Great Ajax(US:AJX)2019-08-10 03:17Financial 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]