New York Mortgage Trust(NYMT) - 2022 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported an undepreciated loss per share of $0.27 and an undepreciated book value decline of 8.3%, ending the third quarter at $3.89 [8][15] - The fair value changes related to the investment portfolio resulted in $128.1 million or $0.34 per share of unrealized losses due to increased interest rates and credit spread widening [21] - The company paid a $0.10 per common share dividend, unchanged from the prior quarter, with adjusted net interest income contributing $0.08 per share [18][19] Business Line Data and Key Metrics Changes - The company recognized $14 million of realized gains from property sales and $20.6 million from investment securities during the quarter [20] - Investment activity was significantly reduced, with only $119 million invested in the third quarter, primarily from previous loans [35] - The company completed a securitization of residential loans, reducing recourse leverage ratios to 0.5x and 0.4x [16][39] Market Data and Key Metrics Changes - The U.S. housing market is experiencing a slowdown, with new and existing home sales trailing below 2019 levels due to rising mortgage payments [24] - The yield on the two-year treasury increased to 4.22%, a rise of 349 basis points from the previous year, contributing to market volatility [6] - The company noted a significant discount in the single-family rental market, with prices reflecting a 15% to 30% discount to current values [33] Company Strategy and Development Direction - The company is focused on monetizing the value from multifamily property acquisitions and is actively considering opportunities to sell consolidated joint venture investments [11][23] - The strategy includes maintaining a nimble and liquid portfolio to navigate market volatility while seeking attractive investment opportunities [7][30] - The company plans to remain exposed to multifamily through mezzanine lending, recognizing better opportunities in this space [65] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns over rising interest rates and potential recession risks impacting the economic environment [5] - The company anticipates continued market volatility through year-end and into 2023, with a focus on capitalizing on dislocated market opportunities [29][100] - Management emphasized the importance of patience in capital deployment, waiting for favorable market conditions before making significant investments [32][104] Other Important Information - The company has $178 million remaining in its buyback authorization, which may be utilized if share prices remain low [79] - The company has a strong liquidity position with $369 million in cash, allowing it to manage margin call risks effectively [40][112] Q&A Session Summary Question: What is the pacing of future JV equity transactions? - The company is engaged in several property sales, but the pace is uncertain due to market conditions [57] Question: What are the expected returns on JV exits? - Returns may vary, but the market's stability due to agency financing supports low cap rates [59] Question: Is the plan to remain exposed to multifamily through mezz-lending? - Yes, the company sees better opportunities in mezzanine lending due to lower senior lending advance rates [65] Question: How is the company balancing stock buybacks and liquidity? - The company is currently prioritizing share buybacks due to attractive pricing while maintaining liquidity for future investments [74][78] Question: What is the dividend outlook? - The company believes it can support the current dividend based on net interest income and potential liquidations [81] Question: What is the quarterly operating expense run rate post-asset sales? - Operating expenses will decrease significantly due to reduced depreciation and amortization on sold assets [88]