% 10.1% 9.3% 9.8% 10.3% Average Leverage Ratio - Asset Backed 2.9 3.0 2.9 2.7 2.8 Average Leverage Ratio - Convertible Debt 0.3 0.4 0.3 0.3 0.3 Average Leverage Ratio - Total 3.2 3.3 3.2 3.0 3.2 Ending Leverage Ratio - Asset Backed3 2.9 3.3 3.2 3.0 2.8 Ending Leverage Ratio - Convertible Debt 0.4 0.4 0.4 0.3 0.3 Ending Leverage Ratio - Total4 3.3 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 consolidating trusts and convertible debt 4Excludes the impact of consolidating trusts 1The 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 Q2-19 Excluding the Q1-19 Excluding the Q4-18 Excluding the Q3-18 Excluding the Q2-19 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 and 2018 C Interest Income on Loans 1 24,621 1,276 1,077 22,268 24,112 23,681 24,626 Interest Income on Debt Securities and Beneficial Interests2 3,140 - - 3,140 2,416 1,155 444 Average Loans 1,199,421 79,274 76,684 1,043,463 1,147,220 1,145,739 1,138,599 Average Loan Yield (net of impairments) 8.5% 0.1% 0.2% 8.8% 8.7% 8.5% 8.9% Average Debt Securities and Beneficial Interests 192,129 - - 192,129 135,449 72,535 32,693 Average Debt Securities and Beneficial Interests Yield 6.7% 0.0% 0.0% 6.7% 7.3% 6.5% 5.5% Average Total Asset Yield 8.2% 0.1% 0.1% 8.5% 8.5% 8.4% 8.8% Total Interest Expense 15,439 669 815 13,955 14,166 13,472 12,196 Asset Level Interest Expense 12,885 669 815 11,401 11,608 11,116 10,037 Average Asset Level Debt 1,107,812 66,985 57,242 983,585 1,000,461 958,606 871,443 Average Asset Level Debt Cost 4.7% 0.0% -0.1% 4.7% 4.7% 4.7% 4.7% Asset Level Net Interest Margin 3.5% 0.1% 0.2% 3.8% 3.8% 3.7% 4.2% Total Average Debt 1,225,854 66,985 57,242 1,101,627 1,118,095 1,068,658 974,472 Total Average Debt Cost 5.1% 0.1% 0.0% 5.2% 5.2% 5.1% 5.1% Total Net Interest Margin 3.1% 0.1% 0.2% 3.3% 3.4% 3.3% 3.7% Non-Interest Operating Expenses/Avg Assets 1.5% 0.1% 0.0% 1.6% 1.7% 1.6% 1.7% ROAA - ex net REO and loan impairments and losses 3.8% 0.2% 0.2% 4.3% 2.5% 2.6% 3.3% ROAA - Net REO and loan impairments, gains and losses -0.3% 0.0% 0.0% -0.3% -0.2% -0.5% -0.7% ROAA - Total 3.5% 0.2% 0.2% 4.0% 2.3% 2.2% 2.5% ROAE - ex net REO and loan impairments and losses 18.5% 0.0% 0.0% 18.5% 11.1% 11.1% 12.6% ROAE - Net REO and loan impairments, gains and losses -1.3% 0.0% 0.0% -1.3% -1.0% -1.8% -2.8% ROAE - Total 17.2% 0.0% 0.0% 17.2% 10.1% 9.3% 9.8% Average Leverage Ratio - Asset Backed 3.3 (0.2) (0.2) 2.9 3.0 2.9 2.7 Average Leverage Ratio - Convertbile Debt 0.3 - - 0.3 0.4 0.3 0.3 Average Leverage Ratio - Total 3.6 (0.2) (0.2) 3.2 3.3 3.2 3.0 Ending Leverage Ratio - Asset Backed3 3.1 (0.1) (0.1) 2.9 3.3 3.2 3.0 Ending Leverage Ratio - Convertible Debt 0.3 0.0 0.0 0.4 0.4 0.4 0.3 Ending Leverage Ratio - Total4 3.4 (0.0) (0.1) 3.3 3.6 3.6 3.3 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 June 30, 2019 March 31, 2019 December 31, 2018 September 30, 2018 (unaudited) (unaudited) (unaudited) (unaudited) INCOME: Interest income $ 28,128 $ 29,452 $ 28,484 $ 27,416 Interest expense (15,439) (15,685) (15,045) (12,997) Net interest income 12,689 13,767 13,439 14,419 Provision for loan losses (85) (154) (799) (365) Net interest income after provision for loan losses 12,604 13,613 12,640 14,054 Income from equity method investments 257 461 134 239 Gain on sale of mortgage loans 7,014 - - - Other income 828 1,110 1,120 457 Total income 20,703 15,184 13,894 14,750 EXPENSE: Related party expense - loan servicing fees 2,274 2,506 2,550 2,457 Related party expense - management fee 1,652 1,688 1,597 1,456 Loan transaction expense 191 69 24 (25) Professional fees 634 862 582 482 Real estate operating expense 887 786 858 1,001 Other expense 1,219 1,081 1,014 964 Total expense 6,857 6,992 6,625 6,335 Loss on debt extinguishment 182 - - 836 Income before provision for income tax 13,664 8,192 7,269 7,579 Provision for income tax 38 71 (38) 84 Consolidated net income 13,626 8,121 7,307 7,495 Less: consolidated net income attributable to non- 599 791 711 937 controlling interests Consolidated net income attributable to common $ 13,027 $ 7,330 $ 6,596 $ 6,558 stockholders Basic earnings per common share $ 0.67 $ 0.39 $ 0.35 $ 0.35 Diluted earnings per common share $ 0.56 $ 0.36 $ 0.34 $ 0.34 Weighted average shares – basic 19,169,941 18,811,713 18,771,423 18,691,393 Weighted average shares – diluted 27,732,587 27,829,448 27,163,859 26,592,806 13


 
Consolidated Balance Sheets (Dollars in thousands except per share amounts) ASSETS June 30, 2019 December 31, 2018 (Unaudited) Cash and cash equivalents $ 55,728 $ 55,146 Cash held in trust 22 24 Mortgage loans, net(1,4) 1,198,140 1,310,873 Property held-for-sale, net(2) 21,335 19,402 Rental property, net 20,883 17,635 Investments at fair value 157,763 146,811 Investments in beneficial interests 40,231 22,086 Receivable from servicer 18,686 14,587 Investment in affiliates 8,799 8,653 Prepaid expenses and other assets 9,643 7,654 Total assets $ 1,531,230 $ 1,602,871 LIABILITIES AND EQUITY Liabilities: Secured borrowings, net(1,3,4) $ 506,741 $ 610,199 Borrowings under repurchase transactions 554,122 534,089 Convertible senior notes, net(3) 118,148 117,525 Management fee payable 814 881 Accrued expenses and other liabilities 5,819 5,898 Total liabilities 1,185,644 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, 19,654,330 shares at June 30, 2019 and 18,909,874 shares at 197 189 December 31, 2018 issued and outstanding Additional paid-in capital 273,438 260,427 Treasury stock (352) (270) Retained earnings 48,301 41,063 Accumulated other comprehensive gain/(loss) 532 (575) Equity attributable to stockholders 322,116 300,834 Non-controlling interests (5) 23,470 33,445 Total equity 345,586 334,279 Total liabilities and equity $ 1,531,230 $ 1,602,871 (1) Mortgage loans, net include $764.5 million and $897.8 million of loans at June 30, 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 $1.4 million and $1.2 of allowance for loan losses at June 30, 2019 and December 31, 2018, respectively. (2) Property held-for-sale, net, includes valuation allowances of $2.1 million and $1.8 million at June 30, 2018 and December 31, 2018, respectively. (3) Secured borrowings and Convertible senior notes are presented net of deferred issuance costs (4) As of June 30, 2019, balances for Mortgage loans, net include​s $360.8 million and Secured borrowings, net of deferred costs includes $221.6 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 borrowings, 14 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. (5) Non-controlling interests includes $21.4 million at June 30, 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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