Great Ajax Corp. (NYSE:AJX) Q1 2021 Earnings Conference Call May 6, 2021 5:00 PM ET Company Participants Lawrence Mendelsohn - Chief Executive Officer Conference Call Participants Kevin Barker - Piper Sandler Eric Hagen - BTIG Operator Good day, and thank you for standing by, and welcome to the Great Ajax Corp. Q1 2021 Earnings Call. At this time all participants are in a listen-only mode. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] Please be advised tha ...

Financial Performance - For the three months ended March 31, 2021, net income attributable to common stockholders was $7.0 million, or $0.30 per share, compared to $0.4 million, or $0.02 per share, for the same period in 2020[301]. - Total revenue for the quarter ended March 31, 2021 was $19.8 million, compared to $8.0 million for the same period in 2020, reflecting a significant increase[304]. - Total expenses rose to $8.2 million for the three months ended March 31, 2021, compared to $6.5 million in the same period of 2020, driven by increased management fees and put option amortization expenses[316]. - Consolidated net income attributable to common stockholders was $7.0 million for the quarter ended March 31, 2021, compared to $400,000 in the same period of 2020[304]. - Net interest income after recovery of losses increased to $19.2 million for the three months ended March 31, 2021, up from $9.1 million in the same period of 2020, primarily due to a $5.5 million acceleration of purchase discount on loans[305]. Asset and Liability Management - The total mortgage-related assets amounted to $1,490.3 million as of March 31, 2021, compared to $1,493.1 million at the end of 2020[248]. - The total assets as of March 31, 2021, were $1,804,775, an increase from $1,777,123 as of December 31, 2020[324]. - Total liabilities increased to $1,184,576 as of March 31, 2021, from $1,140,875 as of December 31, 2020[324]. - The company ended the period with $1.1 billion of net mortgage loans with an aggregate UPB of $1.2 billion as of March 31, 2021[330]. - The fair value of total equity increased to $620,199 as of March 31, 2021, from $636,248 as of December 31, 2020[324]. Investment Strategy - The company is focusing on acquiring pools of residential RPLs, with a strategy to also consider NPLs if attractive opportunities arise[257]. - The company anticipates that the ongoing pandemic may create increased opportunities to acquire NPLs[261]. - The company is actively monitoring opportunities to increase holdings of SBC loans and properties, particularly in urban areas[258]. - The company plans to acquire 4,739 residential RPLs with an aggregate UPB of $790.4 million at 97.5% of UPB and 54.0% of estimated market value of $1.4 billion[392]. - The company has co-invested to form Ajax Mortgage Loan Trust 2021-C, retaining $26.3 million of securities with a coupon of 2.115%[394]. Market Conditions and Risks - The company expects continued volatility in the residential mortgage securities market, which may lead to increased acquisition opportunities[253]. - The company believes that demand for single-family and smaller multi-family rental properties will increase in the near term due to regulatory pressures and market conditions[256]. - The COVID-19 pandemic has created uncertainty in various factors affecting the company's business, making it difficult to predict future impacts[274]. - The company is subject to various market risks, including real estate risk, interest rate risk, prepayment risk, and credit risk[396]. Cash Flow and Financing - The company collected total cash of $70.2 million from loan payments, sales of REO, and investments in debt securities and beneficial interests[301]. - The average daily cash balance for the quarter was $115.2 million, with $137.6 million in cash and cash equivalents at March 31, 2021[301]. - The company had net financing cash inflows of $16.9 million for the three months ended March 31, 2021, primarily driven by additional borrowing of $391.0 million through secured debt[353]. - The company expects that its primary financing sources will continue to include secured borrowings, repurchase agreements, and securities offerings[347]. - The company’s secured borrowings are non-recourse, with principal and interest paid only from cash flows from mortgage loans[390]. Loan Performance and Delinquency - The current delinquency rate for loans held-for-investment was 58.8%, up from 56.1% in the previous quarter[338]. - The percentage of loans 90+ days delinquent increased to 26.5% from 23.5%[338]. - Approximately 73.1% of the portfolio based on UPB made at least 12 out of the last 12 payments as of March 31, 2021[301]. - The weighted average loan-to-value (LTV) ratio improved to 70.9% from 72.8%[335]. - The number of REO properties held-for-sale decreased to 26 from 32, indicating a reduction in foreclosed assets[335]. Shareholder Returns and Equity - A dividend of $0.19 per share was declared on May 6, 2021, representing approximately 4.70% on an annualized basis of the book value of $16.18 per share at March 31, 2021[379][380]. - The book value per common share increased to $16.18 at March 31, 2021, up from $15.59 at December 31, 2020[301]. - The company has not engaged in off-balance sheet arrangements or guaranteed any obligations of unconsolidated entities, minimizing exposure to market, credit, liquidity, or financing risk[381]. Regulatory and Compliance - To qualify as a REIT, the company must distribute at least 90% of its taxable income to stockholders, limiting its ability to retain earnings for capital replenishment[263]. - There have been no changes in internal control over financial reporting that materially affected the company during the last fiscal quarter[407]. - The company and its subsidiaries are not involved in any material pending legal or regulatory proceedings[409].

Financial Data and Key Metrics Changes - The overall corporate cost of funds decreased by approximately 27 basis points in Q4 2020, continuing a trend from previous quarters [4][13] - Net income attributable to common stockholders was $10.8 million, or $0.47 per share, after accounting for preferred dividends and non-controlling interests [14] - Book value per share was $15.59 as of December 31, 2020, while fair value estimates were materially higher, at approximately $19.54 per share [15][30] Business Line Data and Key Metrics Changes - Net interest income from loans and securities was approximately $21.9 million, including a partial reversal of COVID-19 related loan and credit losses [8] - The loan portfolio saw a significant increase in cash flow velocity, leading to a reversal of previous credit loss provisions [4][11] - Approximately 72% of the loan portfolio made at least 12 of the last 12 payments, compared to only 13% at the time of purchase [10][22] Market Data and Key Metrics Changes - California remains the largest segment of the loan portfolio, with consistent payment and performance patterns observed [18][19] - The company has seen increased demand for homes in target markets, particularly in Florida, Phoenix, Dallas, and Atlanta [22] - The Las Vegas market was removed from target markets due to anticipated negative impacts from COVID-19, although a recovery is expected [20][21] Company Strategy and Development Direction - The company continues to focus on acquiring re-performing loans (RPLs), which represent approximately 96% of the loan portfolio [17] - The strategy includes leveraging analytics and an affiliated servicer to maximize loan performance and resolution timelines [6][7] - The company is well-equipped for volatility and is actively pursuing investment opportunities in its pipeline [4] Management's Comments on Operating Environment and Future Outlook - Management noted that the impact of COVID-19 on payment performance has been less than expected, with strong regular payment patterns continuing [11][23] - The company anticipates that the cost of funds will continue to decrease, enhancing profitability [13][27] - Management expressed optimism about the potential for increased prepayments and cash flow velocity in the current environment [35] Other Important Information - The company had approximately $107 million in cash at year-end 2020, increasing to approximately $145 million by March 1, 2021 [16][29] - The company declared a cash dividend of $0.17 per share, expected to increase during 2021 based on taxable income estimates [25] Q&A Session Summary Question: On the RPL purchases since quarter end, are those seasoned loans or newer issues? - Management indicated that about 20% of the loans are scratch and dent from new origination, while the balance consists of seasoned loans [36] Question: What is the expected prepayment rate for re-performing borrowers? - The weighted average coupon for the portfolio is in the mid-fours, with a low weighted average LTV, and borrowers with significant equity are prepaying primarily for sale [34][35] Question: What is the amount of securitized debt callable this year? - Management stated there are about three additional securitizations and four joint venture securitizations callable this year, which could reduce the cost of funds by 120 to 200 basis points [33] Question: What is the current cash number and its implications? - The cash number was $107 million at year-end and $145 million as of March 1, 2021, with prepayments and securitizations contributing to the increase [37][38] Question: How does the recent rise in interest rates affect the company's strategy? - Management believes that loan prices have not yet reacted to the rise in interest rates, but they anticipate significant opportunities as a result [41]

Management and Ownership - The company has a 19.8% ownership in its Manager, which implements its business strategy and manages day-to-day operations[61] - The company has a 19.8% equity interest in its Manager and an 8.0% interest in the parent of its Servicer, structured through wholly owned subsidiaries[82] Fees and Compensation - The base management fee is set at 1.5% of stockholders' equity per annum, calculated quarterly[63] - The company pays an incentive fee of 20% on dividends exceeding 8% of book value, contingent on cumulative core earnings being positive[65] - The company is required to pay a termination fee equal to twice the combined base and incentive fees if the Management Agreement is terminated without cause[68] - The Servicer receives an annual servicing fee ranging from 0.65% to 1.25% of UPB, with specific reductions for certain joint ventures[72] Financing and Capital - The company may utilize various types of borrowings, including bank credit facilities and structured financing arrangements, depending on market conditions[56] - The company finances asset acquisitions with non-recourse securitizations and repurchase agreements, with borrowing bases ranging from 70% to 85% of market value[54] - The company may seek additional capital through public or private offerings, but there is no assurance of success in these efforts[56] - The company expects to continue securitizing whole loan portfolios as a financing tool, creating long-term, fixed-rate, non-recourse financing with moderate leverage[475] Risk Management - The company does not currently hedge risks associated with mortgage loans but may use derivative instruments for risk management in the future[58] - The company is exposed to real estate risk, including volatility in residential property values due to economic conditions and interest rate changes[474] - Credit risk is present due to potential borrower defaults, influenced by factors such as job loss and economic conditions, which may affect property values[478] - Prepayment risk is influenced by various factors, including interest rates and borrower behavior, with expectations of a slowdown in loan prepayments due to the pandemic[477] Servicing and Operations - The Servicer is licensed to service loans in all required states and is an approved servicer for FHA and VA[75] - The Servicer collects mortgage loan payments and is entitled to servicing fees based on specified percentages of the outstanding unpaid principal balance[76] - The company has implemented a multifaceted resolution approach for managing non-performing loans (NPLs) and real estate owned (REO) assets[76] - The company may engage in REO liquidation and short sale processes to generate cash for reinvestment if properties do not meet investment criteria[76] Compliance and Internal Controls - The company monitors compliance with the Investment Company Act to avoid registration as an investment company, ensuring less than 40% of total assets consist of investment securities[84] - The company conducted an evaluation of its disclosure controls and procedures, concluding they were effective as of the end of the reporting period[484] - Management assessed the effectiveness of internal control over financial reporting as of December 31, 2020, finding it effective based on established criteria[489] - The independent auditor, Moss Adams LLP, expressed an unqualified opinion on the company's internal control over financial reporting and consolidated financial statements[490] Market Conditions and Competition - The company competes with larger mortgage and hybrid REITs, hedge funds, and other financial institutions, which may have greater access to capital[79] - The company relies on its Manager's professionals for competitive advantages in assessing risks and pricing potential assets[81] - A rising interest rate environment could positively impact operations related to rental real property, potentially increasing rent levels and property values[476] - The company expects many borrowers to refinance loans at or near the estimated value of the underlying property, potentially generating attractive returns[76]

Great Ajax Corp. (NYSE:AJX) Q3 2020 Earnings Conference Call November 5, 2020 5:00 PM ET Company Participants Lawrence Mendelsohn - Chief Executive Officer Conference Call Participants Mike Smyth - B. Riley Securities Kevin Barker - Piper Sandler Operator Ladies and gentlemen, thank you for standing by and welcome to the Great Ajax Corp. Q3 2020 Earnings Conference Call. All lines are currently in a listen-only mode. After the speaker’s remarks, there will be a question-and-answer session. [Operator Instruc ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ☐ ...

Great Ajax Corp. (NYSE:AJX) Q2 2020 Results Earnings Conference Call August 4, 2020 5:00 PM ET Company Participants Lawrence Mendelsohn - Chief Executive Officer Conference Call Participants Tim Hayes - B. Riley Stephen Laws - Raymond James Kevin Barker - Piper Sandler Operator Ladies and gentlemen, thank you for standing by, and welcome to the Great Ajax Corporation Q2 2020 Earnings Call. [Operator instructions] I would now like to hand the conference over to your speaker today, Mr. Lawrence Mendelsohn, CE ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 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. (Exact name of registrant as specified in its charter) Maryland 47-1271842 State or other jurisdiction o ...

PART I [Item 1. Consolidated Interim Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Interim%20Financial%20Statements) The consolidated interim financial statements present Great Ajax Corp.'s financial position as of March 31, 2020, showing a decrease in total assets to $1.54 billion and a significant decline in net income to $0.4 million due to a $5.1 million provision for credit losses from COVID-19 impacts and CECL adoption [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2020 (Unaudited) | December 31, 2019 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $31,179 | $64,343 | | Mortgage loans, net | $1,098,629 | $1,151,469 | | Investments at fair value | $247,372 | $231,685 | | **Total assets** | **$1,537,847** | **$1,576,841** | | **Liabilities** | | | | Secured borrowings, net | $630,938 | $652,747 | | Borrowings under repurchase transactions | $431,091 | $414,114 | | Convertible senior notes, net | $111,420 | $118,784 | | **Total liabilities** | **$1,180,573** | **$1,192,757** | | **Equity** | | | | Equity attributable to stockholders | $332,060 | $359,882 | | **Total equity** | **$357,274** | **$384,084** | - Total assets decreased from **$1.58 billion** at the end of 2019 to **$1.54 billion** as of March 31, 2020, while total equity decreased from **$384.1 million** to **$357.3 million** over the same period[9](index=9&type=chunk) - The allowance for loan credit losses increased significantly to **$16.1 million** as of March 31, 2020, from **$2.0 million** at December 31, 2019, reflecting the adoption of CECL and the expected impact of COVID-19[9](index=9&type=chunk) [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Consolidated Income Statement Summary (in thousands, except per share data) | Account | Three months ended March 31, 2020 | Three months ended March 31, 2019 | | :--- | :--- | :--- | | Net interest income | $14,216 | $13,767 | | Provision for credit losses | ($5,109) | ($154) | | **Total income** | **$8,037** | **$15,184** | | **Total expense** | **$6,452** | **$6,992** | | Consolidated net income | $1,496 | $8,121 | | **Consolidated net income attributable to common stockholders** | **$400** | **$7,330** | | **Diluted earnings per common share** | **$0.02** | **$0.36** | - Net income attributable to common stockholders plummeted to **$0.4 million** (**$0.02 per diluted share**) for Q1 2020, compared to **$7.3 million** (**$0.36 per diluted share**) for Q1 2019[14](index=14&type=chunk) - The significant decrease in net income was primarily driven by a **$5.1 million** provision for credit losses in Q1 2020, a substantial increase from the **$154 thousand** provision in the prior-year period[14](index=14&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Cash Flow Summary (in thousands) | Activity | Three months ended March 31, 2020 | Three months ended March 31, 2019 | | :--- | :--- | :--- | | Net cash from operating activities | ($30,409) | ($5,044) | | Net cash from investing activities | $11,015 | ($5,593) | | Net cash from financing activities | ($13,771) ($2,968) | | **Net change in cash** | **($33,165)** | **($13,605)** | | Cash at beginning of period | $64,363 | $55,170 | | **Cash at end of period** | **$31,198** | **$41,565** | - Cash and cash equivalents decreased by **$33.2 million** during the quarter, ending at **$31.2 million**, driven by significant cash outflows from operating and financing activities, partially offset by investing activities[20](index=20&type=chunk)[21](index=21&type=chunk) [Notes to Consolidated Interim Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Interim%20Financial%20Statements) - The company adopted ASU 2016-13 (CECL) on January 1, 2020, resulting in a non-cash reclassification of **$10.2 million** from loan discount to allowance for credit losses for mortgage loans and **$4.2 million** for beneficial interests, with no impact on consolidated equity[92](index=92&type=chunk)[93](index=93&type=chunk) - During Q1 2020, the company recorded a provision for credit losses of **$2.1 million** on its mortgage loan portfolio and **$3.0 million** on its beneficial interests, primarily due to reduced cash flow expectations from the COVID-19 outbreak[105](index=105&type=chunk)[119](index=119&type=chunk) - In late March 2020, the company received margin calls of **$28.2 million** from its financing counterparties due to market turmoil from the COVID-19 outbreak, holding **$32.4 million** of cash collateral on deposit as of March 31, 2020[148](index=148&type=chunk) - Subsequent to the quarter end, in April 2020, the company closed a private placement of **$80.0 million** of preferred stock and warrants to institutional investors to bolster its capital position[231](index=231&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=55&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant impact of the COVID-19 pandemic on Q1 2020 results, leading to a $5.1 million provision for credit losses, a $28.4 million unrealized loss on debt securities, and $28.2 million in margin calls, with net income falling to $0.4 million and the company raising $80 million in preferred equity post-quarter end [Overview and Portfolio](index=55&type=section&id=Overview%20and%20Portfolio) - Great Ajax Corp. is a REIT primarily focused on acquiring, investing in, and managing a portfolio of re-performing loans (RPLs) and small balance commercial (SBC) loans, also investing directly in single-family and smaller commercial properties[240](index=240&type=chunk) Portfolio Carrying Value (in millions) | Asset Type | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Residential RPL loan pools | $1,066.6 | $1,085.5 | | Investment in debt securities | $247.4 | $231.7 | | Investment in beneficial interests | $64.7 | $58.0 | | Property held-for-sale, net | $10.9 | $13.5 | | **Total Real Estate Assets** | **$1,423.0** | **$1,456.2** | [Market Trends and Outlook (COVID-19)](index=56&type=section&id=Market%20Trends%20and%20Outlook%20(COVID-19)) - The COVID-19 pandemic began to significantly impact operations in late March 2020, leading to several adverse financial effects in the first quarter[248](index=248&type=chunk) - Key impacts of COVID-19 in Q1 2020 include: - A **$5.1 million** provision expense on mortgage loans and beneficial interests due to expectations of extended portfolio durations and foreclosure timelines - A **$28.4 million** unrealized loss on investments in debt securities recorded to Other Comprehensive Income - Impairments on the REO portfolio due to extended eviction timelines and higher costs - Settled margin calls of **$28.2 million** with financing counterparties[248](index=248&type=chunk) - In response to the pandemic, the company, through its Servicer, implemented a mortgage forbearance program, with 920 inquiries, 115 granted, and 146 under review as of April 30, 2020[249](index=249&type=chunk) [Results of Operations](index=65&type=section&id=Results%20of%20Operations) - Net income attributable to common stockholders decreased by **$6.9 million** to **$0.4 million** in Q1 2020 from **$7.3 million** in Q1 2019, primarily due to a **$5.1 million** provision for losses driven by the expected impact of COVID-19[296](index=296&type=chunk) - Book value per share declined to **$14.37** from **$15.80** at year-end 2019, mainly due to a **$28.4 million** non-cash mark-to-market adjustment on the fair value of its debt securities[296](index=296&type=chunk) - Interest income decreased by **$2.2 million** year-over-year due to a smaller average mortgage loan portfolio, while interest expense decreased by **$2.6 million** due to the impact of a rated secured borrowing that closed in late 2019[302](index=302&type=chunk)[303](index=303&type=chunk) [Liquidity and Capital Resources](index=77&type=section&id=Liquidity%20and%20Capital%20Resources) - Primary sources of cash include securities offerings, secured borrowings, repurchase agreements, and cash flows from the loan portfolio; as of March 31, 2020, the company held **$31.2 million** in cash and cash equivalents, a decrease of **$33.2 million** from year-end 2019[333](index=333&type=chunk)[334](index=334&type=chunk) - In April 2020, subsequent to the quarter's end, the company raised **$80.0 million** through a private placement of preferred stock and warrants to enhance liquidity and fund asset acquisitions[357](index=357&type=chunk)[367](index=367&type=chunk) Contractual Obligations as of March 31, 2020 (in thousands) | Obligation | Total | Less than 1 Year | 1 – 3 Years | 3 – 5 Years | More than 5 Years | | :--- | :--- | :--- | :--- | :--- | :--- | | Convertible senior notes | $115,850 | $— | $— | $115,850 | $— | | Borrowings under repurchase agreements | $431,091 | $431,091 | $— | $— | $— | | Interest on convertible senior notes | $36,046 | $8,399 | $16,798 | $10,849 | $— | | Interest on repurchase agreements | $4,086 | $4,086 | $— | $— | $— | | **Total** | **$587,073** | **$443,576** | **$16,798** | **$126,699** | **$—** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=90&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company identifies its primary market risks as real estate, interest rate, prepayment, and credit risk, acknowledging that the COVID-19 pandemic presents significant uncertainties that could adversely affect these areas, with an expected slowdown in loan prepayments - The company's primary market risks include: - **Real Estate Risk:** Residential property values are volatile and can be adversely affected by economic conditions, including public health crises like COVID-19 - **Interest Rate Risk:** Changes in interest rates can affect the fair value of mortgage loans, financing expenses, and refinancing volumes - **Prepayment Risk:** The rate of principal repayment on mortgage loans is uncertain and affected by interest rates and economic factors; the company expects prepayment rates to slow due to COVID-19 - **Credit Risk:** The company is subject to the risk of borrower default, which can be influenced by job loss, personal events, and economic downturns[370](index=370&type=chunk)[371](index=371&type=chunk)[372](index=372&type=chunk)[374](index=374&type=chunk)[375](index=375&type=chunk) [Item 4. Controls and Procedures](index=92&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2020, with no material changes in internal control over financial reporting during the first quarter - The Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2020, the company's disclosure controls and procedures were effective[378](index=378&type=chunk) - No changes in internal control over financial reporting occurred during the first quarter of 2020 that have materially affected, or are reasonably likely to materially affect, these controls[379](index=379&type=chunk) PART II [Item 1. Legal Proceedings](index=93&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that neither it nor its affiliates are subject to any material legal or regulatory proceedings, though it may be involved in various claims and legal actions that arise in the ordinary course of business - As of the filing date, the company is not a party to any material legal proceedings[382](index=382&type=chunk) [Item 1A. Risk Factors](index=93&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks, including the adverse effects of the COVID-19 pandemic, risks from higher-risk loans, illiquidity of assets, potential failures of the affiliated Servicer, regulatory changes (including the CARES Act), conflicts of interest with the external Manager, and risks associated with leverage and organizational structure - A primary risk factor is the COVID-19 pandemic, which has adversely affected and is expected to continue to adversely affect the company's business, financial condition, liquidity, and results of operations due to market volatility, government measures like forbearance, and potential impacts on personnel[384](index=384&type=chunk) - The company faces risks from its portfolio of higher-risk loans, which are more expensive to service and have higher delinquency rates; government-mandated forbearance programs and foreclosure moratoriums under the CARES Act may adversely affect the value and returns on these loans[386](index=386&type=chunk)[396](index=396&type=chunk) - Significant conflicts of interest exist with the company's external Manager and affiliated Servicer; the Management and Servicing agreements were not negotiated at arm's length, and the incentive fee structure may encourage the Manager to select riskier investments to maximize dividends[493](index=493&type=chunk)[503](index=503&type=chunk) - The company's use of leverage, particularly short-term repurchase agreements, exposes it to risks of margin calls and increased losses in unfavorable economic conditions; market disruptions from COVID-19 have already impacted the company's ability to securitize assets and increased financing costs[418](index=418&type=chunk)[467](index=467&type=chunk) [Item 2. Unregistered Sales of Securities](index=126&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Securities) On March 5, 2020, the company issued a total of 2,600 shares of common stock (650 shares to each of its four independent directors) as partial payment for their Q1 2020 director fees, issued in a private placement exempt from registration under Section 4(a)(2) of the Securities Act - On March 5, 2020, the company issued 650 shares of common stock to each of its four independent directors as partial payment of quarterly fees, relying on the Section 4(a)(2) exemption from registration[536](index=536&type=chunk) [Item 3. Defaults Upon Senior Securities](index=126&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon its senior securities during the period - None[537](index=537&type=chunk) [Item 6. Exhibits](index=126&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the quarterly report, including the Third Amended and Restated Management Agreement, certifications by the CEO and CFO as required by the Sarbanes-Oxley Act, and XBRL data files - Key exhibits filed include the Third Amended and Restated Management Agreement dated April 28, 2020, and Sarbanes-Oxley Act certifications by the CEO and CFO[542](index=542&type=chunk)

Great Ajax Corp. (NYSE:AJX) Q4 2019 Results Conference Call March 3, 2020 5:00 PM ET Company Participants Lawrence Mendelsohn - CEO Conference Call Participants Tim Hayes - B Riley FBR Stephen Laws - Raymond James Operator Good day, and welcome to the Great Ajax Fourth Quarter 2019 and Year End Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Lawrence Mendelsoh ...