Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 12, 2015 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | Great Ajax Corp. | |
Entity Central Index Key | 1,614,806 | |
Trading Symbol | ajx | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 15,926,052 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | |
ASSETS | |||
Cash and cash equivalents | $ 28,507 | $ 53,099 | |
Mortgage loans, net | [1] | 510,594 | 211,159 |
Property held-for-sale | 9,168 | 1,316 | |
Rental property, net | 121 | 290 | |
Receivable from servicer | 6,458 | 1,340 | |
Investment in affiliate | 2,532 | 2,237 | |
Prepaid expenses and other assets | 8,218 | 3,317 | |
Total Assets | 565,598 | 272,758 | |
Liabilities: | |||
Secured borrowings | [1] | 197,836 | 84,679 |
Borrowings under repurchase agreement | 130,798 | 15,249 | |
Management fee payable | 646 | 258 | |
Accrued expenses and other liabilities | 3,209 | 1,292 | |
Total liabilities | $ 332,489 | $ 101,478 | |
Commitments and contingencies - see Note 7 | |||
Equity: | |||
Preferred stock $.01 par value; 25,000,000 shares authorized, none issued or outstanding | |||
Common stock $.01 par value; 125,000,000 shares authorized, 15,285,528 shares at September 30, 2015 and 11,223,984 shares at December 31, 2014 issued and outstanding | $ 152 | $ 112 | |
Additional paid-in capital | 211,595 | 158,951 | |
Retained earnings | 11,530 | 2,744 | |
Equity attributable to common stockholders | 223,277 | 161,807 | |
Noncontrolling interests | 9,832 | 9,473 | |
Total equity | 233,109 | 171,280 | |
Total Liabilities and Equity | $ 565,598 | $ 272,758 | |
[1] | Mortgage loans includes $291,314 and $127,559 of loans at September 30, 2015 and December 31, 2014, respectively, transferred to securitization trusts that are variable interest entities ("VIEs"); these loans can only be used to settle obligations of the VIEs. Secured borrowings consist of notes issued by VIEs that can only be settled with the assets and cash flows of the VIEs. The creditors do not have recourse to the primary beneficiary (Great Ajax Corp.). See Note 8-Debt. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Preferred stock par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock shares authorized | 25,000,000 | 25,000,000 |
Preferred stock shares issued | ||
Preferred stock shares outstanding | ||
Common stock par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock shares authorized | 125,000,000 | 125,000,000 |
Common stock shares issued | 15,285,528 | 11,223,984 |
Common stock shares outstanding | 15,285,528 | 11,223,984 |
Mortgage loans (in dollars) | $ 291,314 | $ 127,559 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2015 | |
INCOME | ||||
Loan interest income | $ 14,440 | $ 2,266 | $ 2,266 | $ 32,116 |
Interest expense | (3,849) | (7,192) | ||
Net interest income | 10,591 | 2,266 | 2,266 | 24,924 |
Other income | 217 | 25 | 25 | 663 |
Total income | 10,808 | 2,291 | 2,291 | 25,587 |
EXPENSE | ||||
Related party expense - management fee | 861 | 439 | 439 | 2,464 |
Related party expense - loan servicing fees | 1,196 | 157 | 157 | 2,703 |
Loan transaction expense | 310 | 129 | 129 | 1,299 |
Professional fees | 278 | 200 | 200 | 1,019 |
Other expense | 230 | 142 | 142 | 679 |
Total expense | 2,875 | 1,067 | 1,067 | 8,164 |
Income before provision for income taxes | 7,933 | 1,224 | 1,224 | 17,423 |
Provision for income taxes | 8 | 24 | ||
Consolidated net income | 7,925 | 1,224 | 1,224 | 17,399 |
Less: consolidated net income attributable to the non-controlling interest | 311 | 228 | 228 | 709 |
Consolidated net income attributable to common stockholders | $ 7,614 | $ 996 | $ 996 | $ 16,690 |
Basic earnings per common share (in dollars per share) | $ 0.50 | $ 0.13 | $ 0.13 | $ 1.15 |
Diluted earnings per common share (in dollars per share) | $ 0.50 | $ 0.13 | $ 0.13 | $ 1.15 |
Weighted average shares - basic (in shares) | 15,273,818 | 7,762,963 | 7,762,963 | 14,514,907 |
Weighted average shares - diluted (in shares) | 15,926,052 | 8,207,705 | 8,207,705 | 15,180,350 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 8 Months Ended | 9 Months Ended |
Sep. 30, 2014 | Sep. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Consolidated net income | $ 1,224 | $ 17,399 |
Adjustments to reconcile net income to net cash from operating activities | ||
Stock-based management fee and compensation expense | 260 | 1,155 |
Non-cash interest income accretion | (1,471) | (21,008) |
Gain on sale of property | (131) | |
Depreciation of property | 1 | 1 |
Amortization of prepaid financing costs | 991 | |
Net change in operating assets and liabilities | ||
Prepaid expenses and other assets | (679) | (5,892) |
Receivable from servicer | (722) | (5,118) |
Undistributed income from investment in affiliate | (20) | (410) |
Accrued expenses and other liabilities | 2,822 | 2,305 |
Net cash from operating activities | 1,415 | (10,708) |
CASH FLOWS FROM INVESTING ACTIVITES | ||
Purchase of mortgage loans and related balances | (104,394) | (300,379) |
Principal paydowns on mortgage loans | 782 | 16,440 |
Purchase of property held-for-sale and related balances | (124) | (2,888) |
Purchase of rental property and related balances | (278) | |
Proceeds from sale of property held-for-sale | 1,081 | |
Distribution from affiliate | 115 | |
Renovations of rental property and property held for sale | (234) | |
Net cash from investing activities | (104,014) | (285,865) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from repurchase agreement | 202,996 | |
Proceeds from sale or issuance of secured notes | 136,939 | |
Repayments on repurchase agreement | (87,447) | |
Repayments on secured notes | (23,782) | |
Sale of common stock, net of offering costs | 119,605 | 51,529 |
Sale of operating units of subsidiary | 7,022 | |
Distribution to non-controlling interest | (178) | (350) |
Dividends paid on common stock | (7,904) | |
Net cash from financing activities | 126,449 | 271,981 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 23,850 | (24,592) |
CASH AND CASH EQUIVALENTS, beginning of period | 53,099 | |
CASH AND CASH EQUIVALENTS, end of period | $ 23,850 | 28,507 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash paid for interest | $ 5,817 | |
Cash paid for income taxes | ||
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES | ||
Transfer of loans to rental property or property held for sale | $ 5,813 | |
Issuance of common stock for management fee and compensation expense | 1,155 | |
Property sold to borrowers under installment method | $ 132 | |
Exchange of membership interest in Little Ajax II for mortgage loans | $ 48,280 | |
Loan acquisition payable | $ 11,401 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Total Stockholders' Equity | Noncontrolling Interest | Total |
Balance at Jan. 29, 2014 | $ 2 | $ 2 | $ 2 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Consolidation of majority-owned subsidiary | $ 10,598 | 10,598 | ||||
Issuance of shares | $ 85 | 119,520 | 119,605 | 119,605 | ||
Issuance of operating partnership units | 7,022 | 7,022 | ||||
Net income | $ 996 | 996 | 228 | 1,224 | ||
Stock-based management fee expense | 219 | 219 | 219 | |||
Stock-based compensation expense | 41 | 41 | 41 | |||
Dissolution of majority-owned subsidiary | (10,598) | (10,598) | ||||
Distribution to non-controlling interest | (178) | (178) | ||||
Balance at Sep. 30, 2014 | 85 | 119,782 | 996 | 120,863 | 7,072 | 127,935 |
Balance at Dec. 31, 2014 | 112 | 158,951 | 2,744 | 161,807 | 9,473 | 171,280 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of shares | 40 | 51,489 | 51,529 | 51,529 | ||
Net income | 16,690 | 16,690 | 709 | 17,399 | ||
Stock-based management fee expense | 1,016 | 1,016 | 1,016 | |||
Stock-based compensation expense | 139 | 139 | 139 | |||
Dividends and distributions | (7,904) | (7,904) | (350) | (8,254) | ||
Balance at Sep. 30, 2015 | $ 152 | $ 211,595 | $ 11,530 | $ 223,277 | $ 9,832 | $ 233,109 |
Organization and basis of prese
Organization and basis of presentation | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and basis of presentation | Note 1 — Organization and basis of presentation Great Ajax Corp., a Maryland corporation (the “Company”), is an externally managed real estate company formed on January 30, 2014 and capitalized on March 28, 2014 by its then sole stockholder, Aspen Yo LLC (“Aspen Yo”), a company affiliated with the Aspen Capital companies (“Aspen Capital”). The Company was formed to facilitate capital raising activities and to operate as a mortgage real estate investment trust. The Company focuses primarily on acquiring, investing in and managing a portfolio of re-performing (“RPL”) and non-performing (“NPL”) mortgage loans secured by single-family residences and, to a lesser extent, single-family properties. Re-performing loans are loans on which at least five of the seven most recent payments have been made, or the most recent payment has been made and accepted pursuant to an agreement, or the full dollar amount to cover at least five payments has been paid in the last seven months. Non-performing loans are those loans on which the most recent three payments have not been made. The Company also invests in loans secured by smaller multi-family residential and commercial mixed use retail/residential properties, as well as in the properties directly. The Company’s manager is Thetis Asset Management LLC (the “Manager” or “Thetis”), an affiliated company. The Company owns 19.8% of the Manager. The Company’s mortgage loans and real properties are serviced by Gregory Funding LLC (“Gregory” or “Servicer”), also an affiliated company. The Company has elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with the year ended December 31, 2014. The Company conducts substantially all of its business through its operating partnership, Great Ajax Operating Partnership L.P., a Delaware limited partnership, and its subsidiaries. The Company, through a wholly owned subsidiary, is the sole general partner of the operating partnership. GA-TRS LLC, or Thetis TRS, is a wholly owned subsidiary of the operating partnership that owns the equity interest in the Manager. The Company elected to treat Thetis TRS as a “taxable REIT subsidiary” (“TRS”) under the Code. In September 2014, the Company formed Great Ajax Funding LLC, a wholly owned subsidiary of the operating partnership, to act as the depositor of mortgage loans into securitization trusts and to hold the subordinated securities issued by such trusts and any additional trusts the Company may form for additional securitizations. The Company generally securitizes its mortgage loans and retains subordinated securities from the securitizations. In November 2014, the Company formed AJX Mortgage Trust I, a wholly owned subsidiary of the operating partnership, in connection with a repurchase agreement. In addition, the Company, through its operating partnership, holds real estate owned properties (“REO”) acquired upon the foreclosure or other settlement of its owned non-performing loans, as well as through outright purchases. On February 1, 2015, the Company formed GAJX Real Estate LLC, as a wholly owned subsidiary of the operating partnership, to own, maintain, improve and sell REO properties. The Company has elected to treat GAJX Real Estate LLC as a TRS under the Code. The Company commenced its operations following the completion of its initial private offering in July 2014. On July 8, 2014, the Company closed a private offering, pursuant to which the Company sold 8,213,116 shares of common stock and 453,551 Class A Units of the operating partnership (the “OP Units”), which are redeemable on a 1-for-1 basis into shares of its common stock after one year of ownership. On August 1, 2014, the Company closed the sale of an additional 263,570 shares of common stock and 14,555 OP Units pursuant to the exercise of the option to purchase additional shares granted to the initial purchaser and placement agent. The purchase price per share and per OP Unit was $15.00. In these offerings, which are referred to collectively as the “Original Private Placement,” the net proceeds, including from the additional shares purchased pursuant to the option to purchase additional shares and OP Units, after deducting the initial purchaser’s discount and placement fee and estimated offering expenses payable, was approximately $128.4 million. The Original Private Placement was made in reliance on the exemptions from registration set forth in Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 of Regulation D thereunder and Rule 144A under the Securities Act. Upon the closing of the Original Private Placement, the Company used $48.8 million of the proceeds to acquire its initial mortgage portfolio through the acquisition of 82% of the equity interests in Little Ajax II, LLC (“Little Ajax II”). Little Ajax II was an affiliated entity that acquired primarily re-performing mortgage loans and a number of non-performing mortgage loans in a series of transactions between December 1, 2013 and July 7, 2014. In September 2014, the Company completed a transaction to acquire the remaining interests in this initial mortgage-related asset portfolio. The transaction initially had Little Ajax II redeem the 82% membership interest of the operating partnership by distributing to the operating partnership 82% of all Little Ajax II loans, participation interests and real property. The operating partnership then purchased for cash the remaining 18% interest in such real estate assets for an aggregate purchase price of approximately $11.4 million. The operating partnership also purchased from Gregory its 5% interest in the 43 loans in which Little Ajax II held a 95% participation interest for approximately $0.2 million. On December 16, 2014, the Company closed an additional private placement (the “Second Private Placement”), pursuant to which it sold 2,725,326 shares of common stock and 156,000 OP Units. The purchase price per share was $15.00. The net proceeds from the private placement after deducting the placement fee and offering expenses paid by the Company, was approximately $41.2 million. The Company used the proceeds of the Original Private Placement and the Second Private Placement, referred to collectively as the Private Placements, to purchase re-performing and non-performing loans. The Company completed its initial public offering, or IPO, in February 2015 in which the Company and selling stockholders sold an aggregate of 5,276,797 shares of common stock, including shares sold pursuant to exercise of the option to purchase additional shares granted to the underwriters. The Company sold 3,976,464 shares of common stock and selling stockholders sold 1,300,333 shares of common stock, in each case, including shares sold pursuant to exercise of the option to purchase additional shares granted to the underwriters. The Company used the approximately $53.9 million of proceeds (after deducting the underwriting discount but before deducting estimated offering expenses) to acquire additional mortgage loans and mortgage-related assets. Basis of presentation and use of estimates These interim consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and the notes thereto for the period ended December 31, 2014 included in the Annual Report on Form 10-K filed with the on March 26, 2015. Interim financial statements are prepared in accordance with accounting principles generally accepted in the United States (“ U.S. GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-X. In the opinion of management, all adjustments, consisting solely of normal recurring accruals considered necessary for the fair presentation of financial statements for the interim period presented, have been included. The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the fiscal year ending December 31, 2015. The consolidated financial statements have been prepared in accordance with U.S. GAAP, as contained within the Accounting Standards Codification (“ASC”) of the Financial Accounting Standards Board (“FASB”) and the rules and regulations of the SEC, as applied to interim financial statements. Since the Company commenced operations in July 2014, the Company’s results of operations for the periods from inception and commenced operations through September 30, 2014 reflect its results for partial periods only. As a result, a comparison of the results of operations between the 2014 and the 2015 periods may not be comparable and is not indicative of the expected period to period variations. All controlled subsidiaries are included in the consolidated financial statements and all intercompany accounts and transactions have been eliminated in consolidation. The operating partnership is a majority owned partnership that has a non-controlling ownership interest that is included in non-controlling interests on the consolidated balance sheet. As of September 30, 2015, the Company owned 96.1% of the outstanding OP Units and the remaining 3.9% of the OP Units were owned by an unaffiliated holder. The Company’s 19.8% investment in the Manager is accounted for using the equity method because it exercises significant influence on the operations of the Manager through common officers and directors. There is no traded or quoted price for the interests in the Manager since it is privately held. The preparation of consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company considers significant estimates to include expected cash flows from mortgage loans and fair value measurements. |
Summary of significant accounti
Summary of significant accounting policies | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Summary of significant accounting policies | Note 2 — Summary of significant accounting policies Cash and cash equivalents Highly liquid investments with an original maturity of three months or less when purchased are considered cash equivalents. The Company maintains cash and cash equivalents at insured banking institutions. Certain account balances exceed Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. Organizational expenses Organizational expenses are expensed as incurred or when they become reimbursable. Organizational expenses consisted mainly of legal fees. Offering costs Costs associated with the Company’s completed offering of shares of common stock have been netted against, and are reflected as a reduction in additional paid-in capital. Earnings per share Basic earnings per share is computed by dividing consolidated net income attributable to common stockholders by the weighted average common stock outstanding during the period. The Company treats unvested restricted stock issued under its stock-based compensation plan, which are entitled to non-forfeitable dividends, as participating securities and applies the two-class method in calculating basic earnings per share. Diluted earnings per share is computed by dividing consolidated net income attributable to common stockholders and dilutive securities by the weighted average common stock outstanding for the period plus other potentially dilutive securities, such as stock grants, shares that would be issued in the event that OP Units are redeemed for shares of common stock of the Company and shares issued in respect of the stock-based portion of the base fee payable to the Manager and directors’ fees. Stock-based payments The Management Agreement (as defined below) provides for the payment to the Manager of a management fee. The Company pays a portion of the management fee in cash, and a portion of the management fee in shares of the Company’s common stock, which are issued to the Manager in a private placement and are restricted securities under the Securities Act. On October 27, 2015, the Company entered into an amended and restated management agreement with the Manager (the “Amended and Restated Agreement”), which amended the portion of the Base Management Fee and Manager’s Incentive Fee to be payable in cash and shares of the Company’s common stock retroactive to July 1, 2015. (For more information see Note 13-Subsequent events.) Shares issued to the Manager are determined based on the higher of the most recently reported book value or the average of the closing prices of our common stock on the NYSE on the five business days after the date on which the most recent regular quarterly dividend to holders of our common stock is paid. Management fees paid in common stock are expensed in the quarter incurred and recorded in equity at quarter end. Pursuant to the Company’s 2014 Director Equity Plan (the “Director Plan”), the Company may make stock-based awards. The Company has issued to each of the independent directors restricted stock awards of 2,000 shares of its common stock, which are subject to a one-year vesting period. In addition, each of the Company’s independent directors receives an annual retainer of $50,000, payable quarterly, half of which is paid in shares of the Company’s common stock on the same basis as the stock portion of the management fee payable to the Manager, and half in cash. Stock-based expense for the directors’ annual retainer is expensed as earned, in equal quarterly amounts during the year, and recorded in equity at quarter end. Directors’ fees The expense related to directors’ fees is accrued and reflected in stockholders’ equity in the period in which it is incurred. Management fee and expense reimbursement Under the management agreement with the Manager, the Company pays a quarterly base management fee based on its stockholders’ equity and a quarterly incentive management fee based on its cash distributions to its stockholders. Manager fees are expensed in the quarter incurred and the portion payable in common stock is included in stockholders’ equity at quarter end. See Note 9 — Related party transactions. Servicing fees Under the servicing agreement, Gregory receives servicing fees ranging from 0.65% – 1.25% annually of unpaid principal balance (“UPB”) (or the fair market value or purchase price of REO that the Company owns or acquires). Gregory is reimbursed for all customary, reasonable and necessary out-of-pocket costs and expenses incurred in the performance of its obligations, including the actual cost of any repairs and renovations undertaken on the Company’s behalf. The total fees incurred by the Company for these services will be dependent upon the UPB and type of mortgage loans that Gregory services, property values, previous UPB of the relevant loan, and the number of REO properties. The agreement will automatically renew for successive one-year terms, subject to prior written notice of non-renewal. In certain cases, the Company may be obligated to pay a termination fee. The Management Agreement will automatically terminate at the same time as the servicing agreement if the servicing agreement is terminated for any reason. See Note 9 — Related party transactions. Fair value of financial instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy has been established which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: · Level 1 · Level 2 · Level 3 The degree of judgment utilized in measuring fair value generally correlates to the level of pricing observability. Assets and liabilities with readily available actively quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of pricing observability and a lesser degree of judgment utilized in measuring fair value. Conversely, assets and liabilities rarely traded or not quoted will generally have little or no pricing observability and a higher degree of judgment utilized in measuring fair value. Pricing observability is impacted by a number of factors, including the type of asset or liability, whether it is new to the market and not yet established, and the characteristics specific to the transaction. Property held-for-sale is measured at cost at acquisition for purchased REO, or at the present value of future cash flows for foreclosed REO, and is subsequently measured at the lower of acquisition basis or fair value less cost to sell on a nonrecurring basis. The fair value of property held-for-sale is generally based on estimated market prices from an independently prepared appraisal, an independent broker price opinion (“BPO”), or management’s judgment as to the selling price of similar properties. Income taxes The Company has elected REIT status upon the filing of its 2014 income tax return, and has conducted its operations in order to satisfy and maintain eligibility for REIT status. Accordingly, the Company does not believe it will be subject to U.S. federal income tax from the year ended December 31, 2014 forward on the portion of the Company’s REIT taxable income that is distributed to the Company’s stockholders as long as certain asset, income and stock ownership tests are met. If the Company fails to qualify as a REIT in any taxable year, it generally will not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for the four taxable years following the year during which qualification is lost. The Company may also be subject to state or local income or franchise taxes. Thetis TRS, GAJX Real Estate LLC and any other TRS that the Company forms, will be subject to U.S. federal and state income taxes. On January 13, 2015, the Company applied for a private letter ruling from the Internal Revenue Service that would allow it to exclude its proportionate share of gross income from the Manager if it held its interest in the Manager through the operating partnership. If the Company receives such a ruling, it expects that it will hold its interest in the Manager through the operating partnership, instead of through Thetis TRS; however, there is no assurance that such a ruling will be issued. Income taxes are provided for using the asset and liability method. Provisions for income taxes of $8,000 and $24,000, respectively, were recorded for the three- and nine-month periods ended September 30, 2015. The Company evaluates tax positions taken in its consolidated financial statements under the interpretation for accounting for uncertainty in income taxes. As a result of this evaluation, the Company may recognize a tax benefit from an uncertain tax position only if it is “more-likely-than-not” that the tax position will be sustained on examination by taxing authorities. The Company’s tax returns remain subject to examination and consequently, the taxability of the distributions and other tax positions taken by the Company may be subject to change. Distributions to stockholders generally will be taxable as ordinary income, although a portion of such distributions may be designated as long-term capital gain or qualified dividend income, or may constitute a return of capital. The Company will furnish annually to each stockholder a statement setting forth distributions paid during the preceding year and their U.S. federal income tax treatment. Mortgage loans Purchased mortgage loans are initially recorded at the purchase price, net of any acquisition fees or costs at the time of acquisition and are considered asset acquisitions. As part of the determination of the purchase price for mortgage loans, the Company uses a discounted cash flow valuation model to model expected cash flows, and which considers alternate loan resolution probabilities, including liquidation or conversion to real estate owned. Observable inputs to the model include current interest rates, loan amounts, status of payments and property types. Unobservable inputs to the model include discount rates, forecast of future home prices, alternate loan resolution probabilities, resolution timelines, the value of underlying properties and other economic and demographic data. Under ASC 310-30, acquired loans may be aggregated and accounted for as a pool of loans if the loans being aggregated have some degree of credit quality deterioration since origination and have common risk characteristics. A pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. Re-performing mortgage loans have been determined to have common risk characteristics and are accounted for as a single loan pool for loans acquired within each three-month fiscal quarter. Similarly, non-performing mortgage loans have been determined to have common risk characteristics and are accounted for as a single non-performing pool for loans acquired within each three-month fiscal quarter. Under ASC 310-30, the Company estimates cash flows expected to be collected, adjusted for expected prepayments and defaults expected to be incurred over the life of the loan pool. The Company determines the excess of the loan pool’s contractually required principal and interest payments over the expected cash flows as an amount that should not be accreted, referred to as the non-accretable yield. The difference between expected cash flows and the purchase price (at acquisition) or the present value of the expected cash flows is referred to as the accretable yield, which represents the amount that is expected to be recorded as interest income over the remaining life of the loan pool. For the three-and nine-months ended September 30, 2015, the Company recognized no provision for loan loss. For the period from inception (January 30, 2014) through September 30, 2014, the Company recognized no provision for loan loss. For the three- and nine-months ended September 30, 2015, the Company accreted $14.4 million and $32.1 million, respectively, into interest income with respect to its loan portfolio. For the periods from commenced operations (July 8, 2014) and inception (January 30, 2014) through September 30, 2014, the Company accreted $2.3 million and $2.3 million, respectively, into interest income with respect to its loan portfolio. As of September 30, 2015, the Company’s loan portfolio had a UPB of $676.6 million and a carrying value of $510.6 million and at December 31, 2014, a UPB of $298.6 million and carrying value of $211.2 million, in each case excluding one loan in which it holds a 40.5% beneficial interest through an equity method investee. Generally, the Company acquires loans at a discount associated with some degree of credit impairment. The Company elects to aggregate certain pools of loans with common risk characteristics and accrue interest income thereon at a composite interest rate, based on expectations of cash flows to be collected for the pool. Expectations of pool cash flow are reviewed quarterly. Adjustments to a pool’s prospective composite interest rate or an allowance for impairment are made to the extent revised expectations differ from original estimates. For loans that do not qualify for pool aggregation treatment, including performing loans that are not purchased at discounts resulting from credit-related issues, interest is recognized using the simple-interest method on daily balances of the principal amount outstanding, adjusted for the amortization or accretion of the loan premium or discount over the contractual life of the loan. Accrual of interest on individual loans is discontinued when management believes that, after considering economic and business conditions and collection efforts, the borrower’s financial condition is such that collection of interest is doubtful. The Company’s policy is to stop accruing interest when a loan’s delinquency exceeds 90 days. All interest accrued but not collected for loans that are placed on non-accrual status or subsequently charged-off are reversed against interest income. Income is subsequently recognized on the cash basis until, in management’s judgment, the borrower’s ability to make periodic principal and interest payments returns and future payments are reasonably assured, in which case the loan is returned to accrual status. An individual loan is considered to be impaired when, based on current events and conditions, it is probable the Company will be unable to collect all amounts due (both principal and interest) according to the contractual terms of the loan agreement. Impaired loans are carried at the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s market price, or the fair value of the collateral if the loan is collateral dependent. For individual loans, a troubled debt restructuring is a formal restructuring of a loan where, for economic or legal reasons related to the borrower’s financial difficulties, a concession that would not otherwise be considered is granted to the borrower. The concession may be granted in various forms, including providing a below-market interest rate, a reduction in the loan balance or accrued interest, an extension of the maturity date, or a combination of these. An individual loan that has had a troubled debt restructuring is considered to be impaired and is subject to the relevant accounting for impaired loans. The allowance for loan losses is established through a provision for loan losses charged to expenses. The allowance is an amount that management believes will be adequate to absorb probable losses on existing loans that may become uncollectible, based on evaluations of the collectability of loans. Purchased non-performing loans that are accounted for as individual loans are recorded at fair value, which is generally the purchase price. Interest income is recognized on a cash basis and loan purchase discount is accreted to income in proportion to the actual principal paid. Loans are tested quarterly for impairment and impairment reserves are recorded to the extent the fair market value of the underlying collateral falls below net book value. While the Company generally intends to hold its assets as long-term investments, it may sell certain of its loans in order to manage its interest rate risk and liquidity needs, meet other operating objectives and adapt to market conditions. The timing and impact of future sales of loans, if any, cannot be predicted with any certainty. Since the Company expects that its assets will generally be financed, it expects that a significant portion of the proceeds from sales of its assets (if any), prepayments and scheduled amortization will be used to repay balances under its financing sources. Residential properties Property is recorded at cost if purchased, or at the present value of future cash flows of the asset if obtained through foreclosure by the Company. Property that is currently unoccupied and actively marketed for sale is classified as held-for-sale. Property held-for-sale is carried at the lower of its acquisition basis or fair market value. Net unrealized losses due to changes in market value are recognized through a valuation allowance by charges to income. No depreciation or amortization expense is recognized on properties held-for-sale, while holding costs are expensed as incurred. Rental property is property not held-for-sale. Rental properties are intended to be held as long-term investments but may eventually be held-for-sale. Depreciation is provided for using the straight-line method over the estimated useful lives of the assets of three to 27.5 years. With respect to residential rental properties not held-for-sale, the Company performs an impairment analysis using estimated cash flows if events or changes in circumstances indicate that the carrying value may be impaired, such as prolonged vacancy, identification of materially adverse legal or environmental factors, changes in expected ownership period or a decline in market value to an amount less than cost. This analysis is performed at the property level. These cash flows are estimated based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for rental properties, competition for customers, changes in market rental rates, costs to operate each property and expected ownership periods. If the carrying amount of a held-for-investment asset exceeds the sum of its undiscounted future operating and residual cash flows, an impairment loss is recorded for the difference between estimated fair value of the asset and the carrying amount. The Company generally estimates the fair value of assets held for use by using BPOs. In some instances, appraisal information may be available and is used in addition to BPOs. The Company performs property renovations to maximize the value of the property for its rental strategy. Such expenditures are part of its initial investment in a property and, therefore, are capitalized as part of the basis of the property. Subsequently, the residential property, including any renovations that improve or extend the life of the asset, are accounted for at cost. The cost basis is depreciated using the straight-line method over an estimated useful life of three to 27.5 years. Interest and other carrying costs incurred during the renovation period are capitalized until the property is ready for its intended use. Expenditures for ordinary maintenance and repairs are charged to expense as incurred. Segment information The Company’s primary business is acquiring, investing in and managing a portfolio of mortgage loans. The Company operates in a single segment focused on non-performing mortgages and re-performing mortgages. Emerging growth company Section 107 of the Jumpstart Our Business Startups Act (the “JOBS Act”) provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to take advantage of the benefits of this extended transition period. Its consolidated financial statements may, therefore, not be comparable to those of companies that comply with such new or revised accounting standards. Reclassifications Certain amounts in the Company’s 2014 Consolidated Financial Statements have been reclassified to conform to the current period presentation. Specifically, on the Company’s Consolidated Statement of Cash Flows for the period from inception (January 30, 2014) to September 30, 2014, approximately $1.5 million was reclassified from Cash Flows From Operating Activities to Cash Flows from Investing Activities. The December 31, 2014 amounts included in the delinquency table in Note 3 – Mortgage loans have been reclassified from delinquent to current to reflect a correction of an error in the presentation of the disclosure that is immaterial to the consolidated financial statements taken as a whole. Such reclassifications did not affect cash flows, net revenues, net income, total assets, total liabilities or total equity. Recently issued accounting standards In January 2014, FASB issued Accounting Standards Update (“ASU”) 2014-04, Troubled Debt Restructurings by Creditors. It provides that if a repossession or foreclosure has occurred, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendment requires disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in mortgage loans collateralized by residential real estate property that are in the process of foreclosure. The amended guidance may be applied using either a prospective transition method or a modified retrospective transition method and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014, with early adoption permitted. The Company adopted this standard in the first quarter of 2015 and it did not have a material impact on its financial statements. In May 2014, the FASB issued ASU 2014-09 Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services . While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In February 2015, the FASB issued ASU 2015-02 Amendments to the Consolidation Analysis. These amendments: (1) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities; (2) eliminate the presumption that a general partner should consolidate a limited partnership; (3) affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships; and (4) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. ASU 2015-02 is effective for interim and annual reporting periods beginning after December 15, 2015. The Company is evaluating the impact of this amendment on its financial position and results of operations. In April 2015, the FASB issued ASU 2015-03 Interest – Imputation of Interest. The amendments in this update require that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of a debt liability, consistent with debt discounts. This guidance is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. This guidance may be adopted retrospectively or under a modified retrospective method where the cumulative effect is recognized at the date of initial application. The Company is evaluating the impact of this amendment on its financial position and results of operations. |
Mortgage loans
Mortgage loans | 9 Months Ended |
Sep. 30, 2015 | |
Mortgage Loans [Abstract] | |
Mortgage loans | Note 3 — Mortgage loans The following tables present information regarding the contractually required payments and the estimated cash flows expected to be collected as of the date of the acquisition, and changes in the balance of the accretable yield, for loans acquired during the following periods ($ in thousands): Three months ended September 30, 2015 Period from commenced operations (July 8, 2014) to December 31, 2014 Nine months ended September 30, 2015 Period from inception (January 30, 2014) to December 31, 2014 Re- Non- Re- Non- Re- Non- Re- Non- Contractually required principal and interest $ 157,868 $ - $ 393,657 $ 257,790 $ 644,471 $ 65,675 $ 393,657 $ 257,790 Non-accretable yield (62,289 ) - (173,502 ) (184,096 ) (260,993 ) (38,317 ) (173,502 ) (184,096 ) Expected cash flows to be collected 95,579 - 220,155 73,694 383,478 27,358 220,155 73,694 Accretable yield (28,727 ) - (60,495 ) (22,071 ) (102,407 ) (8,038 ) (60,495 ) (22,071 ) Fair value at acquisition $ 66,852 $ - $ 159,660 $ 51,623 $ 281,071 $ 19,320 $ 159,660 $ 51,623 Accretable yield Three months ended Period from commenced operations (July 8, 2014) to December 31, 2014 Nine months ended Period from inception Re- Non- Re- Non- Re- Non- Re- Non- Balance at beginning of period $ 115,932 $ 23,735 $ - $ - $ 54,940 $ 20,686 $ - $ - Accretable yield additions 28,727 - 60,495 22,071 102,407 8,038 60,495 22,071 Accretion (11,531 ) (2,908 ) (5,555 ) (1,385 ) (24,219 ) (7,897 ) (5,555 ) (1,385 ) Balance at end of period $ 133,128 $ 20,827 $ 54,940 $ 20,686 $ 133,128 $ 20,827 $ 54,940 $ 20,686 During the three- and nine-months ended September 30, 2015, the Company recognized $0.3 million and $1.3 million, respectively, for due diligence costs related to these and other transactions in loan transaction expense. During the periods from commenced operations (July 8, 2014) and from inception (January 30, 2014) through September 30, 2014, the Company recognized $0.1 million and $0.1 million, respectively, for due diligence costs related to these and other transactions in loan transaction expense. The following table sets forth the carrying value of its mortgage loans, and related UPB by delinquency status as of September 30, 2015 and December 31, 2014 ($ in thousands): September 30, 2015 December 31, 2014 Number of Carrying Unpaid Number of Carrying Unpaid Current 1,111 $ 203,383 $ 264,262 439 $ 72,727 $ 94,993 30 470 81,059 104,816 237 36,954 53,739 60 278 48,056 60,498 99 13,849 17,766 90 729 112,595 150,763 352 53,987 76,691 Foreclosure 377 65,501 96,293 212 33,642 55,384 Mortgage loans 2,964 $ 510,594 $ 676,632 1,339 $ 211,159 $ 298,573 These balances do not include one loan in which we hold a 40.5% beneficial interest through an equity method investee. As of September 30, 2015, the Company held 43 residential properties with a carrying value of $5.4 million that had been foreclosed. As of December 31, 2014, the Company held two residential properties that had been foreclosed. The Company’s mortgage loans are secured by real estate. As such, the Company believes that the credit quality indicators for each of its mortgage loans are the timeliness of payments and the value of the underlying real estate. The Company categorizes mortgage loans as “re-performing” and as “non-performing.” The Company monitors the credit quality of the mortgage loans in its portfolio on an ongoing basis, principally by considering loan payment activity or delinquency status. In addition, the Company assesses the expected cash flows from the mortgage loans, the fair value of the underlying collateral and other factors, and evaluates whether and when it becomes probable that all amounts contractually due will not be collected. |
Real estate assets, net
Real estate assets, net | 9 Months Ended |
Sep. 30, 2015 | |
Real Estate [Abstract] | |
Real estate assets, net | Note 4 — Real estate assets, net Rental property, net As of September 30, 2015, the Company had two REO properties having an aggregate carrying value of $0.1 million held for use as rentals. One of these properties had been rented. As of December 31, 2014, the Company had three REO properties having an aggregate carrying value of $0.3 million held for use as rentals. Two of these properties had been rented. Property held-for-sale As of September 30, 2015, the Company classified 62 REO properties having an aggregate carrying value of $9.2 million as real estate held for sale as they do not meet its residential rental property investment criteria. As of December 31, 2014, the Company classified 12 REO properties having an aggregate carrying value of $1.3 million as real estate held for sale as they do not meet its residential rental property investment criteria. Dispositions During the three-months ended September 30, 2015, the Company disposed of nine held-for-sale residential properties and recognized a gain of $0.1 million. During the nine-months ended September 30, 2015, the Company disposed of 12 held-for-sale residential properties and recognized a gain of $0.1 million. During the periods from commenced operations (July 8, 2014), and from inception (January 30, 2014) through September 30, 2014, the Company did not dispose of any held-for-sale properties. |
Fair value of financial instrum
Fair value of financial instruments | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair value of financial instruments | Note 5 — Fair value of financial instruments The following tables set forth the fair value of financial assets and liabilities by level within the fair value hierarchy as of September 30, 2015 and December 31, 2014 ($ in thousands): Level 1 Level 2 Level 3 September 30, 2015 Carrying Quoted prices Observable Unobservable Not recognized on consolidated balance sheet at fair value (assets) Mortgage loans, net $ 510,594 - - $ 568,564 Not recognized on consolidated balance sheet at fair value (liabilities) Borrowings under repurchase agreement 130,798 - $ 130,798 - Secured borrowings 197,836 - 197,836 - Level 1 Level 2 Level 3 December 31, 2014 Carrying Quoted prices Observable Unobservable Not recognized on consolidated balance sheet at fair value (assets) Mortgage loans, net $ 211,159 - - $ 235,623 Not recognized on consolidated balance sheet at fair value (liabilities) Borrowings under repurchase agreement 15,249 - $ 15,249 - Secured borrowings 84,679 - 84,679 - The Company has not transferred any assets from one level to another level during the three or nine months ended September 30, 2015. The carrying values of its cash and cash equivalents, related party receivables, accounts payable and accrued liabilities, related party payables and investments in the Manager and affiliate are equal to or approximate fair value. Property held-for-sale is measured at cost at acquisition and subsequently measured at the lower of cost or fair value less cost to sell on a nonrecurring basis. The fair value of property held-for-sale is generally based on estimated market prices from an independently prepared appraisal, an independent BPO, or management’s judgment as to the selling price of similar properties. No properties held-for-sale were measured at fair value at September 30, 2015 or December 31, 2014. The fair value of mortgage loans is estimated using the Manager’s proprietary pricing model which estimates expected cash flows with the discount rate used in the present value calculation representing the estimated effective yield of the loan. The value of transfers of mortgage loans to real estate owned is estimated using BPOs. The significant unobservable inputs used in the fair value measurement of the Company’s mortgage loans are the same as those used to calculate the acquisition price, including discount rates and loan resolution timelines. Significant changes to any of these inputs in isolation could result in a significant change to the fair value measurement. A decline in the discount rate in isolation would increase the fair value. An increase in the loan resolution timeline in isolation would decrease the fair value. The following table sets forth quantitative information about the significant unobservable inputs used to measure the fair value of the Company’s mortgage loans as of September 30, 2015 and December 31, 2014: Range of Values Input September 30, 2015 December 31, 2014 Equity discount rate – Re-performing loans 7% - 14% 7% - 14% Equity discount rate – Non-performing loans 10% - 18% 10% - 18% Cost of debt 4.25% 4.25% Loan resolution timelines – Re-performing loans (in years) 4 - 7 4 - 7 Loan resolution timelines – Non-performing loans (in years) 1.4 - 4 1.4 - 4 |
Unconsolidated affiliates
Unconsolidated affiliates | 9 Months Ended |
Sep. 30, 2015 | |
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | |
Unconsolidated affiliates | Note 6 — Unconsolidated affiliates On December 5, 2014, the Company acquired a 40.5% interest in GA-E 2014-12, a Delaware trust, for $2.2 million. GA-E 2014-12 holds an economic interest in a single small-balance commercial loan secured by a commercial property in Portland, Oregon. At September 30, 2015, GA-E 2014-12 had a basis in the loan of $5.7 million and net income of $0.2 million and $0.7 million, respectively, for the three- and nine- months ended September 30, 2015, of which 40.5% is the Company’s share. At December 31, 2014, GA-E 2014-12 had a basis in the loan of $5.4 million. The Company accounts for this investment using the equity method. Upon the closing of the Original Private Placement, the Company received a 19.8% equity interest in Thetis, a privately held company for which there is no public market for its securities. At September 30, 2015, Thetis had total assets of $2.9 million, liabilities of $0.6 million, and net income of $0.2 million for the three-months, and $0.7 million for the nine-months ended September 30, 2015, of which 19.8% is the Company’s share. At December 31, 2014, Thetis had total assets of $2.2 million and liabilities of $0.2 million. At September 30, 2014 Thetis had net income of $18,000 for the period from commenced operations (July 8, 2014) through September 30, 2014, of which 19.8% is the Company’s share. The Company accounts for its investment in Thetis using the equity method. |
Commitments and contingencies
Commitments and contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Note 7 — Commitments and contingencies The Company regularly enters into agreements to acquire additional mortgage loans and mortgage-related assets, subject to continuing diligence on such assets and other customary closing conditions. There can be no assurance that the Company will acquire any or all of the mortgage loans identified in any acquisition agreement as of the date of these consolidated financial statements, and it is possible that the terms of such acquisitions may change. At September 30, 2015, the Company had commitments to purchase 28 RPLs secured by single and one-to-four family residences with aggregate UPB of $4.6 million. The loans were acquired, subsequent to quarter end, at 79.3% of UPB and the estimated market value of the underlying collateral is $6.7 million. The purchase price equaled 54.6% of the estimated market value of the underlying collateral. Litigation, claims and assessments From time to time, the Company may be involved in various claims and legal actions arising in the ordinary course of business. As of September 30, 2015, the Company was not a party to, and its properties were not subject to, any pending or threatened legal proceedings that individually or in the aggregate, are expected to have a material impact on its financial condition, results of operations or cash flows. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt | Note 8 — Debt Repurchase agreement On November 25, 2014, the Company entered into a repurchase facility pursuant to which a newly formed Delaware statutory trust wholly owned by the operating partnership, AJX Mortgage Trust I, the “Seller,” will acquire, from time to time, pools of mortgage loans that are primarily secured by first liens on one-to-four family residential properties from its affiliates and/or third party sellers. The facility was amended on May 13, 2015 to increase the transaction limit. These mortgage loans will generally be sold from time to time by the operating partnership as the “Guarantor” to the Seller pursuant to the terms of a mortgage loan purchase agreement by and between the Guarantor, as seller, and the Seller, as purchaser, in accordance with the terms thereof. Pursuant to a master repurchase agreement (the “2014 MRA”), these mortgage loans, together with the Seller’s 100% ownership interests in its wholly owned subsidiary, a newly formed Delaware limited liability company (“REO I”), and any future REO subsidiaries wholly owned by the Seller and certain other property of the Seller, will be sold by the Seller to Nomura Corporate Funding Americas, LLC, as buyer, from time to time, pursuant to one or more transactions, not exceeding $200 million, with a simultaneous agreement by the Seller to repurchase such mortgage loans and other property, as provided in the 2014 MRA. The obligations of the Seller are guaranteed by the operating partnership. Repurchases under this facility carry interest calculated based on a spread to one-month LIBOR and are fixed for the term of the borrowing. The purchase price for each mortgage loan or REO is generally equal to 65% of the acquisition price for such asset or the then current BPO for the asset. The difference between the market value of the asset and the amount of the repurchase agreement is the amount of equity the Company has in the position and is intended to provide the lender some protection against fluctuations of value in the collateral and/or the failure by the Company to repay the borrowing at maturity. The Company has effective control over the assets associated with this agreement and therefore it is accounted for as a financing arrangement. The facility termination date is November 24, 2015. Gregory services these mortgage loans and the REO properties pursuant to the terms of a servicing agreement by and among the Servicer, the Seller, REO I, and any other REO Subsidiary, which servicing agreement has the same fees and expenses terms as the Company’s servicing agreement described under Note 9 — Related party transactions. The operating partnership as Guarantor will provide to the Buyer a limited guaranty of certain losses incurred by the Buyer in connection with certain events and/or the Seller’s obligations under the MLPA, following the breach of certain covenants by the Seller or an REO Subsidiary related to their status as a special purpose entity, the occurrence of certain bad acts by the Seller Parties, the occurrence of certain insolvency events of the Seller or an REO Subsidiary or other events specified in the Guaranty. As security for its obligations under the Guaranty, the Guarantor will pledge the Trust Certificate representing the Guarantor’s 100% beneficial interest in the Seller. While the Guaranty establishes a master netting arrangement, the arrangement does not meet the criteria for offsetting. The amount outstanding on the Company’s repurchase facility and the carrying value of the Company’s loans pledged as collateral are presented as gross amounts in the Company’s balance sheets at September 30, 2015 and December 31, 2014. The following table sets forth the details of the repurchase agreements ($ in thousands): September 30, 2015 Maturity Date Maximum Amount Carrying Interest November 24, 2015 $ 200,000 $ 130,798 $ 188,132 4.00 % December 31, 2014 Maturity Date Maximum Amount Carrying Interest rate November 24, 2015 $ 100,000 $ 15,249 $ 23,460 4.00 % Secured borrowings From the commencement of operations to September 30, 2015, the Company has completed four securitizations pursuant to Rule 144A under the Securities Act. The securitizations are structured as debt financings and not REMIC sales, and the loans included in the securitizations remain on the Company’s balance sheet as the Company is the primary beneficiary of the securitization trusts, which are variable interest entities (“VIEs”). The securitization VIEs are structured as pass through entities that receive principal and interest on the underlying mortgages and distribute those payments to the holders of the notes. The Company’s exposure to the obligations of the VIEs is generally limited to its investments in the entities. The notes that are issued by the securitization trusts are secured solely by the mortgages held by the applicable trusts and not by any of the Company’s other assets. The mortgage loans of the applicable trusts are the only source of repayment and interest on the notes issued by such trusts. The Company does not guarantee any of the obligations of the trusts under the terms of the agreement governing the notes or otherwise. The Company’s securitizations are structured with Class A notes, Class B notes, and a trust certificate representing the residual interests in the mortgages. For each of the Company’s four securitizations, the Company has retained the Class B notes and the trust certificate. The Class A notes are senior, sequential pay, fixed rate notes. The Class B notes are subordinate, sequential pay, fixed rate notes with Class B-2 notes subordinate to the Class B-1 notes. If the Class A notes have not been redeemed by the payment date 36 months after issue, or otherwise paid in full by that date, an amount equal to the aggregate interest payment amount that accrued and would otherwise be paid to the Class B-1 and the Class B-2 notes will be paid as principal to the Class A notes on that date and each subsequent payment date until the Class A notes are paid in full. After the Class A notes are paid in full, the Class B-1 and Class B-2 notes will resume receiving their respective interest payment amounts and any interest that accrued but was not paid to the Class B notes while the Class A notes were outstanding. As the holder of the trust certificates, the Company is entitled to receive any remaining amounts in the trust after the Class A notes and Class B notes have been paid in full. The following table sets forth the original terms of all securitization notes at their respective cutoff dates as of September 30, 2015: Issuing Trust/Issue Date Security Original Interest Rate Ajax Mortgage Loan Trust 2014-A/ October 2014 Class A notes due 2057 (1) $ 45 million 4.00 % Class B-1 notes due 2057 (2) $ 8 million 5.19 % Class B-2 notes due 2057 (2) $ 8 million 5.19 % Trust certificates (3) $ 20.4 – Ajax Mortgage Loan Trust 2014-B / November 2014 Class A notes due 2054 (1) $ 41.2 3.85 % Class B-1 notes due 2054 (2) $ 13.7 5.25 % Class B-2 notes due 2054 (2) $ 13.7 5.25 % Trust certificates (3) $ 22.9 – Ajax Mortgage Loan Trust 2015-A / May 2015 Class A notes due 2054 (1) $ 35.6 3.88 % Class B-1 notes due 2054 (2) $ 8.7 5.25 % Class B-2 notes due 2054 (2) $ 8.7 5.25 % Trust certificates (3) $ 22.8 – Ajax Mortgage Loan Trust 2015-B / July 2015 Class A notes due 2060 (1) $ 87.2 3.88 % Class B-1 notes due 2060 (2) (4) $ 15.9 5.25 % Class B-2 notes due 2060 (2) $ 7.9 5.25 % Trust certificates (3) $ 47.5 – (1) The Class A notes are senior, sequential pay, fixed rate notes. (2) The Class B notes are subordinate, sequential pay, fixed rate notes with Class B-2 notes subordinate to the Class B-1 notes. The Company has retained the Class B notes. (3) The trust certificate issued by the trust and the beneficial ownership of the trust are retained by Great Ajax Funding LLC as the depositor. As the holder of the trust certificate, the Company is entitled to receive any remaining amounts in the trust after the Class A notes and Class B notes have been paid in full. (4) These securities are encumbered under the Company’s repurchase agreement. Servicing for the mortgage loans in 2014-A, 2014-B, 2015-A and 2015-B is provided by the Servicer at a servicing fee rate of 0.65% annually of UPB for re-performing loans and 1.25% annually of UPB for non-performing loans, and is paid monthly by us. The following table sets forth the status of the 2014-A, 2014-B, 2015-A and 2015-B notes held by others at the securitization cutoff date, at September 30, 2015 and at December 31, 2014 ($ in thousands): Balances at September 30, 2015 Balances at December 31, 2014 Original balances at securitization Class of Carrying Bond Carrying Bond Mortgage Bond 2014-A $ 56,049 $ 39,819 $ 58,905 $ 44,016 $ 81,405 $ 45,000 2014-B 67,085 37,441 68,654 40,663 91,535 41,191 2015-A 53,172 34,508 - - 75,835 35,643 2015-B 115,008 86,068 - - 158,498 87,174 $ 291,314 $ 197,836 $ 127,559 $ 84,679 $ 407,273 $ 209,008 The Company’s obligations under its secured borrowings are not fixed, and the payments on these borrowings are predicated upon cash flows received on the underlying mortgage loans. Accordingly, a projection of contractual maturities over the next five years is inapplicable. |
Related party transactions
Related party transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related party transactions | Note 9 — Related party transactions Our consolidated statement of income included the following significant related party transactions ($ in thousands): Three months ended September 30, 2015 Period from commenced operations (July 8, 2014) Amount Counterparty Consolidated Amount Counterparty Consolidated Loan servicing fees $ 1,196 Gregory Related party expense – loan servicing fees $ 157 Gregory Related party expense – loan servicing fees Management fee 861 Thetis Related party expense – management fee 439 Thetis Related party expense – management fee Due diligence and related loan acquisition costs 2 Gregory Loan transaction expense 12 Aspen Yo Loan transaction expense Expense reimbursements - - Professional fees 54 Gregory Professional fees Nine months ended September 30, 2015 Period from inception (January 30, 2014) through Amount Counterparty Consolidated Amount Counterparty Consolidated Loan servicing fees $ 2,703 Gregory Related party expense – loan servicing fees $ 157 Gregory Related party expense – loan servicing fees Management fee 2,464 Thetis Related party expense – management fee 439 Thetis Related party expense – management fee Due diligence and related loan acquisition costs 21 Gregory Loan transaction expense 12 Aspen Yo Loan transaction expense Expense reimbursements 3 Gregory Professional fees 54 Gregory Professional fees Management Agreement On July 8, 2014, the Company entered into a 15-year management agreement (the “Management Agreement”) with the Manager. Under the Management Agreement, the Manager implements the Company’s business strategy and manages the Company’s business and investment activities and day-to-day operations, subject to oversight by the Company’s board of directors. Among other services, the Manager, directly or through Aspen affiliates, provides the Company with a management team and necessary administrative and support personnel. The Company does not currently have any employees and does not expect to have any employees in the foreseeable future. Each of the Company’s executive officers is an employee or officer, or both, of the Manager or the Company’s Servicer. Under the Management Agreement, the Company pays both a base management fee and an incentive fee to the Manager. The Base Management Fee equals 1.5% of our stockholders’ equity per annum and calculated and payable quarterly in arrears. For purposes of calculating the management fee, the Company’s stockholders’ equity means: (a) the sum of (i) the net proceeds from any issuances of common stock or other equity securities issued by the Company or the operating partnership (without double counting) since inception (allocated on a pro rata daily basis for such issuances during the fiscal quarter of any such issuance), and (ii) the Company’s and the operating partnership’s (without double counting) retained earnings calculated in accordance with U.S. GAAP at the end of the most recently completed fiscal quarter (without taking into account any non-cash equity compensation expense incurred in current or prior periods), less (A) any amount that the Company or the operating partnership pays to repurchase shares of common stock or OP Units since inception, (B) any unrealized gains and losses and other non-cash items that have affected consolidated stockholders’ equity as reported in the Company’s financial statements prepared in accordance with U.S. GAAP, and (C) one-time events pursuant to changes in U.S. GAAP, and certain non-cash items not otherwise described above, in each case after discussions between the Manager and the Company’s independent directors and approval by a majority of the Company’s independent directors. As a result, the Company’s stockholders’ equity, for purposes of calculating the management fee, could be greater or less than the amount of stockholders’ equity shown on the Company’s consolidated financial statements. A portion of the base management fee is payable in shares of the Company’s common stock so long as the ownership of such additional number of shares by the Manager would not violate the 9.8% stock ownership limit set forth in the Company’s charter, and the balance is payable in cash. The common stock will be determined using the higher of the most recently reported book value or the average of the closing prices of our common stock on the NYSE on the five business days after the date on which the most recent regular quarterly dividend to holders of our common stock is paid. The Manager has agreed to hold any shares of common stock received by it as payment of the base management fee for at least three years from the date such shares of common stock are received by it. The Manager is also entitled to an incentive management fee that is payable quarterly in arrears in cash in an amount equal to one-fourth of 20% of the dollar amount by which (i) the sum of (A) the aggregate cash dividends, if any, declared out of the REIT taxable income of the Company by the Company’s Board of Directors payable to the holders of the Company’s common stock and (B) the aggregate cash distributions, if any, declared out of the REIT taxable income of the operating partnership (without duplication) by the operating partnership payable to holders of OP Units (other than any OP Units held by the Company as a limited partner) annualized, or the Annualized Dividends and Distributions, in respect of such calendar quarter exceeds (ii) the product of (1) the book value per share of the Company’s common stock as of the end of each such quarter multiplied by the number of shares of the Company’s common stock and OP Units (other than any OP Units held by the Company as a limited partner) outstanding as of the end of such calendar quarter and (2) 8%. Notwithstanding the foregoing, no incentive fee will be payable to the Manager with respect to any calendar quarter unless its cumulative core earnings, as defined in the agreement, is greater than zero for the most recently completed eight calendar quarters, or the number of completed calendar quarters since the closing date of the Original Private Placement, whichever is less. The Company also reimburses the Manager for all third-party, out-of-pocket costs incurred by the Manager for managing its business, including third-party diligence and valuation consultants, legal expenses, auditors and other financial services. The Company will not reimburse the Manager for lease costs or salaries and expenses of employees of the Manager. The reimbursement obligation is not subject to any dollar limitation. Expenses will be reimbursed in cash on a monthly basis. The Company will be required to pay the Manager a termination fee in the event that the Management Agreement is terminated as a result of (i) a termination by the Company without cause, (ii) its decision not to renew the Management Agreement upon the determination of at least two thirds of the Company’s independent directors for reasons including the failure to agree on revised compensation, (iii) a termination by the Manager as a result of the Company becoming regulated as an “investment company” under the Investment Company Act of 1940 (other than as a result of the acts or omissions of the Manager in violation of investment guidelines approved by the Company’s board of directors), or (iv) a termination by the Manager if the Company defaults in the performance of any material term of the Management Agreement (subject to a notice and cure period). The termination fee will be equal to twice the combined base fee and incentive fees payable to the Manager during the 12-month period ended as of the end of the most recently completed fiscal quarter prior to the date of termination. On October 27, 2015, the Company entered into the Amended and Restated Agreement with the Manager, which amended the allocation of the Base Management Fee and Manager’s Incentive Fee between cash and shares of the Company’s common stock retroactive to July 1, 2015. (For more information see Note 13-Subsequent events.) Servicing Agreement On July 8, 2014, the Company entered into a 15-year servicing agreement (the “Servicing Agreement”) with the Servicer. The Company’s overall servicing costs under the servicing agreement will vary based on the types of assets serviced. Servicing fees range from 0.65% to 1.25% annually of UPB (or the fair market value or purchase price of REO the Company owns or acquires), and are paid monthly. The total fees incurred by the Company for these services depend upon the UPB and type of mortgage loans that Gregory services pursuant to the terms of the servicing agreement. The fees are determined based on the loan’s status at acquisition and do not change if a performing loan becomes non-performing or vice versa. The Company will also reimburse Gregory for all customary, reasonable and necessary out-of-pocket costs and expenses incurred in the performance of its obligations, including the actual cost of any repairs and renovations to REO properties. The total fees incurred by the Company for these services will be dependent upon the property value, previous UPB of the relevant loan, and the number of REO properties. If the Management Agreement has been terminated other than for cause and/or the Servicer terminates the servicing agreement, the Company will be required to pay a termination fee equal to the aggregate servicing fees payable under the servicing agreement for the immediate preceding 12-month period. Trademark Licenses Aspen Yo has granted the Company a non-exclusive, non-transferable, non-sublicensable, royalty-free license to use the name “Great Ajax” and the related logo. The Company also has a similar license to use the name “Thetis.” The agreement has no specified term. If the Management Agreement expires or is terminated, the trademark license agreement will terminate within 30 days. In the event that this agreement is terminated, all rights and licenses granted thereunder, including, but not limited to, the right to use “Great Ajax” in its name will terminate. Aspen Yo also granted to the Manager a substantially identical non-exclusive, non-transferable, non-sublicensable, royalty-free license to use of the name “Thetis.” |
Stock based payments and direct
Stock based payments and director fees | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock based payments and director fees | Note 10 — Stock-based payments and director fees Pursuant to the terms of the Management Agreement, the Company pays a portion of the base fee to the Manager in shares of its common stock with the number of shares determined based on the higher of the most recently reported book value or the average of the closing prices of our common stock on the NYSE on the five business days after the date on which the most recent regular quarterly dividend to holders of our common stock is paid. The Company paid the Manager a base fee for the quarter ended September 30, 2015 of $0.9 million of which the Company paid $0.2 million, in 14,710 shares of its common stock. The shares issued to the Manager are restricted securities subject to transfer restrictions, and were issued in a private placement transaction on October 27, 2015. On October 27, 2015, the Company entered into the Amended and Restated Management Agreement with the Manager, which amended the allocation of the Base Management Fee and Manager’s Incentive Fee between cash and shares of the Company’s common stock retroactive to July 1, 2015. (For more information see Note 13-Subsequent events.) In addition, each of the Company’s independent directors receives an annual retainer of $50,000, payable quarterly, half of which is paid in shares of the Company’s common stock on the same basis as the stock portion of the management fee payable to the Manager and half in cash. The following table sets forth the Company’s stock-based management fees and independent director fees ($ in thousands except share amounts) Management fees and director fees For the three months ended September 30, 2015 For the period from commenced operations (July 8, 2014) through September 30, 2014 Number of Amount of expense recognized (1) Number of Amount of expense recognized (1) Management fees 14,710 $ 215 14,621 $ 219 Independent director fees 1,708 25 1,251 19 16,418 $ 240 15,872 $ 238 For the nine months ended September 30, 2015 For the period from inception (January 30, 2014) through September 30, 2014 Number of Amount of expense recognized (1) Number of Amount of expense recognized (1) Management fees 70,587 $ 1,016 14,621 $ 219 Independent director fees 5,196 75 1,251 19 75,783 $ 1,091 15,872 $ 238 (1) All management fees and independent director fees are fully expensed in the period in which they are incurred. The Director Plan is designed to promote the Company’s interests by attracting and retaining qualified and experienced individuals for service as non-employee directors. The Director Plan is administered by the Company’s board of directors. The total number of shares of common stock or other stock-based award, including grants of long term incentive plan (“LTIP”) units from the operating partnership, available for issuance under the Director Plan is 100,000 shares. At the closing of the Original Private Placement, the Company issued to each of its three independent directors restricted stock awards of 2,000 shares of its common stock, which are subject to a one-year vesting period. At the time of the IPO in February 2015, the Company added an additional independent director who was also granted a restricted stock award of 2,000 shares of common stock, subject to a one-year vesting period. The following table sets forth the activity in its restricted stock plan ($ in thousands, except share and per share amounts): Restricted Stock Number of Per share Total cost of Grant expense Grant expense July 8, 2014, Directors’ Grants (1) 6,000 $ 15.00 $ 90 $ - $ 23 February 19, 2015 Director Grant (1) 2,000 14.25 29 7 - 8,000 $ 119 $ 7 $ 23 Number of Per share Total cost of Grant expense Grant expense July 8, 2014, Directors’ Grants (1) 6,000 $ 15.00 $ 90 $ 45 $ 23 February 19, 2015 Director Grant (1) 2,000 14.25 29 19 - 8,000 $ 119 $ 64 $ 23 (1) Vesting period is one year from grant date. |
Income taxes
Income taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Note 11 — Income taxes As a REIT, the Company must meet certain organizational and operational requirements including the requirement to distribute at least 90% of its annual REIT taxable income to its stockholders. As a REIT, the Company generally will not be subject to U.S. federal income tax to the extent the Company distributes its REIT taxable income to its stockholders and provided the Company satisfies the REIT requirements including certain asset, income, distribution and stock ownership tests. If the Company fails to qualify as a REIT, and does not qualify for certain statutory relief provisions, it will be subject to U.S. federal, state and local income taxes and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year in which it lost its REIT qualification. The Company’s consolidated financial statements include the operations of Thetis TRS and GAJX Real Estate LLC, which are subject to U.S. federal, state and local income taxes on the Company’s taxable income. For the three- and nine-months ended September 30, 2015, the Company’s taxable income was $1.8 million and $7.0 million, respectively. Provisions for income taxes of $8,000 and $24,000, respectively, were recorded for both the three- and nine-month periods ended September 30, 2015. No provision for income taxes was recorded for periods from commenced operations (July 8, 2014) or from inception (January 30, 2014) through September 30, 2014. |
Earnings per share
Earnings per share | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Earnings per share | Note 12 — Earnings per share The following table sets forth the components of basic and diluted earnings per share ($ in thousands, except share and per share amounts): Three months ended September 30, 2015 Period from commenced operations (July 8, Income Shares Per Share Income Shares Per Share Basic EPS Consolidated income attributable to common stockholders $ 7,614 15,273,818 996 7,762,963 Allocation of earnings to participating restricted shares (14 ) - (2 ) - Consolidated income attributable to unrestricted common stockholders $ 7,600 15,273,818 $ 0.50 $ 994 7,762,963 $ 0.13 Effect of dilutive securities Operating partnership units 311 624,106 50 428,692 Restricted stock grants and Manager and director fee shares 14 28,128 2 16,050 Diluted EPS Consolidated income attributable to common stockholders and dilutive securities $ 7,925 15,926,052 $ 0.50 $ 1,046 8,207,705 $ 0.13 Nine months ended September 30, 2015 Period from inception (January 30, 2014) Income Shares Per Share Income Shares Per Share Basic EPS Consolidated income attributable to common stockholders $ 16,690 14,514,907 996 7,762,963 Allocation of earnings to participating restricted shares (47 ) - (2 ) - Consolidated income attributable to unrestricted common stockholders $ 16,643 14,514,907 $ 1.15 $ 994 7,762,963 $ 0.13 Effect of dilutive securities Operating partnership units 709 624,106 50 428,692 Restricted stock grants and Manager and director fee shares 47 41,337 2 16,050 Diluted EPS Consolidated income attributable to common stockholders and dilutive securities $ 17,399 15,180,350 $ 1.15 $ 1,046 8,207,705 $ 0.13 |
Subsequent events
Subsequent events | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent events | Note 13 — Subsequent events Dividend Declaration On October 27, 2015, the Company’s board of directors declared a dividend of $0.24 per share, to be paid on November 27, 2015, to stockholders of record as of November 13, 2015. Amended and Restated Management Agreement On October 27, 2015, the Company entered into the Amended and Restated Management Agreement with the Manager, which amended the consideration of the Base Management Fee and Manager’s Incentive Fee to be payable in cash and shares of the Company’s common stock retroactive to July 1, 2015. The initial $1 million of the quarterly Base Management Fee will be payable 75% in cash and 25% in shares of the Company’s common stock. Any amount of the Base Management Fee in excess of $1 million will be payable in shares of the Company’s common stock until payment is 50% in cash and 50% in shares (the “50/50 split”). Any remaining amount of the quarterly Base Management Fee after the 50/50 split threshold is reached will be payable in equal amounts of cash and shares. As for the Manager’s Incentive Fee, in the event that the payment of the quarterly Base Management Fee has not reached the 50/50 split, all of the Incentive Fee will be payable in shares of the Company’s common stock until the 50/50 split occurs. In the event that the total payment of the quarterly Base Management Fee and the Incentive Fee has reached the 50/50 split, 20% of the remaining Incentive Fee is payable in shares of the Company’s common stock and 80% of the remaining Incentive Fee is payable in cash. Management Fees On October 27, 2015, the Company issued 14,710 shares of its common stock to the Manager in payment of part of the management fee due for the third quarter of 2015 in a private transaction. The management fee expense associated with these shares was recorded as an expense in the third quarter of 2015. Directors’ Retainer On October 27, 2015, the Company issued each of Jonathan Bradford Handley, Jr., Daniel Hoffman, J. Kirk Ogren Jr. and John Condas 427 shares of its common stock in payment of half of their quarterly director fees for the third quarter of 2015. Securitization On October 30, 2015 the Company completed its fifth securitization. An aggregate of $82.0 million of senior securities and $13.0 million of subordinated securities were issued in a private offering with respect to $130.1 million UPB of mortgage loans. Approximately 84.9% of these mortgage loans were re-performing loans and approximately 15.1% were non-performing loans based on UPB. |
Summary of significant accoun20
Summary of significant accounting policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Cash and cash equivalents | Cash and cash equivalents Highly liquid investments with an original maturity of three months or less when purchased are considered cash equivalents. The Company maintains cash and cash equivalents at insured banking institutions. Certain account balances exceed Federal Deposit Insurance Corporation (“FDIC”) insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. |
Organizational expenses | Organizational expenses Organizational expenses are expensed as incurred or when they become reimbursable. Organizational expenses consisted mainly of legal fees. |
Offering costs | Offering costs Costs associated with the Company’s completed offering of shares of common stock have been netted against, and are reflected as a reduction in additional paid-in capital. |
Earnings per share | Earnings per share Basic earnings per share is computed by dividing consolidated net income attributable to common stockholders by the weighted average common stock outstanding during the period. The Company treats unvested restricted stock issued under its stock-based compensation plan, which are entitled to non-forfeitable dividends, as participating securities and applies the two-class method in calculating basic earnings per share. Diluted earnings per share is computed by dividing consolidated net income attributable to common stockholders and dilutive securities by the weighted average common stock outstanding for the period plus other potentially dilutive securities, such as stock grants, shares that would be issued in the event that OP Units are redeemed for shares of common stock of the Company and shares issued in respect of the stock-based portion of the base fee payable to the Manager and directors’ fees. |
Stock-based payments | Stock-based payments The Management Agreement (as defined below) provides for the payment to the Manager of a management fee. The Company pays a portion of the management fee in cash, and a portion of the management fee in shares of the Company’s common stock, which are issued to the Manager in a private placement and are restricted securities under the Securities Act. On October 27, 2015, the Company entered into an amended and restated management agreement with the Manager (the “Amended and Restated Agreement”), which amended the portion of the Base Management Fee and Manager’s Incentive Fee to be payable in cash and shares of the Company’s common stock retroactive to July 1, 2015. (For more information see Note 13-Subsequent events.) Shares issued to the Manager are determined based on the higher of the most recently reported book value or the average of the closing prices of our common stock on the NYSE on the five business days after the date on which the most recent regular quarterly dividend to holders of our common stock is paid. Management fees paid in common stock are expensed in the quarter incurred and recorded in equity at quarter end. Pursuant to the Company’s 2014 Director Equity Plan (the “Director Plan”), the Company may make stock-based awards. The Company has issued to each of the independent directors restricted stock awards of 2,000 shares of its common stock, which are subject to a one-year vesting period. In addition, each of the Company’s independent directors receives an annual retainer of $50,000, payable quarterly, half of which is paid in shares of the Company’s common stock on the same basis as the stock portion of the management fee payable to the Manager, and half in cash. Stock-based expense for the directors’ annual retainer is expensed as earned, in equal quarterly amounts during the year, and recorded in equity at quarter end. |
Directors' fees | Directors’ fees The expense related to directors’ fees is accrued and reflected in stockholders’ equity in the period in which it is incurred. |
Management fee and expense reimbursement | Management fee and expense reimbursement Under the management agreement with the Manager, the Company pays a quarterly base management fee based on its stockholders’ equity and a quarterly incentive management fee based on its cash distributions to its stockholders. Manager fees are expensed in the quarter incurred and the portion payable in common stock is included in stockholders’ equity at quarter end. See Note 9 — Related party transactions. |
Servicing fees | Servicing fees Under the servicing agreement, Gregory receives servicing fees ranging from 0.65% – 1.25% annually of unpaid principal balance (“UPB”) (or the fair market value or purchase price of REO that the Company owns or acquires). Gregory is reimbursed for all customary, reasonable and necessary out-of-pocket costs and expenses incurred in the performance of its obligations, including the actual cost of any repairs and renovations undertaken on the Company’s behalf. The total fees incurred by the Company for these services will be dependent upon the UPB and type of mortgage loans that Gregory services, property values, previous UPB of the relevant loan, and the number of REO properties. The agreement will automatically renew for successive one-year terms, subject to prior written notice of non-renewal. In certain cases, the Company may be obligated to pay a termination fee. The Management Agreement will automatically terminate at the same time as the servicing agreement if the servicing agreement is terminated for any reason. See Note 9 — Related party transactions. |
Fair value of financial instruments | Fair value of financial instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy has been established which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: · Level 1 · Level 2 · Level 3 The degree of judgment utilized in measuring fair value generally correlates to the level of pricing observability. Assets and liabilities with readily available actively quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of pricing observability and a lesser degree of judgment utilized in measuring fair value. Conversely, assets and liabilities rarely traded or not quoted will generally have little or no pricing observability and a higher degree of judgment utilized in measuring fair value. Pricing observability is impacted by a number of factors, including the type of asset or liability, whether it is new to the market and not yet established, and the characteristics specific to the transaction. Property held-for-sale is measured at cost at acquisition for purchased REO, or at the present value of future cash flows for foreclosed REO, and is subsequently measured at the lower of acquisition basis or fair value less cost to sell on a nonrecurring basis. The fair value of property held-for-sale is generally based on estimated market prices from an independently prepared appraisal, an independent broker price opinion (“BPO”), or management’s judgment as to the selling price of similar properties. |
Income taxes | Income taxes The Company has elected REIT status upon the filing of its 2014 income tax return, and has conducted its operations in order to satisfy and maintain eligibility for REIT status. Accordingly, the Company does not believe it will be subject to U.S. federal income tax from the year ended December 31, 2014 forward on the portion of the Company’s REIT taxable income that is distributed to the Company’s stockholders as long as certain asset, income and stock ownership tests are met. If the Company fails to qualify as a REIT in any taxable year, it generally will not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for the four taxable years following the year during which qualification is lost. The Company may also be subject to state or local income or franchise taxes. Thetis TRS, GAJX Real Estate LLC and any other TRS that the Company forms, will be subject to U.S. federal and state income taxes. On January 13, 2015, the Company applied for a private letter ruling from the Internal Revenue Service that would allow it to exclude its proportionate share of gross income from the Manager if it held its interest in the Manager through the operating partnership. If the Company receives such a ruling, it expects that it will hold its interest in the Manager through the operating partnership, instead of through Thetis TRS; however, there is no assurance that such a ruling will be issued. Income taxes are provided for using the asset and liability method. Provisions for income taxes of $8,000 and $24,000, respectively, were recorded for the three- and nine-month periods ended September 30, 2015. The Company evaluates tax positions taken in its consolidated financial statements under the interpretation for accounting for uncertainty in income taxes. As a result of this evaluation, the Company may recognize a tax benefit from an uncertain tax position only if it is “more-likely-than-not” that the tax position will be sustained on examination by taxing authorities. The Company’s tax returns remain subject to examination and consequently, the taxability of the distributions and other tax positions taken by the Company may be subject to change. Distributions to stockholders generally will be taxable as ordinary income, although a portion of such distributions may be designated as long-term capital gain or qualified dividend income, or may constitute a return of capital. The Company will furnish annually to each stockholder a statement setting forth distributions paid during the preceding year and their U.S. federal income tax treatment. |
Mortgage loans | Mortgage loans Purchased mortgage loans are initially recorded at the purchase price, net of any acquisition fees or costs at the time of acquisition and are considered asset acquisitions. As part of the determination of the purchase price for mortgage loans, the Company uses a discounted cash flow valuation model to model expected cash flows, and which considers alternate loan resolution probabilities, including liquidation or conversion to real estate owned. Observable inputs to the model include current interest rates, loan amounts, status of payments and property types. Unobservable inputs to the model include discount rates, forecast of future home prices, alternate loan resolution probabilities, resolution timelines, the value of underlying properties and other economic and demographic data. Under ASC 310-30, acquired loans may be aggregated and accounted for as a pool of loans if the loans being aggregated have some degree of credit quality deterioration since origination and have common risk characteristics. A pool is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows. Re-performing mortgage loans have been determined to have common risk characteristics and are accounted for as a single loan pool for loans acquired within each three-month fiscal quarter. Similarly, non-performing mortgage loans have been determined to have common risk characteristics and are accounted for as a single non-performing pool for loans acquired within each three-month fiscal quarter. Under ASC 310-30, the Company estimates cash flows expected to be collected, adjusted for expected prepayments and defaults expected to be incurred over the life of the loan pool. The Company determines the excess of the loan pool’s contractually required principal and interest payments over the expected cash flows as an amount that should not be accreted, referred to as the non-accretable yield. The difference between expected cash flows and the purchase price (at acquisition) or the present value of the expected cash flows is referred to as the accretable yield, which represents the amount that is expected to be recorded as interest income over the remaining life of the loan pool. For the three-and nine-months ended September 30, 2015, the Company recognized no provision for loan loss. For the period from inception (January 30, 2014) through September 30, 2014, the Company recognized no provision for loan loss. For the three- and nine-months ended September 30, 2015, the Company accreted $14.4 million and $32.1 million, respectively, into interest income with respect to its loan portfolio. For the periods from commenced operations (July 8, 2014) and inception (January 30, 2014) through September 30, 2014, the Company accreted $2.3 million and $2.3 million, respectively, into interest income with respect to its loan portfolio. As of September 30, 2015, the Company’s loan portfolio had a UPB of $676.6 million and a carrying value of $510.6 million and at December 31, 2014, a UPB of $298.6 million and carrying value of $211.2 million, in each case excluding one loan in which it holds a 40.5% beneficial interest through an equity method investee. Generally, the Company acquires loans at a discount associated with some degree of credit impairment. The Company elects to aggregate certain pools of loans with common risk characteristics and accrue interest income thereon at a composite interest rate, based on expectations of cash flows to be collected for the pool. Expectations of pool cash flow are reviewed quarterly. Adjustments to a pool’s prospective composite interest rate or an allowance for impairment are made to the extent revised expectations differ from original estimates. For loans that do not qualify for pool aggregation treatment, including performing loans that are not purchased at discounts resulting from credit-related issues, interest is recognized using the simple-interest method on daily balances of the principal amount outstanding, adjusted for the amortization or accretion of the loan premium or discount over the contractual life of the loan. Accrual of interest on individual loans is discontinued when management believes that, after considering economic and business conditions and collection efforts, the borrower’s financial condition is such that collection of interest is doubtful. The Company’s policy is to stop accruing interest when a loan’s delinquency exceeds 90 days. All interest accrued but not collected for loans that are placed on non-accrual status or subsequently charged-off are reversed against interest income. Income is subsequently recognized on the cash basis until, in management’s judgment, the borrower’s ability to make periodic principal and interest payments returns and future payments are reasonably assured, in which case the loan is returned to accrual status. An individual loan is considered to be impaired when, based on current events and conditions, it is probable the Company will be unable to collect all amounts due (both principal and interest) according to the contractual terms of the loan agreement. Impaired loans are carried at the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s market price, or the fair value of the collateral if the loan is collateral dependent. For individual loans, a troubled debt restructuring is a formal restructuring of a loan where, for economic or legal reasons related to the borrower’s financial difficulties, a concession that would not otherwise be considered is granted to the borrower. The concession may be granted in various forms, including providing a below-market interest rate, a reduction in the loan balance or accrued interest, an extension of the maturity date, or a combination of these. An individual loan that has had a troubled debt restructuring is considered to be impaired and is subject to the relevant accounting for impaired loans. The allowance for loan losses is established through a provision for loan losses charged to expenses. The allowance is an amount that management believes will be adequate to absorb probable losses on existing loans that may become uncollectible, based on evaluations of the collectability of loans. Purchased non-performing loans that are accounted for as individual loans are recorded at fair value, which is generally the purchase price. Interest income is recognized on a cash basis and loan purchase discount is accreted to income in proportion to the actual principal paid. Loans are tested quarterly for impairment and impairment reserves are recorded to the extent the fair market value of the underlying collateral falls below net book value. While the Company generally intends to hold its assets as long-term investments, it may sell certain of its loans in order to manage its interest rate risk and liquidity needs, meet other operating objectives and adapt to market conditions. The timing and impact of future sales of loans, if any, cannot be predicted with any certainty. Since the Company expects that its assets will generally be financed, it expects that a significant portion of the proceeds from sales of its assets (if any), prepayments and scheduled amortization will be used to repay balances under its financing sources. |
Residential properties | Residential properties Property is recorded at cost if purchased, or at the present value of future cash flows of the asset if obtained through foreclosure by the Company. Property that is currently unoccupied and actively marketed for sale is classified as held-for-sale. Property held-for-sale is carried at the lower of its acquisition basis or fair market value. Net unrealized losses due to changes in market value are recognized through a valuation allowance by charges to income. No depreciation or amortization expense is recognized on properties held-for-sale, while holding costs are expensed as incurred. Rental property is property not held-for-sale. Rental properties are intended to be held as long-term investments but may eventually be held-for-sale. Depreciation is provided for using the straight-line method over the estimated useful lives of the assets of three to 27.5 years. With respect to residential rental properties not held-for-sale, the Company performs an impairment analysis using estimated cash flows if events or changes in circumstances indicate that the carrying value may be impaired, such as prolonged vacancy, identification of materially adverse legal or environmental factors, changes in expected ownership period or a decline in market value to an amount less than cost. This analysis is performed at the property level. These cash flows are estimated based on a number of assumptions that are subject to economic and market uncertainties including, among others, demand for rental properties, competition for customers, changes in market rental rates, costs to operate each property and expected ownership periods. If the carrying amount of a held-for-investment asset exceeds the sum of its undiscounted future operating and residual cash flows, an impairment loss is recorded for the difference between estimated fair value of the asset and the carrying amount. The Company generally estimates the fair value of assets held for use by using BPOs. In some instances, appraisal information may be available and is used in addition to BPOs. The Company performs property renovations to maximize the value of the property for its rental strategy. Such expenditures are part of its initial investment in a property and, therefore, are capitalized as part of the basis of the property. Subsequently, the residential property, including any renovations that improve or extend the life of the asset, are accounted for at cost. The cost basis is depreciated using the straight-line method over an estimated useful life of three to 27.5 years. Interest and other carrying costs incurred during the renovation period are capitalized until the property is ready for its intended use. Expenditures for ordinary maintenance and repairs are charged to expense as incurred. |
Segment information | Segment information The Company’s primary business is acquiring, investing in and managing a portfolio of mortgage loans. The Company operates in a single segment focused on non-performing mortgages and re-performing mortgages. |
Emerging growth company | Emerging growth company Section 107 of the Jumpstart Our Business Startups Act (the “JOBS Act”) provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to take advantage of the benefits of this extended transition period. Its consolidated financial statements may, therefore, not be comparable to those of companies that comply with such new or revised accounting standards. |
Reclassifications | Reclassifications Certain amounts in the Company’s 2014 Consolidated Financial Statements have been reclassified to conform to the current period presentation. Specifically, on the Company’s Consolidated Statement of Cash Flows for the period from inception (January 30, 2014) to September 30, 2014, approximately $1.5 million was reclassified from Cash Flows From Operating Activities to Cash Flows from Investing Activities. The December 31, 2014 amounts included in the delinquency table in Note 3 – Mortgage loans have been reclassified from delinquent to current to reflect a correction of an error in the presentation of the disclosure that is immaterial to the consolidated financial statements taken as a whole. Such reclassifications did not affect cash flows, net revenues, net income, total assets, total liabilities or total equity. |
Recently issued accounting standards | Recently issued accounting standards In January 2014, FASB issued Accounting Standards Update (“ASU”) 2014-04, Troubled Debt Restructurings by Creditors. It provides that if a repossession or foreclosure has occurred, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendment requires disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in mortgage loans collateralized by residential real estate property that are in the process of foreclosure. The amended guidance may be applied using either a prospective transition method or a modified retrospective transition method and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014, with early adoption permitted. The Company adopted this standard in the first quarter of 2015 and it did not have a material impact on its financial statements. In May 2014, the FASB issued ASU 2014-09 Revenue from Contracts with Customers. ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services . While ASU 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. In February 2015, the FASB issued ASU 2015-02 Amendments to the Consolidation Analysis. These amendments: (1) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities; (2) eliminate the presumption that a general partner should consolidate a limited partnership; (3) affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships; and (4) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. ASU 2015-02 is effective for interim and annual reporting periods beginning after December 15, 2015. The Company is evaluating the impact of this amendment on its financial position and results of operations. In April 2015, the FASB issued ASU 2015-03 Interest – Imputation of Interest. The amendments in this update require that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of a debt liability, consistent with debt discounts. This guidance is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. This guidance may be adopted retrospectively or under a modified retrospective method where the cumulative effect is recognized at the date of initial application. The Company is evaluating the impact of this amendment on its financial position and results of operations. |
Mortgage loans (Tables)
Mortgage loans (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Mortgage Loans [Abstract] | |
Schedule of contractually required payments and estimated cash flows expected to be collected | Three months ended September 30, 2015 Period from commenced operations (July 8, 2014) to December 31, 2014 Nine months ended September 30, 2015 Period from inception (January 30, 2014) to December 31, 2014 Re- Non- Re- Non- Re- Non- Re- Non- Contractually required principal and interest $ 157,868 $ - $ 393,657 $ 257,790 $ 644,471 $ 65,675 $ 393,657 $ 257,790 Non-accretable yield (62,289 ) - (173,502 ) (184,096 ) (260,993 ) (38,317 ) (173,502 ) (184,096 ) Expected cash flows to be collected 95,579 - 220,155 73,694 383,478 27,358 220,155 73,694 Accretable yield (28,727 ) - (60,495 ) (22,071 ) (102,407 ) (8,038 ) (60,495 ) (22,071 ) Fair value at acquisition $ 66,852 $ - $ 159,660 $ 51,623 $ 281,071 $ 19,320 $ 159,660 $ 51,623 |
Schedule of accretable yield | Accretable yield Three months ended Period from commenced operations (July 8, 2014) to December 31, 2014 Nine months ended Period from inception Re- Non- Re- Non- Re- Non- Re- Non- Balance at beginning of period $ 115,932 $ 23,735 $ - $ - $ 54,940 $ 20,686 $ - $ - Accretable yield additions 28,727 - 60,495 22,071 102,407 8,038 60,495 22,071 Accretion (11,531 ) (2,908 ) (5,555 ) (1,385 ) (24,219 ) (7,897 ) (5,555 ) (1,385 ) Balance at end of period $ 133,128 $ 20,827 $ 54,940 $ 20,686 $ 133,128 $ 20,827 $ 54,940 $ 20,686 |
Schedule of carrying value of mortgage loans and related UPB by delinquency status | September 30, 2015 December 31, 2014 Number of Carrying Unpaid Number of Carrying Unpaid Current 1,111 $ 203,383 $ 264,262 439 $ 72,727 $ 94,993 30 470 81,059 104,816 237 36,954 53,739 60 278 48,056 60,498 99 13,849 17,766 90 729 112,595 150,763 352 53,987 76,691 Foreclosure 377 65,501 96,293 212 33,642 55,384 Mortgage loans 2,964 $ 510,594 $ 676,632 1,339 $ 211,159 $ 298,573 |
Fair value of financial instr22
Fair value of financial instruments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of financial assets and liabilities | Level 1 Level 2 Level 3 September 30, 2015 Carrying Quoted prices Observable Unobservable Not recognized on consolidated balance sheet at fair value (assets) Mortgage loans, net $ 510,594 - - $ 568,564 Not recognized on consolidated balance sheet at fair value (liabilities) Borrowings under repurchase agreement 130,798 - $ 130,798 - Secured borrowings 197,836 - 197,836 - Level 1 Level 2 Level 3 December 31, 2014 Carrying Quoted prices Observable Unobservable Not recognized on consolidated balance sheet at fair value (assets) Mortgage loans, net $ 211,159 - - $ 235,623 Not recognized on consolidated balance sheet at fair value (liabilities) Borrowings under repurchase agreement 15,249 - $ 15,249 - Secured borrowings 84,679 - 84,679 - |
Schedule of quantitative information about significant unobservable inputs | Range of Values Input September 30, 2015 December 31, 2014 Equity discount rate – Re-performing loans 7% - 14% 7% - 14% Equity discount rate – Non-performing loans 10% - 18% 10% - 18% Cost of debt 4.25% 4.25% Loan resolution timelines – Re-performing loans (in years) 4 - 7 4 - 7 Loan resolution timelines – Non-performing loans (in years) 1.4 - 4 1.4 - 4 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of details of repurchase agreement | September 30, 2015 Maturity Date Maximum Amount Carrying Interest November 24, 2015 $ 200,000 $ 130,798 $ 188,132 4.00 % December 31, 2014 Maturity Date Maximum Amount Carrying Interest rate November 24, 2015 $ 100,000 $ 15,249 $ 23,460 4.00 % |
Schedule of securitization of notes | Issuing Trust/Issue Date Security Original Interest Rate Ajax Mortgage Loan Trust 2014-A/ October 2014 Class A notes due 2057 (1) $ 45 million 4.00 % Class B-1 notes due 2057 (2) $ 8 million 5.19 % Class B-2 notes due 2057 (2) $ 8 million 5.19 % Trust certificates (3) $ 20.4 – Ajax Mortgage Loan Trust 2014-B / November 2014 Class A notes due 2054 (1) $ 41.2 3.85 % Class B-1 notes due 2054 (2) $ 13.7 5.25 % Class B-2 notes due 2054 (2) $ 13.7 5.25 % Trust certificates (3) $ 22.9 – Ajax Mortgage Loan Trust 2015-A / May 2015 Class A notes due 2054 (1) $ 35.6 3.88 % Class B-1 notes due 2054 (2) $ 8.7 5.25 % Class B-2 notes due 2054 (2) $ 8.7 5.25 % Trust certificates (3) $ 22.8 – Ajax Mortgage Loan Trust 2015-B / July 2015 Class A notes due 2060 (1) $ 87.2 3.88 % Class B-1 notes due 2060 (2) (4) $ 15.9 5.25 % Class B-2 notes due 2060 (2) $ 7.9 5.25 % Trust certificates (3) $ 47.5 – (1) The Class A notes are senior, sequential pay, fixed rate notes. (2) The Class B notes are subordinate, sequential pay, fixed rate notes with Class B-2 notes subordinate to the Class B-1 notes. The Company has retained the Class B notes. (3) The trust certificate issued by the trust and the beneficial ownership of the trust are retained by Great Ajax Funding LLC as the depositor. As the holder of the trust certificate, the Company is entitled to receive any remaining amounts in the trust after the Class A notes and Class B notes have been paid in full. (4) These securities are encumbered under the Company’s repurchase agreement. |
Schedule of status of mortgage loans | Balances at September 30, 2015 Balances at December 31, 2014 Original balances at securitization Class of Carrying Bond Carrying Bond Mortgage Bond 2014-A $ 56,049 $ 39,819 $ 58,905 $ 44,016 $ 81,405 $ 45,000 2014-B 67,085 37,441 68,654 40,663 91,535 41,191 2015-A 53,172 34,508 - - 75,835 35,643 2015-B 115,008 86,068 - - 158,498 87,174 $ 291,314 $ 197,836 $ 127,559 $ 84,679 $ 407,273 $ 209,008 |
Related party transactions (Tab
Related party transactions (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Schedule of consolidated statement of income | Three months ended September 30, 2015 Period from commenced operations (July 8, 2014) Amount Counterparty Consolidated Amount Counterparty Consolidated Loan servicing fees $ 1,196 Gregory Related party expense – loan servicing fees $ 157 Gregory Related party expense – loan servicing fees Management fee 861 Thetis Related party expense – management fee 439 Thetis Related party expense – management fee Due diligence and related loan acquisition costs 2 Gregory Loan transaction expense 12 Aspen Yo Loan transaction expense Expense reimbursements - - Professional fees 54 Gregory Professional fees Nine months ended September 30, 2015 Period from inception (January 30, 2014) through Amount Counterparty Consolidated Amount Counterparty Consolidated Loan servicing fees $ 2,703 Gregory Related party expense – loan servicing fees $ 157 Gregory Related party expense – loan servicing fees Management fee 2,464 Thetis Related party expense – management fee 439 Thetis Related party expense – management fee Due diligence and related loan acquisition costs 21 Gregory Loan transaction expense 12 Aspen Yo Loan transaction expense Expense reimbursements 3 Gregory Professional fees 54 Gregory Professional fees |
Stock based payments and dire25
Stock based payments and director fees (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of management fees and director fees | Management fees and director fees For the three months ended September 30, 2015 For the period from commenced operations (July 8, 2014) through September 30, 2014 Number of Amount of expense recognized (1) Number of Amount of expense recognized (1) Management fees 14,710 $ 215 14,621 $ 219 Independent director fees 1,708 25 1,251 19 16,418 $ 240 15,872 $ 238 For the nine months ended September 30, 2015 For the period from inception (January 30, 2014) through September 30, 2014 Number of Amount of expense recognized (1) Number of Amount of expense recognized (1) Management fees 70,587 $ 1,016 14,621 $ 219 Independent director fees 5,196 75 1,251 19 75,783 $ 1,091 15,872 $ 238 (1) All management fees and independent director fees are fully expensed in the period in which they are incurred. |
Schedule of activity in restricted stock | Restricted Stock Number of Per share Total cost of Grant expense Grant expense July 8, 2014, Directors’ Grants (1) 6,000 $ 15.00 $ 90 $ - $ 23 February 19, 2015 Director Grant (1) 2,000 14.25 29 7 - 8,000 $ 119 $ 7 $ 23 Number of Per share Total cost of Grant expense Grant expense July 8, 2014, Directors’ Grants (1) 6,000 $ 15.00 $ 90 $ 45 $ 23 February 19, 2015 Director Grant (1) 2,000 14.25 29 19 - 8,000 $ 119 $ 64 $ 23 (1) Vesting period is one year from grant date. |
Earnings per share (Tables)
Earnings per share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Components of basic and diluted earnings per share | Three months ended September 30, 2015 Period from commenced operations (July 8, Income Shares Per Share Income Shares Per Share Basic EPS Consolidated income attributable to common stockholders $ 7,614 15,273,818 996 7,762,963 Allocation of earnings to participating restricted shares (14 ) - (2 ) - Consolidated income attributable to unrestricted common stockholders $ 7,600 15,273,818 $ 0.50 $ 994 7,762,963 $ 0.13 Effect of dilutive securities Operating partnership units 311 624,106 50 428,692 Restricted stock grants and Manager and director fee shares 14 28,128 2 16,050 Diluted EPS Consolidated income attributable to common stockholders and dilutive securities $ 7,925 15,926,052 $ 0.50 $ 1,046 8,207,705 $ 0.13 Nine months ended September 30, 2015 Period from inception (January 30, 2014) Income Shares Per Share Income Shares Per Share Basic EPS Consolidated income attributable to common stockholders $ 16,690 14,514,907 996 7,762,963 Allocation of earnings to participating restricted shares (47 ) - (2 ) - Consolidated income attributable to unrestricted common stockholders $ 16,643 14,514,907 $ 1.15 $ 994 7,762,963 $ 0.13 Effect of dilutive securities Operating partnership units 709 624,106 50 428,692 Restricted stock grants and Manager and director fee shares 47 41,337 2 16,050 Diluted EPS Consolidated income attributable to common stockholders and dilutive securities $ 17,399 15,180,350 $ 1.15 $ 1,046 8,207,705 $ 0.13 |
Organization and basis of pre27
Organization and basis of presentation (Details Textuals) $ / shares in Units, $ in Thousands | Jul. 08, 2014USD ($)shares | Feb. 28, 2015USD ($)shares | Dec. 16, 2014USD ($)$ / sharesshares | Sep. 30, 2014USD ($)Loan | Aug. 01, 2014USD ($)$ / sharesshares | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) |
Organization And Basis Of Presentation [Line Items] | |||||||
Ownership percentage | 40.50% | ||||||
Percentage of remaining interest in real estate assets purchased for cash | 18.00% | ||||||
Net proceeds from initial public offering | $ | $ 119,605 | $ 51,529 | |||||
Percentage of outstanding OP units owned | 96.10% | ||||||
Percentage of outstanding OP owned by an unaffiliated holder | 3.90% | ||||||
Thetis Asset Management LLC | |||||||
Organization And Basis Of Presentation [Line Items] | |||||||
Ownership percentage | 19.80% | ||||||
Little Ajax II LLC | |||||||
Organization And Basis Of Presentation [Line Items] | |||||||
Ownership percentage | 82.00% | 82.00% | |||||
Redemption of ownership and other transactions | 82.00% | 82.00% | |||||
Acquisition of equity interests | $ | $ 48,800 | ||||||
Aggregate purchase price | $ | $ 11,400 | ||||||
Percentage of participation interest held | 95.00% | 95.00% | |||||
Value of participation interest | $ | $ 200 | ||||||
Gregory | |||||||
Organization And Basis Of Presentation [Line Items] | |||||||
Ownership percentage | 5.00% | 5.00% | |||||
Number of loans | Loan | 43 | ||||||
Initial private offering | |||||||
Organization And Basis Of Presentation [Line Items] | |||||||
Number of shares sold in private offering | 8,213,116 | ||||||
Number of units Class A Units of operating partnership | 453,551 | ||||||
Description of operating partnership units redeemed | The “OP Units” are redeemable on a 1-for-1 basis into shares of its common stock after one year of ownership. | ||||||
Number of additional shares of common stock closed for sale | 263,570 | ||||||
Number of operating units | 14,555 | ||||||
Purchase price per share and per OP Unit | $ / shares | $ 15 | ||||||
Net proceeds from the private placement | $ | $ 128,400 | ||||||
Second Private Placement | |||||||
Organization And Basis Of Presentation [Line Items] | |||||||
Number of shares sold in private offering | 2,725,326 | ||||||
Number of units Class A Units of operating partnership | 156,000 | ||||||
Purchase price per share and per OP Unit | $ / shares | $ 15 | ||||||
Net proceeds from the private placement | $ | $ 41,200 | ||||||
Initial public offering | |||||||
Organization And Basis Of Presentation [Line Items] | |||||||
Number of shares sold in initial public offering | 5,276,797 | ||||||
Number of shares sold in initial public offering by company | 3,976,464 | ||||||
Number of shares sold in initial public offering by selling stockholders | 1,300,333 | ||||||
Net proceeds from initial public offering | $ | $ 53,900 |
Summary of significant accoun28
Summary of significant accounting policies (Details Textuals) | Jul. 08, 2014 | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)Segmentshares | Dec. 31, 2014USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | |||||||
Annual retainer amount | $ 50,000 | ||||||
Provision for income taxes | $ 8,000 | 24,000 | |||||
Interest income related to loan portfolio | 14,440,000 | $ 2,266,000 | $ 2,266,000 | 32,116,000 | |||
Unpaid principal balance of mortgage loans on real estate | 676,632,000 | 676,632,000 | $ 298,573,000 | ||||
Carrying value of mortgage loans | [1] | $ 510,594,000 | $ 510,594,000 | $ 211,159,000 | |||
Loan percentage of beneficial interest through equity method investee | 40.50% | ||||||
Depreciation method | Straight-line method | ||||||
Estimated useful lives of an assets | 27.5 years | ||||||
Number of operating segment | Segment | 1 | ||||||
Amount reclassified from cash flows from operating activities to cash flows from investing activities | $ 1,500,000 | ||||||
Servicing agreement | Gregory | Minimum | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Servicing fees percentage | 0.65% | 0.65% | |||||
Servicing agreement | Gregory | Maximum | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Servicing fees percentage | 1.25% | 1.25% | |||||
2014 Director Equity Plan | Restricted stock | |||||||
Summary Of Significant Accounting Policies [Line Items] | |||||||
Number of shares issued to independent directors | shares | 2,000 | ||||||
Vesting period | 1 year | ||||||
Annual retainer amount | $ 50,000 | ||||||
[1] | Mortgage loans includes $291,314 and $127,559 of loans at September 30, 2015 and December 31, 2014, respectively, transferred to securitization trusts that are variable interest entities ("VIEs"); these loans can only be used to settle obligations of the VIEs. Secured borrowings consist of notes issued by VIEs that can only be settled with the assets and cash flows of the VIEs. The creditors do not have recourse to the primary beneficiary (Great Ajax Corp.). See Note 8-Debt. |
Mortgage loans (Details)
Mortgage loans (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Three months ended | Re-performing loans | ||
Mortgage Loans on Real Estate [Line Items] | ||
Contractually required principal and interest | $ 157,868 | |
Non-accretable yield | (62,289) | |
Expected cash flows to be collected | 95,579 | |
Accretable yield | (28,727) | |
Fair value at acquisition | $ 66,852 | |
Three months ended | Non-performing loans | ||
Mortgage Loans on Real Estate [Line Items] | ||
Contractually required principal and interest | ||
Non-accretable yield | ||
Expected cash flows to be collected | ||
Accretable yield | ||
Fair value at acquisition | ||
Period from commenced operations | Re-performing loans | ||
Mortgage Loans on Real Estate [Line Items] | ||
Contractually required principal and interest | $ 393,657 | |
Non-accretable yield | (173,502) | |
Expected cash flows to be collected | 220,155 | |
Accretable yield | (60,495) | |
Fair value at acquisition | 159,660 | |
Period from commenced operations | Non-performing loans | ||
Mortgage Loans on Real Estate [Line Items] | ||
Contractually required principal and interest | 257,790 | |
Non-accretable yield | (184,096) | |
Expected cash flows to be collected | 73,694 | |
Accretable yield | (22,071) | |
Fair value at acquisition | 51,623 | |
Nine months ended | Re-performing loans | ||
Mortgage Loans on Real Estate [Line Items] | ||
Contractually required principal and interest | $ 644,471 | |
Non-accretable yield | (260,993) | |
Expected cash flows to be collected | 383,478 | |
Accretable yield | (102,407) | |
Fair value at acquisition | 281,071 | |
Nine months ended | Non-performing loans | ||
Mortgage Loans on Real Estate [Line Items] | ||
Contractually required principal and interest | 65,675 | |
Non-accretable yield | (38,317) | |
Expected cash flows to be collected | 27,358 | |
Accretable yield | (8,038) | |
Fair value at acquisition | $ 19,320 | |
Period from inception | Re-performing loans | ||
Mortgage Loans on Real Estate [Line Items] | ||
Contractually required principal and interest | 393,657 | |
Non-accretable yield | (173,502) | |
Expected cash flows to be collected | 220,155 | |
Accretable yield | (60,495) | |
Fair value at acquisition | 159,660 | |
Period from inception | Non-performing loans | ||
Mortgage Loans on Real Estate [Line Items] | ||
Contractually required principal and interest | 257,790 | |
Non-accretable yield | (184,096) | |
Expected cash flows to be collected | 73,694 | |
Accretable yield | (22,071) | |
Fair value at acquisition | $ 51,623 |
Mortgage loans (Details 1)
Mortgage loans (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | 11 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | Dec. 31, 2014 | |
Re-performing loans | ||||
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | ||||
Balance at beginning of period | $ 115,932 | $ 54,940 | ||
Accretable yield additions | 28,727 | $ 60,495 | 102,407 | $ 60,495 |
Accretion | (11,531) | (5,555) | (24,219) | (5,555) |
Balance at end of period | 133,128 | $ 54,940 | 133,128 | $ 54,940 |
Non-performing loans | ||||
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | ||||
Balance at beginning of period | $ 23,735 | 20,686 | ||
Accretable yield additions | $ 22,071 | 8,038 | $ 22,071 | |
Accretion | $ (2,908) | (1,385) | (7,897) | (1,385) |
Balance at end of period | $ 20,827 | $ 20,686 | $ 20,827 | $ 20,686 |
Mortgage loans (Details 2)
Mortgage loans (Details 2) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015USD ($)Loan | Dec. 31, 2014USD ($)Loan | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Number of loans | Loan | 2,964 | 1,339 | |
Carrying value | [1] | $ 510,594 | $ 211,159 |
Unpaid principal balance | $ 676,632 | $ 298,573 | |
Current | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Number of loans | Loan | 1,111 | 439 | |
Carrying value | $ 203,383 | $ 72,727 | |
Unpaid principal balance | $ 264,262 | $ 94,993 | |
30 | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Number of loans | Loan | 470 | 237 | |
Carrying value | $ 81,059 | $ 36,954 | |
Unpaid principal balance | $ 104,816 | $ 53,739 | |
60 | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Number of loans | Loan | 278 | 99 | |
Carrying value | $ 48,056 | $ 13,849 | |
Unpaid principal balance | $ 60,498 | $ 17,766 | |
90 | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Number of loans | Loan | 729 | 352 | |
Carrying value | $ 112,595 | $ 53,987 | |
Unpaid principal balance | $ 150,763 | $ 76,691 | |
Foreclosure | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Number of loans | Loan | 377 | 212 | |
Carrying value | $ 65,501 | $ 33,642 | |
Unpaid principal balance | $ 96,293 | $ 55,384 | |
[1] | Mortgage loans includes $291,314 and $127,559 of loans at September 30, 2015 and December 31, 2014, respectively, transferred to securitization trusts that are variable interest entities ("VIEs"); these loans 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.). See Note 8-Debt. |
Mortgage loans (Details Textual
Mortgage loans (Details Textuals) $ in Millions | 3 Months Ended | 8 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($)Property | Sep. 30, 2014USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)Property | Dec. 31, 2014Property | |
Mortgage Loans [Abstract] | |||||
Due diligence costs related to loan transaction | $ 0.3 | $ 0.1 | $ 0.1 | $ 1.3 | |
Ownership percentage beneficial interest through equity method investee | 40.50% | 40.50% | |||
Residential properties | |||||
Mortgage Loans on Real Estate [Line Items] | |||||
Number of REO properties foreclosed | Property | 43 | 43 | 2 | ||
Foreclosed residential properties | $ 5.4 | $ 5.4 |
Real estate assets, net (Detail
Real estate assets, net (Details Textuals) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015USD ($)Property | Sep. 30, 2015USD ($)Property | Dec. 31, 2014USD ($)Property | |
Real Estate [Abstract] | |||
Number of REO properties held for rental | 2 | 3 | |
Aggregate carrying value REO properties | $ | $ 100 | $ 100 | $ 300 |
Number of REO Properties rented | 1 | 2 | |
Number of REO properties held-for-sale | 62 | 62 | 12 |
Aggregate carrying value of held for sale | $ | $ 9,168 | $ 9,168 | $ 1,316 |
Number of held-for-sale residential properties disposed | 9 | 12 | |
Gain on sale of property | $ | $ 100 | $ 131 |
Fair value of financial instr34
Fair value of financial instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | |
Not recognized on consolidated balance sheet at fair value (assets) | |||
Mortgage loans, net | [1] | $ 510,594 | $ 211,159 |
Not recognized on consolidated balance sheet at fair value (liabilities) | |||
Borrowings under repurchase agreement | 130,798 | 15,249 | |
Secured borrowings | [1] | $ 197,836 | $ 84,679 |
Level 1 Quoted prices in active markets | |||
Not recognized on consolidated balance sheet at fair value (assets) | |||
Mortgage loans, net | |||
Not recognized on consolidated balance sheet at fair value (liabilities) | |||
Borrowings under repurchase agreement | |||
Secured borrowings | |||
Level 2 Observable inputs other than Level 1 prices | |||
Not recognized on consolidated balance sheet at fair value (assets) | |||
Mortgage loans, net | |||
Not recognized on consolidated balance sheet at fair value (liabilities) | |||
Borrowings under repurchase agreement | $ 130,798 | $ 15,249 | |
Secured borrowings | 197,836 | 84,679 | |
Level 3 Unobservable inputs | |||
Not recognized on consolidated balance sheet at fair value (assets) | |||
Mortgage loans, net | $ 568,564 | $ 235,623 | |
Not recognized on consolidated balance sheet at fair value (liabilities) | |||
Borrowings under repurchase agreement | |||
Secured borrowings | |||
Carrying Value | |||
Not recognized on consolidated balance sheet at fair value (assets) | |||
Mortgage loans, net | $ 510,594 | $ 211,159 | |
Not recognized on consolidated balance sheet at fair value (liabilities) | |||
Borrowings under repurchase agreement | 130,798 | 15,249 | |
Secured borrowings | $ 197,836 | $ 84,679 | |
[1] | Mortgage loans includes $291,314 and $127,559 of loans at September 30, 2015 and December 31, 2014, respectively, transferred to securitization trusts that are variable interest entities ("VIEs"); these loans can only be used to settle obligations of the VIEs. Secured borrowings consist of notes issued by VIEs that can only be settled with the assets and cash flows of the VIEs. The creditors do not have recourse to the primary beneficiary (Great Ajax Corp.). See Note 8-Debt. |
Fair value of financial instr35
Fair value of financial instruments (Details 1) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Cost of debt | 4.25% | 4.25% |
Re-performing loans | Minimum | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Equity discount rate | 7.00% | 7.00% |
Loan resolution timelines | 4 years | 4 years |
Re-performing loans | Maximum | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Equity discount rate | 14.00% | 14.00% |
Loan resolution timelines | 7 years | 7 years |
Non-performing loans | Minimum | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Equity discount rate | 10.00% | 10.00% |
Loan resolution timelines | 1 year 4 months 24 days | 1 year 4 months 24 days |
Non-performing loans | Maximum | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] | ||
Equity discount rate | 18.00% | 18.00% |
Loan resolution timelines | 4 years | 4 years |
Unconsolidated affiliates (Deta
Unconsolidated affiliates (Details Textuals) - USD ($) | Dec. 05, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2015 | Dec. 31, 2014 |
Investments in and Advances to Affiliates [Line Items] | ||||||
Ownership percentage | 40.50% | 40.50% | ||||
Total assets | $ 565,598,000 | $ 565,598,000 | $ 272,758,000 | |||
Total liabilities | 332,489,000 | 332,489,000 | 101,478,000 | |||
Net income | $ 7,614,000 | $ 996,000 | $ 996,000 | $ 16,690,000 | ||
Thetis Asset Management LLC | ||||||
Investments in and Advances to Affiliates [Line Items] | ||||||
Ownership percentage | 19.80% | 19.80% | ||||
Total assets | $ 2,900,000 | $ 2,900,000 | 2,200,000 | |||
Total liabilities | 600,000 | 600,000 | 200,000 | |||
Net income | $ 200,000 | $ 18,000 | $ 700,000 | |||
Delaware Trust GA-E 2014-12 | ||||||
Investments in and Advances to Affiliates [Line Items] | ||||||
Ownership percentage | 40.50% | 40.50% | 40.50% | |||
Acquiring interest amount | $ 2,200,000 | |||||
Loan amount | $ 5,700,000 | $ 5,700,000 | $ 5,400,000 | |||
Net income | $ 200,000 | $ 700,000 |
Commitments and contingencies (
Commitments and contingencies (Detail Textuals) - One-to-four family residences - Re-performing loans - Purchase commitment $ in Millions | 3 Months Ended |
Sep. 30, 2015USD ($)Loan | |
Mortgage Loans on Real Estate [Line Items] | |
Number of mortgage loans on real estate | Loan | 28 |
Aggregate unpaid principal balance of mortgage loans on real estate | $ 4.6 |
Percentage of unpaid principal balance of loan acquired | 79.30% |
Estimated market value of the underlying collateral | $ 6.7 |
Percentage of estimated market value of the underlying collateral | 54.60% |
Debt (Details)
Debt (Details) - Master Repurchase Agreement - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | ||
Maturity Date | Nov. 24, 2015 | Nov. 24, 2015 |
Maximum borrowing capacity | $ 200,000 | $ 100,000 |
Amount outstanding | 130,798 | 15,249 |
Carrying value of collateral | $ 188,132 | $ 23,460 |
Interest rate | 4.00% | 4.00% |
Debt (Details 1)
Debt (Details 1) - Mortgage loans $ in Millions | 9 Months Ended | |
Sep. 30, 2015USD ($) | ||
Class A Notes | Ajax Mortgage Loan Trust 2014-A/ October 2014 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,057 | [1] |
Original Principal | $ 45 | [1] |
Interest Rate | 4.00% | [1] |
Class A Notes | Ajax Mortgage Loan Trust 2014-B / November 2014 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,054 | [1] |
Original Principal | $ 41.2 | [1] |
Interest Rate | 3.85% | [1] |
Class A Notes | Ajax Mortgage Loan Trust 2015-A / May 2015 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,054 | [1] |
Original Principal | $ 35.6 | [1] |
Interest Rate | 3.88% | [1] |
Class A Notes | Ajax Mortgage Loan Trust 2015-B / July 2015 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,060 | [1] |
Original Principal | $ 87.2 | [1] |
Interest Rate | 3.88% | [1] |
Class B 1 Notes | Ajax Mortgage Loan Trust 2014-A/ October 2014 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,057 | [2] |
Original Principal | $ 8 | [2] |
Interest Rate | 5.19% | [2] |
Class B 1 Notes | Ajax Mortgage Loan Trust 2014-B / November 2014 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,054 | [2] |
Original Principal | $ 13.7 | [2] |
Interest Rate | 5.25% | [2] |
Class B 1 Notes | Ajax Mortgage Loan Trust 2015-A / May 2015 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,054 | [2] |
Original Principal | $ 8.7 | [2] |
Interest Rate | 5.25% | [2] |
Class B 1 Notes | Ajax Mortgage Loan Trust 2015-B / July 2015 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,060 | [2],[3] |
Original Principal | $ 15.9 | [2],[3] |
Interest Rate | 5.25% | [2],[3] |
Class B 2 Notes | Ajax Mortgage Loan Trust 2014-A/ October 2014 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,057 | [2] |
Original Principal | $ 8 | [2] |
Interest Rate | 5.19% | [2] |
Class B 2 Notes | Ajax Mortgage Loan Trust 2014-B / November 2014 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,054 | [2] |
Original Principal | $ 13.7 | [2] |
Interest Rate | 5.25% | [2] |
Class B 2 Notes | Ajax Mortgage Loan Trust 2015-A / May 2015 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,054 | [2] |
Original Principal | $ 8.7 | [2] |
Interest Rate | 5.25% | [2] |
Class B 2 Notes | Ajax Mortgage Loan Trust 2015-B / July 2015 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,060 | [2] |
Original Principal | $ 7.9 | [2] |
Interest Rate | 5.25% | [2] |
Trust Certificate | Ajax Mortgage Loan Trust 2014-A/ October 2014 | ||
Debt Instrument [Line Items] | ||
Original Principal | $ 20.4 | [4] |
Interest Rate | [4] | |
Trust Certificate | Ajax Mortgage Loan Trust 2014-B / November 2014 | ||
Debt Instrument [Line Items] | ||
Original Principal | $ 22.9 | [4] |
Interest Rate | [4] | |
Trust Certificate | Ajax Mortgage Loan Trust 2015-A / May 2015 | ||
Debt Instrument [Line Items] | ||
Original Principal | $ 22.8 | [4] |
Interest Rate | [4] | |
Trust Certificate | Ajax Mortgage Loan Trust 2015-B / July 2015 | ||
Debt Instrument [Line Items] | ||
Original Principal | $ 47.5 | [4] |
Interest Rate | [4] | |
[1] | The Class A notes are senior, sequential pay, fixed rate notes. | |
[2] | The Class B notes are subordinate, sequential pay, fixed rate notes with Class B-2 notes subordinate to the Class B-1 notes. The Company has retained the Class B notes. | |
[3] | These securities are encumbered under the Company's repurchase agreement. | |
[4] | The trust certificate issued by the trust and the beneficial ownership of the trust are retained by Great Ajax Funding LLC as the depositor. As the holder of the trust certificate, the Company is entitled to receive any remaining amounts in the trust after the Class A notes and Class B notes have been paid in full. |
Debt (Details 2)
Debt (Details 2) - Mortgage loans - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||
Carrying value of mortgages | $ 291,314 | $ 127,559 |
Bond principal balance | 197,836 | 84,679 |
Original balances at securitization cutoff date Mortgage UPB | 407,273 | |
Original balances at securitization cutoff date Bond principal balance | 209,008 | |
2014-A | ||
Debt Instrument [Line Items] | ||
Carrying value of mortgages | 56,049 | 58,905 |
Bond principal balance | 39,819 | 44,016 |
Original balances at securitization cutoff date Mortgage UPB | 81,405 | |
Original balances at securitization cutoff date Bond principal balance | 45,000 | |
2014-B | ||
Debt Instrument [Line Items] | ||
Carrying value of mortgages | 67,085 | 68,654 |
Bond principal balance | 37,441 | $ 40,663 |
Original balances at securitization cutoff date Mortgage UPB | 91,535 | |
Original balances at securitization cutoff date Bond principal balance | 41,191 | |
2015-A | ||
Debt Instrument [Line Items] | ||
Carrying value of mortgages | 53,172 | |
Bond principal balance | 34,508 | |
Original balances at securitization cutoff date Mortgage UPB | 75,835 | |
Original balances at securitization cutoff date Bond principal balance | 35,643 | |
2015-B | ||
Debt Instrument [Line Items] | ||
Carrying value of mortgages | 115,008 | |
Bond principal balance | 86,068 | |
Original balances at securitization cutoff date Mortgage UPB | 158,498 | |
Original balances at securitization cutoff date Bond principal balance | $ 87,174 |
Debt (Details Textuals)
Debt (Details Textuals) - USD ($) $ in Millions | 1 Months Ended | 9 Months Ended | |
Nov. 25, 2014 | Sep. 30, 2015 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | |||
Percentage of guarantors beneficial interest | 100.00% | ||
Mortgage loans | Re-performing loans | 2014-A | |||
Debt Instrument [Line Items] | |||
Servicing fees percentage | 0.65% | ||
Mortgage loans | Re-performing loans | 2014-B | |||
Debt Instrument [Line Items] | |||
Servicing fees percentage | 0.65% | ||
Mortgage loans | Re-performing loans | 2015-A | |||
Debt Instrument [Line Items] | |||
Servicing fees percentage | 0.65% | ||
Mortgage loans | Re-performing loans | 2015-B | |||
Debt Instrument [Line Items] | |||
Servicing fees percentage | 0.65% | ||
Mortgage loans | Non-performing loans | 2014-A | |||
Debt Instrument [Line Items] | |||
Servicing fees percentage | 1.25% | ||
Mortgage loans | Non-performing loans | 2014-B | |||
Debt Instrument [Line Items] | |||
Servicing fees percentage | 1.25% | ||
Mortgage loans | Non-performing loans | 2015-A | |||
Debt Instrument [Line Items] | |||
Servicing fees percentage | 1.25% | ||
Mortgage loans | Non-performing loans | 2015-B | |||
Debt Instrument [Line Items] | |||
Servicing fees percentage | 1.25% | ||
Master Repurchase Agreement | |||
Debt Instrument [Line Items] | |||
Interest Rate | 4.00% | 4.00% | |
Master Repurchase Agreement | Mortgage loans | |||
Debt Instrument [Line Items] | |||
Ownership interests in subsidiary | 100.00% | ||
Variable rate basis of borrowing | One-month LIBOR | ||
Percentage of purchase price for each mortgage loan or REO | 65.00% | ||
Master Repurchase Agreement | Mortgage loans | Maximum | |||
Debt Instrument [Line Items] | |||
Loan amount | $ 200 |
Related party transactions (Det
Related party transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2015 | |
Gregory | Loan servicing fees | ||||
Related Party Transaction [Line Items] | ||||
Loan servicing fees | $ 1,196 | $ 157 | $ 157 | $ 2,703 |
Gregory | Loan transaction expense | ||||
Related Party Transaction [Line Items] | ||||
Due diligence and related loan acquisition costs | 2 | 21 | ||
Gregory | Professional fees | ||||
Related Party Transaction [Line Items] | ||||
Expense reimbursements | 54 | 54 | 3 | |
Thetis | Management fees | ||||
Related Party Transaction [Line Items] | ||||
Management fee | $ 861 | 439 | 439 | $ 2,464 |
Aspen Yo | Loan transaction expense | ||||
Related Party Transaction [Line Items] | ||||
Due diligence and related loan acquisition costs | $ 12 | $ 12 |
Related party transactions (D43
Related party transactions (Details Textuals) | Jul. 08, 2014 | Sep. 30, 2015 |
Management agreement | Manager | ||
Related Party Transaction [Line Items] | ||
Term of agreement | 15 years | |
Base management fee percentage | 1.50% | |
Stock ownership limit percentage | 9.80% | |
Description of incentive management fee payable | The Manager is also entitled to an incentive management fee that is payable quarterly in arrears in cash in an amount equal to one-fourth of 20% of the dollar amount by which (i) the sum of (A) the aggregate cash dividends, if any, declared out of the REIT taxable income of the Company by the Company’s Board of Directors payable to the holders of the Company’s common stock and (B) the aggregate cash distributions, if any, declared out of the REIT taxable income of the operating partnership (without duplication) by the operating partnership payable to holders of OP Units (other than any OP Units held by the Company as a limited partner) annualized, or the Annualized Dividends and Distributions, in respect of such calendar quarter exceeds (ii) the product of (1) the book value per share of the Company’s common stock as of the end of each such quarter multiplied by the number of shares of the Company’s common stock and OP Units (other than any OP Units held by the Company as a limited partner) outstanding as of the end of such calendar quarter and (2) 8% | |
Servicing agreement | Servicer | ||
Related Party Transaction [Line Items] | ||
Term of agreement | 15 years | |
Servicing agreement | Servicer | Minimum | ||
Related Party Transaction [Line Items] | ||
Servicing fees percentage | 0.65% | 0.65% |
Servicing agreement | Servicer | Maximum | ||
Related Party Transaction [Line Items] | ||
Servicing fees percentage | 1.25% | 1.25% |
Stock based payments and dire44
Stock based payments and director fees (Details) - USD ($) $ in Thousands | 3 Months Ended | 8 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2015 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares | 16,418 | 15,872 | 15,872 | 75,783 | |
Amount of expense recognized | [1] | $ 240 | $ 238 | $ 238 | $ 1,091 |
Management fees | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares | 14,710 | 14,621 | 14,621 | 70,587 | |
Amount of expense recognized | [1] | $ 215 | $ 219 | $ 219 | $ 1,016 |
Independent director fees | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares | 1,708 | 1,251 | 1,251 | 5,196 | |
Amount of expense recognized | [1] | $ 25 | $ 19 | $ 19 | $ 75 |
[1] | All management fees and independent director fees are fully expensed in the period in which they are incurred. |
Stock based payments and dire45
Stock based payments and director fees (Details 1) - Restricted stock - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 8 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2015 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares | 8,000 | 8,000 | |||
Total cost of grant | $ 119 | $ 119 | |||
Grant expense recognized | $ 7 | $ 23 | $ 23 | $ 64 | |
July 8, 2014 Directors Grants | Director | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares | [1] | 6,000 | 6,000 | ||
Per share value (in dollars per share) | [1] | $ 15 | $ 15 | ||
Total cost of grant | [1] | $ 90 | $ 90 | ||
Grant expense recognized | [1] | $ 23 | $ 23 | $ 45 | |
February 19, 2015 Director Grant | Director | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of shares | [1] | 2,000 | 2,000 | ||
Per share value (in dollars per share) | [1] | $ 14.25 | $ 14.25 | ||
Total cost of grant | [1] | $ 29 | $ 29 | ||
Grant expense recognized | [1] | $ 7 | $ 19 | ||
[1] | Vesting period is one year from grant date. |
Stock based payments and dire46
Stock based payments and director fees (Details Textuals) | 1 Months Ended | 3 Months Ended | 9 Months Ended |
Feb. 28, 2015shares | Sep. 30, 2015USD ($)shares | Sep. 30, 2015USD ($)Directorshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Management fees | $ | $ 900,000 | ||
Management fee paid with shares of stock | $ | $ 200,000 | ||
Number of shares issued for payment for management fee | 14,710 | ||
Annual retainer amount | $ | $ 50,000 | ||
Long term incentive plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares available for issuance under Director Plan | 100,000 | 100,000 | |
Number of independent directors | Director | 4 | ||
Long term incentive plan | Restricted stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of restricted stock awards issued to independent directors | 2,000 | ||
Vesting period | 1 year | ||
Long term incentive plan | Initial public offering | Restricted stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of restricted stock awards issued to independent directors | 2,000 | ||
Vesting period | 1 year |
Income taxes (Details Textuals)
Income taxes (Details Textuals) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015 | Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | ||
Distribution percentage of Real Estate Investment Trust (REIT) taxable income | 90.00% | |
Taxable income | $ 1,800 | $ 7,000 |
Provision for income taxes | $ 8 | $ 24 |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 8 Months Ended | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2015 | |
Basic EPS | ||||
Consolidated income attributable to common stockholders | $ 7,614 | $ 996 | $ 996 | $ 16,690 |
Allocation of earnings to participating restricted shares | (14) | (2) | (2) | (47) |
Consolidated income attributable to unrestricted common stockholders | 7,600 | 994 | 994 | 16,643 |
Effect of dilutive securities | ||||
Operating partnership units | 311 | 50 | 50 | 709 |
Restricted stock grants and Manager and director fee shares | 14 | 2 | 2 | 47 |
Diluted EPS | ||||
Consolidated income attributable to common stockholders and dilutive securities | $ 7,925 | $ 1,046 | $ 1,046 | $ 17,399 |
Basic EPS | ||||
Consolidated income attributable to common stockholders, shares | 15,273,818 | 7,762,963 | 7,762,963 | 14,514,907 |
Allocation of earnings to participating restricted shares, shares | ||||
Consolidated income attributable to unrestricted common stockholders, shares | 15,273,818 | 7,762,963 | 7,762,963 | 14,514,907 |
Effect of dilutive securities | ||||
Operating partnership units, shares | 624,106 | 428,692 | 428,692 | 624,106 |
Restricted stock grants and Manager and director fee shares, shares | 28,128 | 16,050 | 16,050 | 41,337 |
Diluted EPS | ||||
Consolidated income attributable to common stockholders and dilutive securities, shares | 15,926,052 | 8,207,705 | 8,207,705 | 15,180,350 |
Per Share Amount | ||||
Consolidated income attributable to unrestricted common stockholders (in dollars per share) | $ 0.50 | $ 0.13 | $ 0.13 | $ 1.15 |
Consolidated income attributable to unrestricted common stockholders (in dollars per share) | $ 0.50 | $ 0.13 | $ 0.13 | $ 1.15 |
Subsequent events (Details Text
Subsequent events (Details Textuals) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 8 Months Ended | 9 Months Ended | |||
Oct. 30, 2015 | Oct. 27, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2015 | Dec. 31, 2014 | |
Subsequent Event [Line Items] | |||||||
Stock issued in lieu of management fee | 16,418 | 15,872 | 15,872 | 75,783 | |||
Senior securities issued in private offerings to institutional investors | $ 119,605 | $ 51,529 | |||||
Management fee payable | $ 646 | 646 | $ 258 | ||||
Common Stock | |||||||
Subsequent Event [Line Items] | |||||||
Senior securities issued in private offerings to institutional investors | $ 85 | $ 40 | |||||
Subsequent events | |||||||
Subsequent Event [Line Items] | |||||||
Senior securities issued in private offerings to institutional investors | $ 82,000 | ||||||
Subordinated securities issued in private offerings to institutional investors | 13,000 | ||||||
UPB of mortgage loans | $ 130,100 | ||||||
Subsequent events | Re-performing loans | |||||||
Subsequent Event [Line Items] | |||||||
Percentage of mortgage loans based on unpaid principal balance | 84.90% | ||||||
Subsequent events | Non-performing loans | |||||||
Subsequent Event [Line Items] | |||||||
Percentage of mortgage loans based on unpaid principal balance | 15.10% | ||||||
Subsequent events | Common Stock | |||||||
Subsequent Event [Line Items] | |||||||
Number of shares issued in payment of half of their quarterly director fees | 427 | ||||||
Subsequent events | Manager | Common Stock | |||||||
Subsequent Event [Line Items] | |||||||
Stock issued in lieu of management fee | 14,710 | ||||||
Subsequent events | Dividend declared | |||||||
Subsequent Event [Line Items] | |||||||
Dividend declared date | Oct. 27, 2015 | ||||||
Dividends payable, amount per share | $ 0.24 | ||||||
Dividend paid date | Nov. 27, 2015 | ||||||
Dividend record date | Nov. 13, 2015 | ||||||
Subsequent events | Amended And Restated Management Agreement | Manager | |||||||
Subsequent Event [Line Items] | |||||||
Management fee payable | $ 1,000 | ||||||
Percentage of base management fees payable in cash | 75.00% | ||||||
Percentage of base management fee payable in shares of common stock | 25.00% | ||||||
Management fees, description | Base Management Fee in excess of $1 million will be payable in shares of the Company’s common stock until payment is 50% in cash and 50% in shares (the “50/50 split”) | ||||||
Percentage of remaining incentive fee payable in common stock | 20.00% | ||||||
Percentage of remaining incentive fee payable in cash | 80.00% |