Great Ajax Corp. (NYSE:AJX) Q2 2022 Earnings Conference Call August 4, 2022 5:00 PM ET Company Participants Larry Mendelsohn – Chief Executive Officer Conference Call Participants Eric Hagen – BTIG Kevin Barker – Piper Sandler Matt Howlett – B. Riley Operator Good afternoon. My name is Dennis, and I will be your conference operator today. At this time, I would like to welcome everyone to the Great Ajax Corp. Second Quarter 2022 Financial Results Conference Call. All lines have been placed on mute to prevent ...

Great Ajax Corp. (NYSE:AJX) Q1 2022 Earnings Conference Call May 5, 2022 5:00 PM ET Company Participants Larry Mendelsohn – Chief Executive Officer Conference Call Participants Kevin Barker – Piper Sandler Eric Hagen – BTIG Operator Good afternoon, ladies and gentlemen, and welcome to the Great Ajax Corporation First Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. And please be advised that this call is being recorded. After the speakers’ prepared re ...

[PART I Financial Information](index=3&type=section&id=PART%20I%20Financial%20Information) This section presents the company's unaudited financial statements, management's discussion, market risk disclosures, and internal controls [Item 1. Consolidated Interim Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Interim%20Financial%20Statements) This section presents Great Ajax Corp.'s unaudited Q1 2022 consolidated financial statements, encompassing balance sheets, income, comprehensive income, equity, cash flows, and detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Great Ajax Corp.'s balance sheets as of March 31, 2022, show decreased total assets and liabilities due to reduced investments and borrowings, alongside a slight equity decline Consolidated Balance Sheet Highlights ($ in thousands) | Account | March 31, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$1,685,879** | **$1,759,680** | | Mortgage loans held-for-investment, net | $1,063,476 | $1,080,434 | | Investments in securities at fair value | $327,793 | $355,178 | | **Total Liabilities** | **$1,198,380** | **$1,259,207** | | Secured borrowings, net | $536,988 | $575,563 | | Borrowings under repurchase transactions | $522,574 | $546,054 | | **Total Equity** | **$487,499** | **$500,473** | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) For Q1 2022, the company reported a significant decrease in common stockholders' net income, driven by other losses and increased expenses Consolidated Income Statement Highlights ($ in thousands) | Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Net interest income | $14,606 | $13,731 | | Total revenue, net | $14,971 | $19,766 | | Total expense | $9,368 | $8,179 | | Consolidated net income | $5,631 | $10,642 | | Consolidated net income attributable to common stockholders | $3,586 | $7,004 | | Basic earnings per common share | $0.15 | $0.30 | | Diluted earnings per common share | $0.15 | $0.30 | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) In Q1 2022, the company recorded a comprehensive loss, a stark contrast to prior-year income, primarily due to significant net unrealized losses on available-for-sale debt securities Comprehensive (Loss)/Income ($ in thousands) | Description | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Consolidated net income attributable to common stockholders | $3,586 | $7,004 | | Net unrealized (loss)/income on investments | ($9,778) | $1,306 | | **Comprehensive (loss)/income** | **($6,192)** | **$8,310** | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2022, the company experienced a net cash outflow, primarily driven by financing and operating activities, partially offset by cash inflows from investing activities Cash Flow Summary ($ in thousands) | Cash Flow Activity | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Net cash from operating activities | ($9,161) | ($9,374) | | Net cash from investing activities | $69,024 | $22,863 | | Net cash from financing activities | ($71,662) | $16,941 | | **Net change in cash** | **($11,799)** | **$30,430** | [Notes to Consolidated Interim Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Interim%20Financial%20Statements) These notes detail the company's accounting policies and financial activities, including its REIT structure, loan portfolio, investments, debt, equity, and new accounting standards - The company is an externally managed mortgage REIT primarily targeting acquisitions of re-performing loans (RPLs) and, to a lesser extent, non-performing loans (NPLs) and small balance commercial (SBC) loans[30](index=30&type=chunk) - The company adopted ASU 2020-06, which simplifies accounting for convertible instruments, resulting in a **$0.7 million reduction** in additional paid-in capital and a corresponding increase in the carrying value of its Convertible senior notes[90](index=90&type=chunk)[57](index=57&type=chunk) - In Q1 2022, the company re-pooled its entire mortgage loan portfolio into six new pools based on payment patterns and borrower equity to better reflect recent market trends and loan performance[100](index=100&type=chunk)[101](index=101&type=chunk) - A **$4.0 million impairment** was recorded on beneficial interests in two joint venture trusts (2018-D and -G) due to lower than expected cash proceeds at redemption, driven by market disruption[132](index=132&type=chunk)[194](index=194&type=chunk) [Cautionary Statement Regarding Forward-Looking Statements](index=49&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) This section warns that forward-looking statements in the report are subject to risks and uncertainties, such as market volatility and interest rate changes, which may cause actual results to differ materially - Forward-looking statements are identified by terms like "anticipate," "believe," "expect," and are not guarantees of future performance[243](index=243&type=chunk) - Key risks that could affect future performance include adverse real estate markets, changes in business strategy, impact of COVID-19, capital market volatility, interest rate changes, and failure to maintain REIT status[244](index=244&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's Q1 2022 financial condition and results, covering business overview, portfolio, market trends, and performance factors, noting a decrease in common stockholders' net income [Overview and Portfolio](index=50&type=section&id=Overview%20and%20Portfolio) Great Ajax Corp. is a REIT focused on acquiring residential mortgage loans and small balance commercial loans, with its total mortgage-related assets decreasing as of March 31, 2022 - The company's primary business is acquiring RPLs, but it also invests in NPLs, SBC loans, and real estate owned (REO) properties, and is externally managed by Thetis Asset Management LLC and serviced by the affiliated Gregory Funding LLC[249](index=249&type=chunk) Portfolio Carrying Value ($ in millions) | Asset Type | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Residential RPLs | $931.4 | $971.1 | | Residential NPLs | $116.6 | $119.5 | | SBC loans | $15.5 | $19.3 | | Investments in securities at fair value | $327.8 | $355.2 | | Investment in beneficial interests | $139.2 | $139.6 | | **Total mortgage related assets** | **$1,537.1** | **$1,610.8** | [Market Trends and Factors Affecting Results](index=51&type=section&id=Market%20Trends%20and%20Factors%20Affecting%20Results) Management identifies rising home prices and interest rates as key Q1 2022 market trends, noting that loan acquisitions, financing, resolution strategies, and external factors significantly impact results - Market trends include rising home prices and interest rates, a fall-off in refinance activity, and continued market share gains by non-bank lenders[257](index=257&type=chunk)[258](index=258&type=chunk) - Key operational drivers include acquisitions, financing availability (securitizations and repurchase agreements), loan resolution strategies (modification preferred), and expenses (management and servicing fees)[266](index=266&type=chunk)[269](index=269&type=chunk)[271](index=271&type=chunk)[273](index=273&type=chunk) - External factors like home price appreciation (HPA), interest rate changes, and the COVID-19 pandemic significantly impact portfolio value, financing costs, and credit performance[274](index=274&type=chunk)[275](index=275&type=chunk)[280](index=280&type=chunk) [Results of Operations Analysis](index=54&type=section&id=Results%20of%20Operations%20Analysis) Q1 2022 saw a decrease in common stockholders' net income, primarily due to impairments and fair value adjustments, despite increased net interest income and a slight rise in book value per share Q1 2022 vs Q1 2021 Results ($ in thousands) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net interest income | $14,606 | $13,731 | | Other (loss)/income | ($3,550) | $356 | | Total expense | $9,368 | $8,179 | | **Consolidated net income attributable to common stockholders** | **$3,586** | **$7,004** | - The decrease in earnings was primarily driven by a **$4.0 million impairment** on investments in beneficial interests and a **$1.3 million increase** in the fair value adjustment expense for the put option liability[285](index=285&type=chunk)[288](index=288&type=chunk)[305](index=305&type=chunk) - Book value per common share increased to **$15.95** at March 31, 2022, from **$15.92** at December 31, 2021, mainly due to the anti-dilutive effect of convertible notes in the Q1 2022 calculation[311](index=311&type=chunk)[312](index=312&type=chunk) - Loan acquisition activity was very low in Q1 2022, with only **$0.9 million of NPLs** purchased, compared to over **$35 million** in total loans purchased in Q1 2021[313](index=313&type=chunk)[316](index=316&type=chunk) [Liquidity and Capital Resources](index=64&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity relies on cash from operations, securities offerings, and secured borrowings, with significant contractual obligations from repurchase agreements and convertible notes - Primary sources of cash include proceeds from securities offerings, secured borrowings, repurchase agreements, and principal/interest payments from the portfolio[331](index=331&type=chunk) Key Balances as of March 31, 2022 ($ in millions) | Item | Balance | | :--- | :--- | | Cash and cash equivalents | $70.7 | | Repurchase obligations | $522.6 | | Secured borrowings (gross) | $543.5 | | Convertible senior notes (principal) | $104.6 | | Put option liability (expected future value) | $50.7 | - The company has five outstanding secured borrowings structured as debt financings, not REMIC sales, which remain on the consolidated balance sheet[342](index=342&type=chunk) - Subsequent to quarter-end, the company refinanced two joint ventures into a new **$215.5 million UPB** securitization (2022-A), declared a **$0.26/share** dividend, and continued to acquire small pools of RPLs and NPLs[377](index=377&type=chunk)[380](index=380&type=chunk)[381](index=381&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=75&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's primary market risks, including real estate, interest rate, prepayment, credit, and inflation, which can significantly impact asset values, financing costs, and borrower performance - **Real Estate Risk:** Property values are volatile and affected by economic conditions, local markets, and other factors, where decreases in property values may cause losses[383](index=383&type=chunk) - **Interest Rate Risk:** Rising interest rates increase the cost of funds on repurchase lines and for new secured borrowings, and may lower refinancing volume, affecting the fair value of the company's portfolio[384](index=384&type=chunk) - **Prepayment Risk:** Changes in prepayment rates, influenced by interest rates and borrower behavior, affect yields, where an increase in prepayments on discounted loans can increase yield but also creates reinvestment risk[386](index=386&type=chunk) - **Credit Risk:** The company is subject to the risk of borrower default due to factors like job loss, personal events, or, for commercial loans, poor property performance[388](index=388&type=chunk)[389](index=389&type=chunk) - **Inflation Risk:** Recent and expected interest rate hikes by the Federal Reserve to combat inflation are expected to increase the company's cost of funds[390](index=390&type=chunk) [Item 4. Controls and Procedures](index=76&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of the end of the quarter, the company's disclosure controls and procedures were effective[392](index=392&type=chunk) - No changes occurred during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[393](index=393&type=chunk) [PART II Other Information](index=77&type=section&id=PART%20II%20Other%20Information) This section provides additional information, including legal proceedings, risk factors, unregistered securities sales, defaults, and exhibits [Item 1. Legal Proceedings](index=77&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material pending legal or regulatory proceedings involving itself or its subsidiaries as of the filing date - As of the filing date, the company is not involved in any material pending legal proceedings[395](index=395&type=chunk) [Item 1A. Risk Factors](index=77&type=section&id=Item%201A.%20Risk%20Factors) The company reports no material changes to the risk factors previously disclosed in its 2021 Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the company's 2021 Annual Report on Form 10-K[395](index=395&type=chunk) [Item 2. Unregistered Sales of Securities](index=77&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Securities) During the quarter, the company issued unregistered common stock shares in private transactions to its Manager and independent directors as partial payment for fees - On March 7, 2022, **39,558 shares** of common stock were issued to the Manager for the stock-based portion of the management fee[396](index=396&type=chunk) - On March 7, 2022, a total of **3,470 shares** (694 each) were issued to the five independent directors as partial payment of their quarterly fees[396](index=396&type=chunk) [Item 3. Defaults Upon Senior Securities](index=77&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon its senior securities during the period - None[397](index=397&type=chunk) [Item 5. Other Information](index=77&type=section&id=Item%205.%20Other%20Information) The company reported no other information for this item - None[397](index=397&type=chunk) [Item 6. Exhibits](index=77&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Exhibits filed with the report include Sarbanes-Oxley Act certifications (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (101 series)[399](index=399&type=chunk)

Great Ajax’s (NYSE:AJX) Q4 2021 Earnings Conference Call March 3, 2022 5:00 PM ET Company Participants Lawrence Mendelsohn - Chief Executive Officer Mary Doyle - Chief Financial Officer Conference Call Participants Kevin Barker - Piper Sandler Eric Hagen - BTIG Operator Ladies and gentlemen, thank you for standing by and welcome to the Great Ajax Corp Fourth Quarter Fiscal 2021 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a q ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to 001-36844 (Commission file number) GREAT AJAX CORP. (E ...

Financial Data and Key Metrics Changes - The overall cost of funds decreased by almost 30 basis points in Q3 2021, contributing to an increase in net interest income to approximately $18.1 million, which includes a $3.7 million acceleration of income on loans [3][14][19] - Net income attributable to common stockholders was $9.3 million or $0.40 per share after preferred dividends [14] - Book value increased to $16 per share at September 30, 2021, compared to $15.86 at June 30, 2021 [16] Business Line Data and Key Metrics Changes - Purchased reperforming loans (RPLs) represented approximately 88% of the loan portfolio at September 30, down from 96% at June 30 [21] - The company purchased $87.5 million in nonperforming loans (NPLs) with a total owing balance of approximately $96 million during Q3 [17] - Approximately 76.6% of the loan portfolio made at least 12 of the last 12 payments, up from 13% at the time of purchase [11][25] Market Data and Key Metrics Changes - California remains the largest segment of the loan portfolio, with consistent payment and performance patterns observed [23] - The company has seen strong prepayment patterns in various markets, particularly in Southern California, which has outperformed expectations during the COVID pandemic [23] - Demand and prices for homes have increased significantly in several metro areas, including Florida, Phoenix, Dallas, and Atlanta [24] Company Strategy and Development Direction - The company is in an offensive position, actively purchasing loans with specific characteristics at low percentages of underlying property value [4] - The strategy includes leveraging analytics and sourcing capabilities to broaden investment reach through joint ventures with institutional investors [8] - The company aims to maintain low leverage, with a corporate leverage ratio of 2.2 times as of September 30, 2021 [8] Management's Comments on Operating Environment and Future Outlook - Management noted that the impact of the COVID-19 economic environment on regular payment performance has been less than expected, with ongoing increases in loan cash flow velocity [11][26] - The company expects further reductions in interest expense as the cost of funds continues to decrease [14] - Management expressed optimism regarding the investment potential created by market volatility and the opportunities in the pipeline [5] Other Important Information - The company completed one rated securitization and a joint venture structure totaling $517 million in UPB during Q3 [17] - Approximately 28% of full loan payoffs in Q3 2021 were from loans over 180 days delinquent, up from 20% in Q2 [12] - The company declared a cash dividend of $0.24 to be paid on November 29, 2021 [27] Q&A Session Summary - There were no questions during the Q&A session, and the call concluded without further inquiries [30]

Financial Performance - For the three months ended June 30, 2021, the company reported net income attributable to common stockholders of $10.4 million, or $0.45 per share for basic and $0.42 per share for diluted common shares, compared to $6.2 million, or $0.27 per share for the same period in 2020[320]. - Total revenue for the three months ended June 30, 2021 was $19.8 million, compared to $16.3 million for the same period in 2020, reflecting a year-over-year increase of approximately 21.5%[323]. - Consolidated net income attributable to common stockholders for the three months ended June 30, 2021 was $10.4 million, compared to $6.2 million for the same period in 2020, marking a significant increase of approximately 67.1%[323]. - The company collected $78.9 million in cash payments and proceeds on mortgage loans, securities, and REO held-for-sale during the second quarter of 2021, up from $57.8 million in the second quarter of 2020, reflecting a 36.5% increase[328]. - The net increase in the net present value of expected cash flows for the six months ended June 30, 2021 was $10.2 million, compared to only $0.2 million for the same period in 2020, indicating a substantial improvement[326]. Asset and Portfolio Management - As of June 30, 2021, the carrying value of residential RPLs was $897.5 million, down from $1,057.5 million as of December 31, 2020, representing a decrease of approximately 15.1%[268]. - The total mortgage-related assets increased to $1,518.5 million as of June 30, 2021, compared to $1,493.1 million as of December 31, 2020, reflecting a growth of about 1.7%[268]. - The company anticipates that its residential mortgage loan portfolio may grow at an uneven pace due to irregular acquisition opportunities[278]. - The company is focusing on acquiring pools of residential RPLs, while also considering NPLs if attractive opportunities arise[274]. - The company purchased $4.8 million in RPLs, with UPB of $5.2 million at 60.7% of property value, resulting in a total of $955.6 million in net mortgage loans[320]. Market Conditions and Economic Outlook - The company expects continued volatility in the residential mortgage securities market and increased acquisition opportunities due to extended forbearance and foreclosure timelines[272]. - The company believes that demand for single-family and smaller multi-family rental properties will increase in the near term due to regulatory constraints on traditional mortgage lending[273]. - Current market conditions present attractive investment opportunities despite the uncertain environment for mortgage-related assets[290]. - The pandemic has created challenges in predicting the impact on various business factors, complicating the assessment of future performance[291]. - The company expects the COVID-19 pandemic to adversely impact future operating cash flows due to borrower payment delays and potential declines in home prices[360]. Cash Flow and Liquidity - As of June 30, 2021, the company held $88.1 million in cash and cash equivalents, with an average daily cash balance of $113.0 million for the quarter[320]. - The company’s operating cash outflows for the six months ended June 30, 2021, were $22.9 million, compared to $10.2 million for the same period in 2020, indicating a 124.5% increase in cash outflows[362]. - The average daily cash balance during the quarter was $113.0 million, a decrease of $15.7 million from $128.7 million in the previous quarter[361]. - The company experienced net financing cash outflows of $7.0 million for the six months ended June 30, 2021, primarily due to pay downs of existing debt obligations totaling $312.5 million[367]. Debt and Financing - The company has two repurchase facilities with ceilings of $250.0 million and $400.0 million, allowing for the acquisition of mortgage loan pools[381]. - The total maximum borrowing capacity across various loans is $987,545 million[384]. - The total amount outstanding is $394,386 million, representing approximately 40% of the maximum borrowing capacity[384]. - The company completed a public offering of $87.5 million in convertible senior notes due 2024, with a 7.25% annual interest rate[379]. - The company’s secured borrowings are non-recourse, with principal and interest paid only from cash flows from mortgage loans[402]. Risk Management - The company’s market risk includes real estate risk, interest rate risk, prepayment risk, and credit risk, which are actively managed[407]. - Credit risk is a significant concern, with property values subject to volatility from various economic factors, including public health crises[412]. - Borrowers may fail to pay due to personal income reductions, job loss, or poor property management, which the company aims to mitigate through servicer efforts[413]. - The company’s assets and liabilities are sensitive to interest rates, and inflation could decrease disposable household income, increasing credit risk[416]. Corporate Governance and Compliance - The company conducted an evaluation of its disclosure controls and procedures, concluding they were effective as of the end of the reporting period[418]. - There have been no material changes in the company's internal control over financial reporting during the last fiscal quarter[419]. - The company is not involved in any material pending legal or regulatory proceedings[421]. - The company has not reported any defaults upon senior securities[422].