Great Ajax(US:AJX)2025-11-04 00:56Financial Transactions - Rithm Property Trust completed a strategic transaction on June 11, 2024, selling $14.0 million of common stock to Rithm at $4.87 per share[177]. - The company issued 2,084,232 shares of Series C Preferred Stock, generating total net proceeds of $50.8 million[234]. Market Conditions - The overall Consumer Price Index (CPI) rose to 3.0% in September 2025, up from 2.7% in June 2025, indicating increased inflation pressures[185]. - The unemployment rate increased to 4.3% in August 2025, up from 4.1% in June 2025, reflecting a slight loosening in the labor market[187]. - The nominal 10-year Treasury yield declined to 4.15% at the end of September 2025, down from 4.23% at the end of June 2025[186]. - The commercial real estate market is showing signs of stabilization, with improved sentiment and disciplined underwriting practices[189]. Company Strategy - The company has shifted its strategic focus towards investments in the commercial real estate (CRE) sector and has begun investing in commercial mortgage-backed securities (CMBS)[181]. - Rithm Property Trust is positioned to capitalize on emerging dislocations in the market, providing liquidity where traditional lenders are cautious[196]. - The company expects limited ability to acquire significant new commercial mortgage assets in the near future due to financial challenges[197]. Financial Performance - Net interest income increased by $0.3 million for the three months and by $6.3 million for the nine months ended September 30, 2025, compared to the same periods in 2024, primarily due to reinvesting proceeds from sales of residential mortgage loans and RMBS into CMBS with a higher net interest margin[210]. - Interest income for the three months ended September 30, 2025, was $13,424,000, an increase of $1,076,000 from $12,348,000 in the same period of 2024[211]. - Interest expense for the three months ended September 30, 2025, was $9,436,000, an increase of $776,000 from $8,660,000 in the same period of 2024[211]. - Total expenses decreased by $1.2 million for the three months ended September 30, 2025, compared to the same period in 2024, primarily due to lower general and administrative expenses[215]. - Total expenses decreased by $24.4 million for the nine months ended September 30, 2025, compared to the same period in 2024, primarily due to a $17.2 million decrease in management fee expense[216]. - General and administrative expenses for the nine months ended September 30, 2025, were $2.9 million, down from $7.96 million in 2024, reflecting a year-over-year variance of $5.06 million[217]. - The total gain on revenue turned positive at $543 thousand in September 2025, compared to a loss of $11.870 million in the same period of 2024[252]. Asset and Liability Management - As of September 30, 2025, the carrying value of mortgage loans held-for-sale was $372.9 million, down from $396.1 million at the end of 2024[183]. - The average carrying value of the mortgage loan portfolio decreased by $223,233,000 for the nine months ended September 30, 2025, compared to the same period in 2024, primarily due to loan sales and paydowns[213]. - The average carrying value of CMBS and RMBS increased by $176,377,000 for the nine months ended September 30, 2025, compared to the same period in 2024[213]. - The average carrying value of repurchase financing agreements increased by $59,581,000 for the nine months ended September 30, 2025, compared to the same period in 2024[213]. - The ending carrying value of mortgage loans held-for-investment, net, was $372.87 million as of September 30, 2025, down from $403.06 million at the end of 2024[225]. - Total assets decreased from $505.465 million on December 31, 2024, to $288.554 million on September 30, 2025, representing a decline of approximately 43%[252]. - Total liabilities decreased from $414.773 million to $186.650 million, a reduction of about 55%[252]. - Total equity increased by $11.2 million, from $90.692 million at the end of 2024 to $101.904 million by September 30, 2025[252]. Credit and Risk Management - The net loss attributable to common stockholders for the three months ended September 30, 2025, was $(1,559,000), a decrease of $6,470,000 compared to $(8,029,000) in the same period of 2024[209]. - The net loss attributable to Rithm Property Trust Inc. for the three months ended September 30, 2025, was $(273,000), a decrease of $7,756,000 compared to $(8,029,000) in the same period of 2024[209]. - The net change in the allowance for credit losses was $0 for the three months ended September 30, 2025, compared to a loss of $(857,000) in the same period of 2024[209]. - The allowance for credit losses on mortgage loans held-for-investment was $0 for the nine months ended September 30, 2025, compared to $5.1 million for the same period in 2024[220]. - The current delinquency rate for the loan portfolio was 78.1% as of September 30, 2025, compared to 76.7% at the end of 2024[229]. - The company has no material exposure to market, credit, liquidity, or financing risk from unconsolidated entities or financial partnerships[253]. - Interest rate increases could lead to higher costs of funds for new secured bonds and repurchase lines of credit, impacting overall financing expenses[256]. - The company is actively managing risks related to real estate, interest rates, prepayment, and credit to maintain capital levels consistent with those risks[255]. - Inflation risks may affect disposable household income and increase credit risk for certain borrowers, impacting overall asset performance[263]. Cash Flow and Liquidity - As of September 30, 2025, the total cash and cash equivalents were $81.4 million[232]. - Net cash used in operating activities decreased by $10.2 million year-over-year, totaling $(7,465) thousand for the nine months ended September 30, 2025[244]. - Net cash provided by investing activities decreased by $426.9 million year-over-year, totaling $1,384 thousand for the nine months ended September 30, 2025[245]. - Net cash from financing activities increased by $424.1 million year-over-year, totaling $24,199 thousand for the nine months ended September 30, 2025[246]. - Dividends declared in the nine months ended September 30, 2025, were $8.2 million on Common Stock, with an additional $2.9 million accrued on Series C Preferred Stock[249]. - The company must distribute at least 90% of its REIT taxable income annually to maintain its REIT status[235]. - The company expects to meet its long-term liquidity requirements through cash on hand and potential additional borrowings[242]. - The company is subject to debt covenants requiring a minimum liquidity of $30.0 million and a tangible net worth of $240.0 million[238].