Hot Stock of the Wednesday: Great Ajax Corp. (NYSE: AJX)

Shares of Great Ajax Corp. (NYSE: AJX) closed with decline of -0.38% to $13.18. Recent traded volume was 54,660 million shares versus to it an average volume of 39,790 shares. The company holds 18.7M shares outstanding and market cap of 254.671M. The stock’s day range was recorded between a low of $13.13 and a high $13.21. The one year high of the company is $15.40 and the one year low is $12.27.

Great Ajax Corp. (AJX), a Maryland corporation that is a real estate investment trust, recently announces its results of operations for the quarter ended March 31, 2018. 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 (“NPLs”). In addition to our continued focus on residential RPLs, we also originate and acquire small balance commercial loans (“SBC loans”) secured by multi-family residential and commercial mixed use retail/residential properties.

Our consolidated net income raised $1.7M for the quarter ended March 31, 2018 contrast to the quarter ended December 31, 2017, primarily Because of the acceleration of deferred issuance costs of $0.9M in the fourth quarter of 2017 related to calling our 2015-B and -C securitizations. Additionally, we realized an raise in fee income from the Home Affordable Modification Program and a gain, net of impairments, on real estate owned property (“REO”) sales. Our net interest income raised $0.1M as a result of recording a full quarter of acquisitions, net of funding costs, that were made in the quarter ended December 31, 2017. Although we only hold a 50% interest in the assets of Ajax Mortgage Loan Trust 2017-D, we are required to consolidate 100% of its assets and record an offsetting liability and non-controlling interest for the debt and equity, respectively, held by our joint venture partner. Accordingly, our net interest income reflects the impact of consolidating the joint venture.

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 will be completed in two steps. On January 26, 2018, the initial closing, we purchased 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 $1.1M of cash and 45,938 shares of our ordinary stock. At the date of an additional closing, predictable to take place at the end of May, 2018, we expect to acquire the remaining 3.1% interest in GAFS and three warrants, each exercisable for a 1.55% interest in GAFS, in exchange for consideration of $0.7M of cash and shares of our ordinary stock with a value of about $0.4M, with the actual number of shares dependent upon our ordinary stock’s public trading price at the close of trading on the day immediately preceding the date of the additional closing.

We collected $50.4M on our mortgage loan and REO portfolios through loan payments, loan payoffs and sales of REO during the quarter, and ended the first quarter with $47.5M in cash and cash equivalents. We had an average cash balance of $51.5M during the quarter. We continue to see a high volume of payoffs in certain RPL cohorts as borrowers continue to refinance or sell the underlying real property. Additionally, we continue to experience duration extension in other cohorts of our RPL portfolio resulting from materially lower than predictable delinquencies and higher predictable future cash flows in the form of interest and principal payments. This results in a important aggregate raise in predictable future cash flows for these loans but a lower current yield and lower predictable current period income. The raise in the quality of the portfolio has resulted in a lower cost of funds on our securitization transactions.

We purchased $17.6M of RPLs with an aggregate UPB of $19.7M, and underlying collateral values of $32.4M during the quarter to end the period with $1,247.2M of mortgage loans with an aggregate UPB of $1,448.3M. Mortgage loans purchased during the first quarter and held as of quarter-end were on our consolidated balance sheet for a weighted average of 56 days during the quarter.

The stock quick ratio for most recent quarter was 15.90 while current ratio for time period was 15.90. In most recent quarter, LT Debt/Equity ratio was listed at 2.60 and Total Debt/Equity ratio was noted at 2.60.



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