Great Ajax(US:AJX)2021-08-05 16:00Financial 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].