Exhibit 99.1 
logoa01.jpg
GREAT AJAX CORP. ANNOUNCES RESULTS FOR THE QUARTER
ENDED DECEMBER 31, 2017
 
Fourth Quarter Highlights
Purchased $219.2 million of re-performing mortgage loans (“RPL”) with an aggregate unpaid principal balance (“UPB”) of $241.3 million and underlying collateral value of $363.9 million, including $177.3 million of RPLs in a joint venture with a new third party institutional partner.
Originated $1.7 million of small-balance commercial mortgage loans (“SBC”).
Raised $332.4 million, net, in three separate fixed rate secured borrowings including gross proceeds of $88.9 million of secured debt consolidated on our balance sheet that is held by a joint venture partner.
Interest income from investment portfolio of $24.4 million; net interest income of $13.0 million.
Net income attributable to common stockholders of $6.2 million.
Basic earnings per share (“EPS”) of $0.34.
Taxable income of $0.11 per share.
Book value per share of $15.45 at December 31, 2017.
Held $53.7 million of cash and cash equivalents at December 31, 2017.

New York, NY—March 6, 2018 —Great Ajax Corp. (NYSE: AJX), a Maryland corporation that is a real estate investment trust, today announces results of operations for the quarter ended December 31, 2017. We focus primarily on acquiring, investing in and managing a portfolio of RPLs secured by single-family residences and commercial properties, and, to a lesser extent, non-performing mortgage loans (“NPL”). In addition to our continued focus on residential RPLs, we have increased our originations of SBCs secured by multi-family residential and commercial mixed use retail/residential properties.
 
Financial Results (Unaudited)
($ in thousands except per share amounts)
 
 
December 31, 2017
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
December 31, 2016
Loan interest income(2)
 
$
24,231

 
$
24,396

 
$
21,682

 
$
20,556

 
$
19,653

Total revenue(3)
 
$
13,797

 
$
14,226

 
$
13,105

 
$
13,667

 
$
10,969

Consolidated net income
 
$
6,638

 
$
7,716

 
$
7,102

 
$
8,698

 
$
6,163

Net income per diluted share
 
$
0.33

 
$
0.38

 
$
0.36

 
$
0.46

 
$
0.33

Average equity(1)
 
$
302,482

 
$
292,640

 
$
288,884

 
$
284,872

 
$
280,213

Average total assets(1)
 
$
1,230,026

 
$
1,157,223

 
$
1,050,108

 
$
952,112

 
$
883,621

Average daily cash balance(4)
 
$
47,717

 
$
43,666

 
$
47,705

 
$
35,513

 
$
32,759

Average carrying value of RPLs(1)
 
$
1,046,126

 
$
998,692

(5)
$
898,749

(5)
$
810,166

(5)
$
751,801

Average carrying value of NPLs
 
$
43,400

 
$
44,919

(5)
$
48,396

(5)
$
52,770

(5)
$
59,365

Average carrying value of originated SBC loans
 
$
11,273

 
$
8,427

(5)
$
5,493

(5)
$
2,781

(5)
$
1,246

Average debt balance(1)
 
$
943,329

 
$
883,770

 
$
775,717

 
$
669,938

 
$
615,103

____________________________________________________________






(1)
Reflects the impact of consolidating the assets, liabilities and non-controlling interest of Ajax Mortgage Loan Trust 2017-D, which is 50% owned by a third party institutional investor.
(2)
Loan interest income excludes interest income from debt securities and bank account balances.
(3)
Total revenue includes net interest income, income from investments in our manager and other income.
(4)
Average daily cash balance includes cash and cash equivalents, and excludes cash held in trust.
(5)
The 2017 quarterly average balances for mortgage loans was calculated using daily ending balances. Prior quarters of 2017 have been restated to conform to the current quarter presentation. Prior year data has not been restated.

Consolidated net income decreased $1.1 million for the quarter ended December 31, 2017 compared to the quarter ended September 30, 2017, primarily due to the accelerated amortization of the deferred issuance costs of $0.9 million on certain of our secured borrowings that were called in the fourth quarter as we took advantage of favorable market conditions to refinance. Our professional fees increased for the quarter ended December 31, 2017 primarily as a result of due diligence and structuring costs related to a number of transactions reviewed during the quarter. Additionally, audit fees increased for the year ended December 31, 2017 as we became larger and more complex. Accordingly, we made a cumulative adjustment to accrued audit fees during the quarter. Additionally, net interest income declined as the final deployment of the proceeds from the issuance of our convertible debt occurred late in the fourth quarter. This resulted in our fourth quarter loan acquisitions being held for only a weighted average of 23 days for the quarter, compared to a weighted average 59 day holding period during the third quarter for third quarter acquisitions. Also in the fourth quarter, we continued to experience extensions in the duration of a portion of our RPL portfolio resulting from (1) lower expected delinquencies and (2) significantly higher expected future cash flows in the form of interest payments and full payoffs. The updates resulted in a significant aggregate increase in expected future cash flows but a lower expected current yield and lower expected current period income.

During the quarter ended December 31, 2017, we completed three securitizations, including our first rated securitization, Ajax Mortgage Loan Trust 2017-B.  Ajax Mortgage Loan Trust 2017-B closed on December 21, 2017 with an aggregate of $115.8 million of AA rated senior securities and $35.7 million of subordinated securities issued with respect to $165.9 million of mortgage loans, all of which were RPLs. The senior securities represent 69.8% of the UPB of the underlying mortgage loans. The senior securities have no step up provision; as a result, the stated coupon of 3.163% is fixed to maturity.

Ajax Mortgage Loan Trust 2017-C closed on November 27, 2017 with an aggregate of $130.2 million of senior securities and $13.0 million of subordinated securities issued with respect to $185.9 million of mortgage loans.  The senior securities represent 70.0% of UPB of the underlying mortgage loans. 742 of the loans were RPLs and 94 of these loans were NPLs.  The senior securities have a four-year step provision - a one year extension versus the three-year step up from our previous issuance of non-rated senior securities.

We closed Ajax Mortgage Loan Trust 2017-D, a joint venture with an independent third party, on December 7, 2017 with an aggregate of $177.8 million senior securities and $44.5 million of subordinated equity issued with respect to $177.3 million of mortgage loans.  Included in 1,003 of these loans were RPLs.  The senior securities represent 80% of the UPB of the underlying mortgage loans. The senior securities and subordinated equity are currently owned 50% by us and 50% by the third party.  The bonds may be sold by either party at a future date.  We have consolidated Ajax Mortgage Loan Trust 2017-D in our Consolidated Financial Statements at December 31, 2017.  As a result, we included 100% of the mortgages on our balance sheet in Mortgage loans offset by a liability in Secured borrowings of $88.9 million and equity of $14.0 million in non-controlling interest.  The senior securities have no step provision; accordingly, the stated coupon of 3.75% is fixed to maturity.

We collected $48.1 million on our mortgage loan and REO portfolios through payments, payoffs and sales of REO during the quarter, and ended the fourth quarter with $53.7 million in cash and cash equivalents. We continue to see a high volume of payoffs as borrowers continue to refinance or sell the underlying real property.

We acquired $219.2 million of RPLs with aggregate UPB of $241.3 million, and underlying collateral values of $363.9 million, and originated $1.7 million of SBC loans during the quarter to end the period with $1,253.5 million of mortgage loans with an aggregate UPB of $1,465.2 million. Mortgage loans purchased during the fourth quarter and held as of quarter-end were on our consolidated balance sheet for a weighted average of 23 days during the quarter.

Also, in the fourth quarter of 2017, we sold 286,841 shares of common stock for proceeds of $4.1 million, pursuant to our At-the-Market Issuance Sales Agreements which we established in October 2016. In accordance with the terms of the agreements, we may offer and sell shares of our common stock at any time and from time to time through the sales agents.

Portfolio Acquisitions
($ in thousands)





 
 
December 31, 2017
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
December 31, 2016
RPLs(1)
 
 
 
 

 
 

 
 

 
 

Count
 
1,211

 
109

 
1,218

 
24

 
729

UPB
 
$
241,309

 
$
32,718

 
$
249,000

 
$
3,445

 
$
145,720

Purchase price
 
$
219,236

 
$
26,645

 
$
210,204

 
$
3,143

 
$
127,200

Purchase price % of UPB
 
90.9
%
 
81.4
%
 
84.4
%
 
91.2
%
 
87.3
%
 
 
 
 
 
 
 
 
 
 
 
NPLs
 
 
 
 

 
 

 
 

 
 

Count
 

 

 

 

 
23

UPB
 
$

 
$

 
$

 
$

 
$
3,590

Purchase price
 
$

 
$

 
$

 
$

 
$
2,022

Purchase price % of UPB
 
%
 
%
 
%
 
%
 
56.3
%
 
____________________________________________________________

(1)
Includes the impact of 1,003 mortgage loans with a purchase price of $177.3 million and UPB of $194.3 million acquired in the fourth quarter of 2017 through a 50% owned joint venture which we consolidate.

The following table provides an overview of our portfolio at December 31, 2017 ($ in thousands)(1):
No. of loans
 
6,901

 
Weighted average LTV(5)
 
88.0
%
Total UPB
 
$
1,465,223

 
Weighted average remaining term (months)
 
324

Interest-bearing balance
 
$
1,370,563

 
No. of first liens
 
6,879

Deferred balance(2)
 
$
94,660

 
No. of second liens
 
22

Market value of collateral(3)
 
$
1,954,661

 
No. of rental properties
 
14

Price/total UPB(4)
 
81.0
%
 
Market value of rental properties
 
$
1,838

Price/market value of collateral
 
61.7
%
 
Capital invested in rental properties
 
$
1,353

Re-performing loans
 
95.6
%
 
Price/market value of rental properties
 
73.6
%
Non-performing loans
 
3.5
%
 
No. of other REO
 
137

Originated SBC loans
 
0.9
%
 
Market value of other REO
 
$
28,080

Weighted average coupon
 
4.33
%
 
 
 
 

 
____________________________________________________________

(1)
Includes the impact of 1,003 mortgage loans with a purchase price of $177.3 million, UPB of $194.3 million and collateral value of $295.3 million acquired in the fourth quarter of 2017 through a 50% owned joint venture which we consolidate.
(2)
Amounts that have been deferred in connection with a loan modification on which interest does not accrue. These amounts generally become payable at maturity.
(3)
As of date of acquisition.
(4)
Our loan portfolio consists of fixed rate (58.1% of UPB), ARM (10.2% of UPB) and Hybrid ARM (31.7% of UPB) mortgage loans.
(5)
UPB as of December 31, 2017 divided by market value of collateral and weighted by the UPB of the loan.

Subsequent Events

During January and February 2018, we acquired 85 RPLs with an aggregate UPB of $18.9 million in three transactions. The loans were acquired at 89.3% of UPB and the estimated market value of the underlying collateral is $31.2 million. The purchase price equaled 53.9% of the estimated market value of the underlying collateral. We also acquired a 32-unit multi-family apartment building with a purchase price of $3.5 million.
Additionally, we agreed to acquire, subject to due diligence, 422 RPLs with aggregate UPB of $91.6 million in five transactions from five different sellers. The purchase price equals 95.8% of UPB and 55.8% of the estimated market value of the underlying collateral of $157.3 million. We also agreed to purchase two SBC loans with UPB of $2.7 million. Our investment will equal 67.8% of the underlying collateral value of $3.9 million. Some of these loans may be acquired through joint ventures with unrelated third parties.






On January 26, 2018, we agreed to acquire an 8% ownership interest in Great Ajax Financial Services LLC (“GAFS”), the parent of our servicer, Gregory Funding LLC. The acquisition is expected to be completed in two transactions. On January 26, 2018, the initial closing, we acquired a 4.9% interest in GAFS and three warrants, each exercisable for a 2.45% interest in GAFS upon payment of additional consideration, in exchange for consideration of $1.1 million of cash and 45,938 shares of our common stock. At the date of an additional closing, expected to take place approximately 121 days from January 26, we will acquire an additional 3.1% interest in GAFS, and three warrants, each exercisable for a 1.55% interest in GAFS in exchange for consideration of $0.7 million of cash and shares of our common stock with a value of approximately $0.4 million, with the actual number of shares dependent upon our common stock’s price at the close of trading on the day immediately preceding the date of the additional closing.
On February 16, 2018, we issued 48,654 shares of our common stock to Thetis Asset Management LLC, our Manager, in payment of the portion of the base management fee which is payable in common stock for the fourth quarter of 2017 in a private transaction. The management fee expense associated with these shares was recorded as an expense in the fourth quarter of 2017.
On February 16, 2018, we issued to each of our four independent directors 607 shares of common stock in payment of half of their quarterly director fees for the fourth quarter of 2017.
On February 21, 2018, our Board of Directors declared a dividend of $0.30 per share, to be paid on March 30, 2018 to common stockholders of record as of March 15, 2018.

Conference Call
Great Ajax will host a conference call at 5:00 p.m. EST, Tuesday, March 6, 2018 to review our financial results for the quarter. A live Webcast of the conference call will be accessible from the Investor Relations section of our website www.great-ajax.com. An archive of the Webcast will be available for 90 days.
 
About Great Ajax Corp.
Great Ajax Corp. is a Maryland corporation that is a real estate investment trust, that focuses primarily on acquiring, investing in and managing RPLs secured by single-family residences and, to a lesser extent, NPLs. We also originate in loans secured by multi-family residential and smaller commercial mixed use retail/residential properties, as well as in the properties directly. We are externally managed by Thetis Asset Management LLC. Our mortgage loans and other real estate assets are serviced by Gregory Funding LLC, an affiliated entity. We have elected to be taxed as a real estate investment trust under the Internal Revenue Code.

Forward-Looking Statements
This press release contains certain forward-looking statements. Words such as “believes,” “intends,” “expects,” “projects,” “anticipates,” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions, many of which are beyond the control of Great Ajax, including, without limitation, the risk factors and other matters set forth in our Annual Report on Form 10-K for the period ended December 31, 2017 when filed with the SEC. Great Ajax undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.
 
CONTACT:
Lawrence Mendelsohn
 
Chief Executive Officer
 
or
 
Mary Doyle
 
Chief Financial Officer
 
Mary.Doyle@aspencapital.com
 
503-444-4224





GREAT AJAX CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except per share amounts)  
 
 
 
Three months ended
 
 
December 31, 2017
 
September 30, 2017
 
June 30, 2017
 
March 31, 2017
 
 
(unaudited)
 
(unaudited)
 
(unaudited)
 
(unaudited)
INCOME:
 
 

 
 

 
 

 
 

Interest income
 
$
24,367

 
$
24,529

 
$
21,721

 
$
20,807

Interest expense
 
(11,382
)
 
(10,775
)
 
(9,293
)
 
(7,651
)
Net interest income
 
12,985

 
13,754

 
12,428

 
13,156

 
 
 
 
 
 
 
 
 
Income from investment in Manager
 
89

 
143

 
142

 
49

Other income (expense)
 
723

 
329

 
535

 
462

Total income
 
13,797

 
14,226

 
13,105

 
13,667

 
 
 
 
 
 
 
 
 
EXPENSE:
 
 

 
 

 
 

 
 

Related party expense - loan servicing fees
 
2,242

 
2,187

 
1,935

 
1,881

Related party expense - management fee
 
1,510

 
1,428

 
1,330

 
1,072

Loan transaction expense
 
214

 
290

 
442

 
525

Professional fees
 
856

 
497

 
507

 
480

Real estate operating expense
 
518

 
1,151

 
637

 
324

Other expense
 
871

 
910

 
886

 
686

Total expense
 
6,211

 
6,463

 
5,737

 
4,968

Loss on debt extinguishment
 
913

 

 
218

 

Income before provision for income tax
 
6,673

 
7,763

 
7,150

 
8,699

Provision for income tax (benefit)
 
35

 
47

 
48

 
1

Consolidated net income
 
6,638

 
7,716

 
7,102

 
8,698

Less: consolidated net income attributable to non-controlling interests
 
454

 
246

 
238

 
289

Consolidated net income attributable to common stockholders
 
$
6,184

 
$
7,470

 
$
6,864

 
$
8,409

Basic earnings per common share
 
$
0.34

 
$
0.41

 
$
0.38

 
$
0.46

Diluted earnings per common share
 
$
0.33

 
$
0.38

 
$
0.36

 
$
0.46

 
 
 
 
 
 
 
 
 
Weighted average shares – basic
 
18,236,488

 
18,072,045

 
18,008,499

 
17,976,710

Weighted average shares – diluted
 
26,111,202

 
25,246,764

 
23,026,679

 
18,791,231







GREAT AJAX CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except per share amounts)
 
 
 
 
 
 
 
ASSETS
 
December 31, 2017
 
December 31, 2016
 
 
 
 
 
Cash and cash equivalents
 
$
53,721

 
$
35,723

Cash held in trust
 
301

 
1,185

Mortgage loans, net(1,4)
 
1,253,541

 
869,091

Property held-for-sale, net(2)
 
24,947

 
23,882

Rental property, net
 
1,284

 
1,289

Investment in debt securities
 
6,285

 
6,323

Receivable from servicer
 
17,005

 
12,481

Investment in affiliates
 
7,020

 
4,253

Loans purchase deposit
 
26,740

 
50

Prepaid expenses and other assets
 
4,894

 
3,125

Total assets
 
$
1,395,738

 
$
957,402

 
 
 
 
 
LIABILITIES AND EQUITY
 
 

 
 

Liabilities:
 
 

 
 

Secured borrowings, net(1,3,4)
 
$
694,040

 
$
442,670

Borrowings under repurchase transactions
 
276,385

 
227,440

Convertible senior notes, net(3)
 
102,571

 

Management fee payable
 
750

 
750

Accrued expenses and other liabilities
 
4,554

 
3,819

Total liabilities
 
1,078,300

 
674,679

 
 
 
 
 
Equity:
 
 

 
 

Preferred stock $0.01 par value; 25,000,000 shares authorized, none issued or outstanding
 

 

Common stock $.01 par value; 125,000,000 shares authorized, 18,588,228 shares at December 31, 2017 and 18,122,387 shares at December 31, 2016 issued and outstanding
 
186

 
181

Additional paid-in capital
 
254,847

 
244,880

Retained earnings
 
35,556

 
27,231

Accumulated other comprehensive loss
 
(233
)
 

Equity attributable to stockholders
 
290,356

 
272,292

Non-controlling interests(4)
 
27,082

 
10,431

Total equity
 
317,438

 
282,723

Total liabilities and equity
 
$
1,395,738

 
$
957,402

  
____________________________________________________________

(1)
Mortgage loans, net includes $969,463 and $598,643 of loans transferred to securitization trusts at December 31, 2017 and December 31, 2016, respectively, that are variable interest entities (“VIEs”) that can only be used to settle obligations of the VIEs.  Secured borrowings consist of notes issued by VIEs that can only be settled with the assets and cash flows of the VIEs. The creditors do not have recourse to the primary beneficiary (Great Ajax Corp).
(2)
Property held-for-sale, net, includes valuation allowances of $1,784 and $1,620 at December 31, 2017, and December 31, 2016, respectively.
(3)
Secured borrowings and Convertible senior notes are presented net of deferred issuance costs.
(4)
Mortgage loans, net include $177.1 million, Secured borrowings, net of deferred costs include $88.4 million, and Non-controlling interests includes $14.0 million from a 50% owned joint venture, which we consolidate under GAAP.



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