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 ...

PART I. FINANCIAL INFORMATION [Consolidated Interim Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Interim%20Financial%20Statements) Unaudited consolidated interim financial statements for Q2 2020, detailing financial position, performance, and cash flows [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) | Metric (in thousands) | June 30, 2020 | December 31, 2019 | | :-------------------- | :------------ | :---------------- | | Total assets | $1,639,924 | $1,576,841 | | Total liabilities | $1,141,054 | $1,192,757 | | Total equity | $498,870 | $384,084 | | Cash and cash equivalents | $163,422 | $64,343 | | Mortgage loans, net | $1,080,617 | $1,151,469 | | Secured borrowings, net | $609,812 | $652,747 | | Convertible senior notes, net | $111,773 | $118,784 | - Mortgage loans, net, include **$14.5 million** and **$2.0 million** of allowance for loan credit losses at June 30, 2020 and December 31, 2019, respectively[7](index=7&type=chunk) - Investments at fair value include net unrealized losses of **$3.9 million** at June 30, 2020, compared to unrealized gains of **$1.3 million** at December 31, 2019[7](index=7&type=chunk) [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) | Metric (in thousands) | Three months ended June 30, 2020 | Three months ended June 30, 2019 | Six months ended June 30, 2020 | Six months ended June 30, 2019 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest income | $23,705 | $28,128 | $50,991 | $57,580 | | Net interest income | $10,647 | $12,689 | $24,863 | $26,456 | | Provision for credit benefit/(losses) | $4,328 | $(85) | $(781) | $(239) | | Total revenue, net | $16,327 | $20,703 | $24,364 | $35,887 | | Total expense | $7,389 | $6,857 | $13,841 | $13,849 | | Consolidated net income attributable to Company | $8,083 | $13,027 | $8,483 | $20,357 | | Basic earnings per common share | $0.27 | $0.67 | $0.29 | $1.06 | | Diluted earnings per common share | $0.27 | $0.56 | $0.29 | $0.93 | - The Company sold no mortgage loans during the three months ended June 30, 2020, compared to **962 loans** sold for a gain of **$7.0 million** in the prior year period[8](index=8&type=chunk) [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) | Metric (in thousands) | Three months ended June 30, 2020 | Three months ended June 30, 2019 | Six months ended June 30, 2020 | Six months ended June 30, 2019 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Consolidated net income attributable to common stockholders | $6,242 | $13,027 | $6,642 | $20,357 | | Net unrealized gain/(loss) on investments in available-for-sale debt securities | $23,231 | $710 | $(5,213) | $1,107 | | Comprehensive income | $29,473 | $13,737 | $1,429 | $21,464 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) | Metric (in thousands) | Six months ended June 30, 2020 | Six months ended June 30, 2019 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash from operating activities | $(10,232) | $(9,951) | | Net cash from investing activities | $56,983 | $112,528 | | Net cash from financing activities | $52,498 | $(101,997) | | Net change in cash, cash equivalents, and cash held in trust | $99,249 | $580 | | Cash, cash equivalents and cash held in trust, end of period | $163,612 | $55,750 | - Cash paid for interest was **$22.8 million** for the six months ended June 30, 2020, down from **$28.2 million** in the prior year period[15](index=15&type=chunk) - Proceeds from issuance of preferred stock and warrants, net of offering costs, totaled **$124.977 million** for the six months ended June 30, 2020[15](index=15&type=chunk) [Consolidated Statements of Changes in Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) | Metric (in thousands) | Balance at Dec 31, 2019 | Net income | Preferred Stock | Issuance of shares under dividend reinvestment plan | Stock-based compensation expense | Dividends declared and distributions | Other comprehensive income | Treasury stock | Balance at June 30, 2020 | | :-------------------- | :---------------------- | :--------- | :-------------- | :-------------------------------------------------- | :------------------------------- | :----------------------------------- | :------------------------- | :------------- | :----------------------- | | Total Stockholders' Equity | $359,882 | $8,083 | $115,144 | $41 | $214 | $(5,748) | $23,231 | $(38) | $472,987 | | Noncontrolling Interest | $24,202 | $735 | — | — | — | $(66) | — | — | $25,883 | | Total Equity | $384,084 | $8,818 | $115,144 | $41 | $214 | $(5,814) | $23,231 | $(38) | $498,870 | - During Q2 2019, all **624,106 Operating Partnership units** held by an unaffiliated holder were exchanged for common stock, resulting in the Operating Partnership being **100% owned** by the Company at June 30, 2020[34](index=34&type=chunk) [Note 1 — Organization and Basis of Presentation](index=12&type=section&id=Note%201%20%E2%80%94%20Organization%20and%20Basis%20of%20Presentation) - Great Ajax Corp. is an externally managed real estate company formed on January 30, 2014, operating as a mortgage REIT, primarily targeting acquisitions of re-performing loans (RPLs) and small balance commercial loans (SBC loans)[25](index=25&type=chunk) - The Company also invests in single-family and smaller commercial properties directly and opportunistically acquires non-performing loans (NPLs)[25](index=25&type=chunk) - The Company owns **19.8%** of its Manager (Thetis Asset Management LLC) and **8.0%** of Great Ajax FS LLC (parent of the Servicer, Gregory Funding LLC), both affiliated companies[25](index=25&type=chunk) [Note 2 — Summary of Significant Accounting Policies](index=14&type=section&id=Note%202%20%E2%80%94%20Summary%20of%20Significant%20Accounting%20Policies) - The Company adopted ASU 2016-13, Financial Instruments - Credit Losses (CECL), on January 1, 2020, requiring recording expected credit losses over the life of loans and beneficial interests[87](index=87&type=chunk) - Upon CECL adoption, a **$10.2 million** reclassification occurred between loan discount and allowance for purchased credit impaired loans, and a **$4.2 million** reclassification for beneficial interests, with no net impact on the balance sheet or equity[88](index=88&type=chunk) - The Company issued **$125.0 million** (net of offering costs) of preferred stock and warrants in private placements during Q2 2020, recognizing an **$11.1 million** put option liability for the warrants[54](index=54&type=chunk) [Note 3 — Mortgage Loans](index=23&type=section&id=Note%203%20%E2%80%94%20Mortgage%20Loans) | Loan Type (in thousands) | June 30, 2020 | December 31, 2019 | | :----------------------- | :------------ | :---------------- | | Residential RPLs loans | $1,048,146 | $1,085,514 | | SBC/commercial loans | $4,240 | $35,086 | | Residential NPL loans | $28,231 | $30,869 | | Total | $1,080,617 | $1,151,469 | - The Company recognized a recovery of **$

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 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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-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 fis ...

Great Ajax Corp. (NYSE:AJX) Q3 2019 Earnings Conference Call November 5, 2019 5:00 PM ET Company Participants Lawrence Mendelsohn - Chief Executive Officer Conference Call Participants Timothy Hayes - B. Riley FBR Kevin Barker - Piper Jaffray Scott Valentin - Compass Point Stephen Laws - Raymond James Operator Good day, and welcome to the Great Ajax Third Quarter 2019 Financial Results Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] Please note that this ...

Financial Performance - Consolidated net income attributable to common stockholders for the three months ended September 30, 2019, was $7.7 million, an increase of 17.3% compared to $6.6 million for the same period in 2018[13]. - The company reported a total income of $51.2 million for the nine months ended September 30, 2019, an increase of 15.7% from $44.3 million in the same period of 2018[13]. - Basic earnings per common share for the nine months ended September 30, 2019, was $1.44, up 24.1% from $1.16 in the same period of 2018[13]. - The company reported a gain on the sale of mortgage loans of $7.1 million for the nine months ended September 30, 2019, compared to no gain in the same period of 2018[13]. - Net income for the quarter ended September 30, 2019, was $7,691,000, an increase from $7,330,000 in the previous quarter[24]. - Total comprehensive income for the quarter was $1,012,000, reflecting a positive performance[26]. Assets and Liabilities - Total assets decreased to $1,553.7 million as of September 30, 2019, from $1,602.9 million at December 31, 2018, representing a decline of approximately 3.1%[9]. - The company’s total liabilities decreased to $1,195.7 million as of September 30, 2019, from $1,268.6 million at December 31, 2018, a reduction of approximately 5.7%[9]. - Total equity attributable to stockholders increased to $334.1 million as of September 30, 2019, from $300.8 million at December 31, 2018, representing an increase of 11.0%[9]. - The carrying value of the Company's mortgage loans was approximately $1.164 billion, a decrease from $1.310 billion as of December 31, 2018, representing a decline of about 11%[99]. Cash Flow and Dividends - Cash and cash equivalents increased to $57.9 million as of September 30, 2019, from $55.1 million at December 31, 2018, reflecting a growth of 5.0%[9]. - The company paid $19,462 thousand in dividends on common stock, an increase from $16,892 thousand in the previous period[19]. - The company declared dividends of $0.30 per share, with total distributions amounting to $(5,606) thousand, compared to $(7,673) thousand in the previous period[21]. - The company’s cash flows from operating activities showed a net cash outflow of $11.2 million for the nine months ended September 30, 2019, compared to an outflow of $2.6 million in the same period of 2018[18]. Investments and Acquisitions - The Company targets acquisitions of re-performing loans (RPLs) and small balance commercial loans (SBC loans) to enhance its portfolio[28]. - The Company acquired 539 RPLs with an unpaid principal balance (UPB) of $115.6 million during the nine months ended September 30, 2019, compared to 422 RPLs with a UPB of $104.5 million in the same period of 2018, reflecting a significant increase in acquisitions[102]. - The Company acquired $127.6 million in notes and beneficial interests issued by joint ventures during 2019, with senior notes valued at $93.6 million and subordinate notes at $12.6 million[118]. Debt and Borrowings - The total maximum borrowing capacity as of September 30, 2019, is $906,094,000, with outstanding amounts of $438,388,000 and collateral amounting to $588,974,000, resulting in a coverage ratio of 134%[145]. - The interest rate on the secured borrowings averages 4.26% as of September 30, 2019[145]. - The total secured borrowings as of September 30, 2019 amounted to $912.7 million, reflecting a 143% collateral coverage[161]. - The Company issued $87.5 million of 7.25% convertible senior notes due 2024, with net proceeds of approximately $84.9 million after expenses[165]. Management and Compensation - Management fees paid to Thetis rose to $2.2 million in Q3 2019, up from $1.5 million in Q3 2018, marking a 52% increase[10]. - Total stock-based management and director fees for the three months ended September 30, 2019, amounted to $1,026,000, a 26.3% increase from $813,000 in 2018[197]. - The annual retainer for independent directors increased to $100,000 effective April 1, 2019, with 40% payable in shares of common stock[16]. Real Estate and Property Management - The Company owned 23 rental properties with a carrying value of $38.3 million as of September 30, 2019, an increase from 21 properties valued at $17.6 million as of December 31, 2018[110]. - The net investments in REO held-for-sale were $16.5 million as of September 30, 2019, down from $19.4 million as of December 31, 2018, indicating a decrease in held-for-sale properties[111]. - The Company sold 30 and 32 REO properties during the three months ended September 30, 2019 and 2018, realizing a net gain of approximately $0.3 million and a net loss of $0.2 million, respectively[114]. Accounting and Compliance - The Company has maintained REIT status since 2014, which allows it to avoid U.S. federal income tax on distributed taxable income, provided certain tests are met[82]. - The Company has adopted several accounting standards, including ASU 2016-02 on leases, with no significant impact on consolidated financial statements[90]. - The Company is currently evaluating the impact of ASU 2016-13 on expected credit losses, but does not anticipate a material effect on its financial statements[94].

Financial Data and Key Metrics Changes - Q2 2019 was a strong quarter with approximately $200 million of primarily non-clean-pay loans sold into a joint venture, resulting in a gain of $7 million [3][7] - Interest income for the quarter was $28.1 million, with net interest income impacted by the sale of loans into the joint venture [9][10] - Book value at the end of Q2 was $15.85 per share, with taxable income for the first half of the year reported at $0.86 per share [10][34] Business Line Data and Key Metrics Changes - The company purchased $90.7 million of reperforming loans (RPLs) at a weighted average of 20 days on the balance sheet, with a purchase price of 56% of property value and 85% of unpaid principal balance [6][12] - The company continues to focus on acquiring lower loan-to-value (LTV) loans, with the purchase price to property value for RPLs at approximately 62% [12] - The non-performing loan (NPL) portfolio has seen a decline in absolute dollars invested, with a purchase price to property value of approximately 57% [12] Market Data and Key Metrics Changes - Over 80% of the portfolio is concentrated in target markets, with California representing the largest segment [13] - The company has observed consistent payment patterns in California urban centers, while higher-end property values in states like New York and Illinois have shown a decrease [14][15] - The market has seen a shrinkage in value differences between higher and middle property value deciles, particularly in deciles 8, 9, and 10 [15] Company Strategy and Development Direction - The company aims to maximize returns asset by asset using proprietary analytics for acquisition and management processes [5] - The strategy includes a focus on urban multifamily properties, with ongoing acquisitions in this asset class [17] - The company is also leveraging securitization to reduce funding costs and increase leverage, as seen in the recent 2019-D securitization [17][19] Management's Comments on Operating Environment and Future Outlook - Management noted an increase in prepayment rates and cash flow exceeding expectations, indicating a positive outlook for the current interest rate environment [11][36] - The company is cautious about the potential impacts of market volatility and is monitoring the situation closely before making dividend decisions [22] - Management expressed confidence in the stability of lower decile properties while remaining cautious about higher decile properties [44] Other Important Information - The company has a significant cash flow from its loan and joint venture portfolio, with average cash held during the quarter at approximately $50 million [11] - The Board approved a dividend of $0.32 per share to be paid on August 30, 2019 [18] Q&A Session Summary Question: Will the company pay out more than the $0.32 run rate suggests? - Management indicated a predisposition to increase the quarterly dividend depending on market conditions, with a focus on stability [21][22] Question: How does the company foresee the pace of additional loan sales? - Management expects both loan sales and securitization to continue, with a focus on clean-pay loans that have higher intrinsic value [23][24] Question: What are the characteristics of the properties acquired in Q3? - The properties are primarily multifamily, located in Dallas, Boston, and Saint Paul, with varying cap rates and potential for repositioning [30][31]

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, 2019 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 State or other jurisdiction of incorpora ...

Great Ajax Corp. (NYSE:AJX) Q1 2019 Results Conference Call May 7, 2019 5:00 PM ET Company Participants Lawrence Mendelsohn - CEO Mary Doyle - CFO Conference Call Participants Mike Smyth - B. Riley FBR Scott Valentin - Compass Point Kevin Barker - Piper Jaffray Operator Good afternoon, and welcome to the Great Ajax First Quarter 2019 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the ...