Great Ajax(AJX) - 2022 Q4 - Annual Report

Management and Fees - The company has a 19.8% ownership in its Manager, which implements its business strategy and manages day-to-day operations[71] - The base management fee is set at 1.5% of stockholders' equity per annum, calculated quarterly[73] - The company has the option to pay the management fee in cash (50% to 100%) or in shares of common stock[73] - An incentive fee is payable quarterly if dividends and book value increase exceed 8% on an annualized basis[75] - The termination fee for the Management Agreement is equal to twice the combined base and incentive fees payable during the preceding 12 months[79] - The company has a 19.8% equity interest in its Manager and an 8.0% interest in the parent of its Servicer, structured through a wholly owned subsidiary[98] Servicing Operations - The Servicer receives an annual servicing fee ranging from 0.65% to 1.25% of UPB, paid monthly[84] - The Servicer is licensed to service loans in all states where required and is an approved servicer for FHA and VA[88] - The Servicer collects mortgage loan payments and manages delinquent borrowers, earning servicing fees based on a percentage of the outstanding unpaid principal balance[90] Financing and Risk Management - The company may utilize various types of borrowings, including debt financing through bank credit facilities and structured financing arrangements[66] - The company expects to fund asset acquisitions with non-recourse securitizations and repurchase agreements[64] - The company does not currently hedge risks associated with mortgage loans but may use derivative instruments for risk management in the future[68] Market and Credit Risks - The company faces market risks including real estate risk, interest rate risk, prepayment risk, and credit risk, which are actively managed[510] - Rising interest rates may lead to lower refinancing volumes and could adversely affect property values and net income[512] - The company expects the pace of loan prepayments to slow due to rising interest rates[515] - Credit risk is present due to potential mispricing of acquisitions and property value volatility influenced by various economic factors[516] - Borrowers may default due to personal income reductions, job loss, or poor property management, impacting the company's operations[517] Tax and Regulatory Compliance - The company is subject to U.S. federal income tax requirements for REITs, including the need to distribute at least 90% of annual REIT taxable income[95] - The company conducts operations to avoid registration as an investment company under the Investment Company Act, ensuring less than 40% of total assets are in investment securities[97] Internal Controls and Reporting - The company's management assessed the effectiveness of internal controls over financial reporting as of December 31, 2022, and found them to be effective[525] - Moss Adams LLP provided an unqualified opinion on the company's internal control over financial reporting and consolidated financial statements for the year ended December 31, 2022[526] - There have been no changes in the company's internal control over financial reporting that materially affected its effectiveness during the last fiscal quarter[527]