Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 02, 2017 | |
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 | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 18,794,635 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
ASSETS | |||
Cash and cash equivalents | $ 29,840 | $ 35,723 | |
Cash held in trust | 714 | 1,185 | |
Mortgage loans | [1] | 856,756 | 870,587 |
Property held-for-sale, net | 27,339 | 23,882 | |
Rental property, net | 1,552 | 1,289 | |
Investment in debt securities | 6,255 | 6,323 | |
Receivable from servicer | 13,695 | 12,481 | |
Investment in affiliates | 4,324 | 4,253 | |
Prepaid expenses and other assets | 1,637 | 1,679 | |
Total assets | 942,112 | 957,402 | |
Liabilities: | |||
Secured borrowings, net | [2] | 428,168 | 442,670 |
Borrowings under repurchase agreement | 222,797 | 227,440 | |
Management fee payable | 750 | 750 | |
Accrued expenses and other liabilities | 3,253 | 3,819 | |
Total liabilities | 654,968 | 674,679 | |
Commitments and contingencies- see Note 7 | |||
Equity: | |||
Preferred stock $0.01 par value; 25,000,000 shares authorized, none issued or outstanding | |||
Common stock $0.01 par value; 125,000,000 shares authorized, 18,146,998 shares at March 31, 2017 and 18,122,387 shares at December 31, 2016 issued and outstanding | 181 | 181 | |
Additional paid-in capital | 245,436 | 244,880 | |
Retained earnings | 31,104 | 27,231 | |
Accumulated other comprehensive loss | (140) | ||
Equity attributable to common stockholders | 276,581 | 272,292 | |
Non-controlling interests | 10,563 | 10,431 | |
Total equity | 287,144 | 282,723 | |
Total liabilities and equity | $ 942,112 | $ 957,402 | |
[1] | Mortgage loans include $586,076 and $598,643 of loans at March 31, 2017 and December 31, 2016, respectively, transferred to securitization trusts that are variable interest entities ("VIEs"); these loans can only be used to settle obligations of the VIEs. Secured borrowings consist of notes issued by VIEs that can only be settled with the assets and cash flows of the VIEs. The creditors do not have recourse to the primary beneficiary (Great Ajax Corp.). See Note 8-Debt. | ||
[2] | Secured borrowings are presented net of deferred issuance costs. |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
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 | 0 | 0 |
Preferred stock shares outstanding | 0 | 0 |
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 | 18,146,998 | 18,122,387 |
Common stock shares outstanding | 18,146,998 | 18,122,387 |
Mortgage loans (in dollars) | $ 586,076 | $ 598,643 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
INCOME | ||
Interest income | $ 20,807 | $ 15,880 |
Interest expense | (7,651) | (4,987) |
Net interest income | 13,156 | 10,893 |
Income from investment in Manager | 49 | 44 |
Other income | 462 | 519 |
Total income | 13,667 | 11,456 |
EXPENSE | ||
Related party expense - loan servicing fees | 1,904 | 1,403 |
Related party expense - management fees | 1,072 | 906 |
Loan transaction expense | 525 | 213 |
Professional fees | 480 | 414 |
Real estate operating expense | 324 | 207 |
Other expense | 663 | 353 |
Total expense | 4,968 | 3,496 |
Income before provision for income tax | 8,699 | 7,960 |
Provision (benefit) for income tax | 1 | (3) |
Consolidated net income | 8,698 | 7,963 |
Less: consolidated net income attributable to the non-controlling interests | 289 | 312 |
Consolidated net income attributable to common stockholders | $ 8,409 | $ 7,651 |
Basic earnings per common share (in dollars per share) | $ 0.46 | $ 0.50 |
Diluted earnings per common share (in dollars per share) | $ 0.46 | $ 0.50 |
Weighted average shares - basic (in shares) | 17,976,710 | 15,306,519 |
Weighted average shares - diluted (in shares) | 18,791,231 | 15,959,202 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPRHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Consolidated net income attributable to common stockholders | $ 8,409 | $ 7,651 |
Other comprehensive loss: | ||
Net unrealized loss on investment, net of non-controlling interest | (140) | |
Comprehensive income | $ 8,269 | $ 7,651 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Consolidated net income | $ 8,698 | $ 7,963 |
Adjustments to reconcile consolidated net income to net cash from operating activities | ||
Stock-based management fee and compensation expense | 523 | 254 |
Non-cash interest income accretion | (9,840) | (9,004) |
Discount amortization on investment in debt securities | (72) | |
Gain on sale of property | (109) | (545) |
Depreciation of property | 9 | 5 |
Impairment of real estate owned | 309 | 45 |
Amortization of prepaid financing costs | 1,200 | 1,159 |
Net change in operating assets and liabilities | ||
Prepaid expenses and other assets | (205) | (1,695) |
Receivable from servicer | (1,377) | (2,664) |
Undistributed income from investment in affiliates | (139) | (122) |
Accrued expenses, management fee payable, and other liabilities | (566) | 1,499 |
Net cash (used in) operating activities | (1,569) | (3,105) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of mortgage loans and related balances | (5,572) | (37,205) |
Principal paydowns on mortgage loans | 21,306 | 11,020 |
Proceeds from sale of property held-for-sale | 4,171 | 2,359 |
Investment in equity method investee | (1,111) | |
Distribution from affiliates | 68 | 48 |
Renovations of rental property and property held-for-sale | (240) | |
Net cash provided by (used in) investing activities | 19,973 | (25,129) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from repurchase transactions | 34 | 33,459 |
Repayments on repurchase transactions | (4,677) | (1,496) |
Repayments on secured notes | (15,455) | (5,777) |
Sale of common stock pursuant to dividend reinvestment plan | 33 | |
Distribution to non-controlling interest | (157) | (150) |
Dividends paid on common stock | (4,536) | (3,676) |
Net cash (used in) provided by financing activities | (24,758) | 22,360 |
NET CHANGE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | (6,354) | (5,874) |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 36,908 | 30,834 |
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, end of period | 30,554 | 24,960 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash paid for interest | 6,245 | 3,241 |
Cash paid for income taxes | ||
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES | ||
Transfer of loans to rental property or property held-for-sale | 8,100 | 5,911 |
Issuance of common stock for management and director fees | 523 | 254 |
Transfer of property held-for-sale to loans | 143 | |
Non-cash adjustments to basis in mortgage loans | $ 163 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Stockholders' Equity | Non-controlling Interest | Total |
Balance at Dec. 31, 2015 | $ 152 | $ 211,729 | $ 15,921 | $ 227,802 | $ 10,011 | $ 237,813 | |
Balance (in shares) at Dec. 31, 2015 | 15,301,946 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 7,651 | 7,651 | 312 | 7,963 | |||
Stock-based management fee expense | 227 | 227 | 227 | ||||
Stock-based management fee expense (in shares) | 14,910 | ||||||
Stock-based compensation expense | 27 | 27 | 27 | ||||
Stock-based compensation expense (in shares) | 1,676 | ||||||
Dividends and distributions | (3,676) | (3,676) | (150) | (3,826) | |||
Other comprehensive loss | |||||||
Balance at Mar. 31, 2016 | $ 152 | 211,983 | 19,896 | 232,031 | 10,173 | 242,204 | |
Balance (in shares) at Mar. 31, 2016 | 15,318,532 | ||||||
Balance at Dec. 31, 2016 | $ 181 | 244,880 | 27,231 | 272,292 | 10,431 | $ 282,723 | |
Balance (in shares) at Dec. 31, 2016 | 18,122,387 | 18,122,387 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 8,409 | 8,409 | 289 | $ 8,698 | |||
Issuance of shares | 33 | 33 | 33 | ||||
Issuance of shares (in shares) | 2,599 | ||||||
Stock-based management fee expense | 322 | 322 | 322 | ||||
Stock-based management fee expense (in shares) | 20,352 | ||||||
Stock-based compensation expense | 201 | 201 | 201 | ||||
Stock-based compensation expense (in shares) | 1,660 | ||||||
Dividends and distributions | (4,536) | (4,536) | (157) | (4,693) | |||
Other comprehensive loss | (140) | (140) | (140) | ||||
Balance at Mar. 31, 2017 | $ 181 | $ 245,436 | $ 31,104 | $ (140) | $ 276,581 | $ 10,563 | $ 287,144 |
Balance (in shares) at Mar. 31, 2017 | 18,146,998 | 18,146,998 |
Organization and basis of prese
Organization and basis of presentation | 3 Months Ended |
Mar. 31, 2017 | |
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, a company affiliated with Aspen Capital, the trade name for the Aspen group of companies. The Company was formed to facilitate capital raising activities and to operate as a mortgage real estate investment trust (“REIT”). The Company primarily targets acquisitions of re-performing loans (“RPLs”) including residential mortgage loans and small balance commercial mortgage loans (“SBC loans”) and originations of SBC loans. RPLs are mortgage 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. The SBC loans that the Company intends to opportunistically target, through acquisitions, or originations, generally have a principal balance of up to $5 million and are secured by multi-family residential and commercial mixed use retail/residential properties 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. Additionally, the Company may invest in single-family and smaller commercial properties directly either through a foreclosure event of a loan in our mortgage portfolio or, less frequently, through a direct acquisition. Historically, the Company has also targeted investments in non-performing loans (“NPL”). NPLs are loans on which the most recent three payments have not been made. While the Company may acquire NPLs from time to time and continues to manage the NPLs on its consolidated Balance Sheet, this asset class is no longer a strategic acquisition target. 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 the “Servicer”), also an affiliated company. The Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). The Company conducts substantially all of its business through its operating partnership, Great Ajax Operating Partnership L.P., a Delaware limited partnership (the “Operating Partnership”), and its subsidiaries. The Company, through a wholly owned subsidiary, is the sole general partner of the Operating Partnership. GA-TRS is a wholly owned subsidiary of the Operating Partnership that owns the equity interest in the Manager. The Company elected to treat GA-TRS as a taxable REIT subsidiary (“TRS”) under the Code. Great Ajax Funding LLC is a wholly owned subsidiary of the Operating Partnership formed 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. AJX Mortgage Trust I and AJX Mortgage Trust II are wholly owned subsidiaries of the Operating Partnership formed to hold mortgage loans used as collateral for financings under the Company’s repurchase agreements. In addition, the Company, through its Operating Partnership, holds real estate owned properties (“REO”) acquired upon the foreclosure or other settlement of its owned NPLs, as well as through outright purchases. GAJX Real Estate LLC is a wholly owned subsidiary of the Operating Partnership formed to own, maintain, improve and sell REO properties purchased by the Company. The Company has elected to treat GAJX Real Estate LLC as a TRS under the Code. 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, 2016, included in the Annual Report on Form 10-K filed with the on March 2, 2017. Interim financial statements are unaudited and 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 consolidated 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, 2017. The consolidated interim 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. 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 March 31, 2017, the Company owned 96.7% of the outstanding operating partnership units (“OP Units”) and the remaining 3.3% of the OP Units are owned by an unaffiliated holder. The Company’s 19.8% investment in the Manager is accounted for using the equity method because the Company 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, and the net realizable value of REO properties held-for-sale. |
Summary of significant accounti
Summary of significant accounting policies | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of significant accounting policies | Note 2 — Summary of significant accounting policies 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 bid price for mortgage loans, the Company uses a proprietary discounted cash flow valuation model to project expected cash flows, and consider alternate loan resolution probabilities, including liquidation or conversion to REO. Observable inputs to the model include 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. Loans acquired with deterioration in credit quality The loans acquired by the Company have generally suffered some credit deterioration subsequent to origination. As a result, the Company is required to account for the mortgage loans pursuant to ASC 310-30, Accounting for Loans with Deterioration in Credit Quality . Under ASC 310-30, acquired loans may be aggregated and accounted for as a pool of loans if the loans 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. RPLs have been determined to have common risk characteristics and are accounted for as a single loan pool for loans acquired within each three-month calendar quarter. Similarly, NPLs 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 calendar quarter. Excluded from the aggregate pools are loans that pay in full subsequent to the acquisition closing date but prior to pooling. Any gain on these loans is recognized as Interest income in the period the loan pays in full. The Company’s accounting for loans under ASC 310-30 gives rise to an accretable yield and a non-accretable amount. The excess of all undiscounted cash flows expected to be collected at acquisition over the initial investment in the loans is the accretable yield. Cash flows expected at acquisition include all cash flows directly related to the acquired loan, including those expected from the underlying collateral. The Company recognizes the accretable yield as Interest income on a prospective level yield basis over the life of the pool. The excess of a loan’s contractually required payments over the amount of cash flows expected at the acquisition is the non-accretable amount. The Company’s expectation of the amount of undiscounted cash flows expected to be collected is evaluated at the end of each calendar quarter. If the Company expects to collect greater cash flows over the life of the pool, the accretable yield amount increases and the expected yield to maturity is adjusted on a prospective basis. A provision for loan losses may be established when it is probable the Company will not collect all amounts previously estimated to be collectible. Management assesses the credit quality of the portfolio and the adequacy of loan loss reserves on a quarterly basis, or more frequently as necessary. Significant judgment is required in this analysis. Depending on the expected recovery of its investment, the Company considers the estimated net recoverable value of the loan pools as well as other factors, such as the fair value of the underlying collateral. When a loan pool is determined to be impaired, the amount of loss accrual is calculated by comparing the recorded investment to the value determined by discounting the expected future cash flows at the loan pool’s effective interest rate or the fair value of the underlying collateral. Because these determinations are based upon projections of future economic events, which are inherently subjective, the amounts ultimately realized may differ materially from the carrying value as of the reporting date. Borrower payments on the Company’s mortgage loans are classified as principal, interest, payments of fees or escrow deposits. Amounts applied as interest on the borrower account are similarly classified as interest for accounting purposes and are classified as operating cash flows in the Company’s consolidated Statement of Cash Flows. Amounts applied as principal on the borrower account are similarly classified as principal for accounting purposes and are classified as investing cash flows in the consolidated Statement of Cash Flows. Amounts received as payments of fees are recorded in Other income and classified as operating cash flows in the consolidated Statement of Cash Flows. Escrow deposits are recorded on our Servicer’s Balance Sheet and do not impact the Company’s cash flow. Loans acquired or originated that have not experienced a deterioration in credit quality While the Company generally acquires loans that have experienced deterioration in credit quality, it does, from time to time, acquire or originate loans that have not missed a scheduled payment and have not experienced a deterioration in credit quality. The Company recognizes any related loan discount and deferred expenses pursuant to ASC 310-20 by amortizing these amounts over the 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. Loans are tested quarterly for impairment and impairment reserves are recorded to the extent the net realizable value of the underlying collateral falls below net book value. If necessary, an 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. Real estate The Company acquires REO properties when it forecloses on the borrower and takes title to the underlying property or the borrower surrenders the deed in lieu of foreclosure. Property is recorded at cost if purchased, or at the present value of future cash flows 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, net realizable value (fair market value less expected selling costs). Fair market value is determined based on appraisals, broker price opinions (“BPOs”), or other market indicators of fair 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. Property is held for investment as rental property if the cash flows from use as a rental exceed the present value of expected cash flows from a sale. Depreciation is provided for using the straight-line method over the estimated useful lives of the assets of three to 27.5 years. The Company performs an impairment analysis for all rental property 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. The 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 and other market indicators may be available and used in addition to BPOs. The Company may perform property renovations to maximize the value of the property for its rental strategy. Such expenditures are part of its 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. Expenditures for ordinary maintenance and repairs are charged to expense as incurred. Secured borrowings The Company, through securitization trusts, issues callable debt secured by its mortgage loans in the ordinary course of business. The secured borrowings are structured as debt financings, and the loans remain on the Company’s consolidated Balance Sheet as the Company is the primary beneficiary of the securitization trusts which are variable interest entities (“VIEs”). These secured borrowing 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 creditors do not have recourse to the primary beneficiary. Coupon interest on the debt is recognized using the accrual method of accounting. Deferred issuance costs, including original issue discount and debt issuance costs, are carried on the Company’s consolidated Balance Sheets as a deduction from Secured borrowings, and are amortized on an effective yield basis based on the underlying cash flow of the mortgage loans. The Company assumes the debt will be called at the specified call date for purposes of amortizing discount and issuance costs because the Company believes it will have the intent and ability to call the debt on the call date. Changes in the actual or projected underlying cash flows are reflected in the timing and amount of deferred issuance cost amortization. Repurchase facilities The Company enters into repurchase financing facilities under which it nominally sells assets to a counterparty and simultaneously enters into an agreement to repurchase the sold assets at a price equal to the sold amount plus an interest factor. Despite being legally structured as sales and subsequent repurchases, repurchase transactions are generally accounted for as debt secured by the underlying assets. At the maturity of a repurchase financing, unless the repurchase financing is renewed, the Company is required to repay the borrowing including any accrued interest and concurrently receives back its pledged collateral from the lender. The repurchase financings are treated as collateralized financing transactions; pledged assets are recorded as assets in the Company’s consolidated Balance Sheets, and debt is recognized at the contractual amount. Interest is recorded at the contractual amount on an accrual basis. Costs associated with the set-up of a repurchasing contract are recorded as deferred expense at inception and amortized over the contractual life of the agreement. Any draw fees associated with individual transactions and any facility fees assessed on the amounts outstanding are recorded as deferred expense when incurred and amortized over the contractual life of the related borrowing. Management fee and expense reimbursement The Company entered into an amended and restated management agreement with the Manager on October 27, 2015, which had an initial 15-year term (the “Management Agreement”). 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 Yo LLC (“Aspen”) affiliates, provides the Company with a management team and necessary administrative and support personnel. The Company does not currently have any employees that it pays directly and does not expect to have any employees that it pays directly in the foreseeable future. Each of the Company’s executive officers is an employee or officer, or both, of the Manager or the Servicer. Under the Management agreement, 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 consolidated Stockholders’ equity at quarter end. See Note 9 — Related party transactions. Servicing fees On July 8, 2014, the Company entered into a 15-year Servicing Agreement (the “Servicing Agreement”) with Gregory (the “Servicer”). Under the Servicing Agreement by and between the Company and the Servicer, the Servicer receives servicing fees of 0.65% annually of the Unpaid Principal Balance (UPB) for loans that are re-performing at acquisition and 1.25% annually of UPB for loans that are non-performing at acquisition. Additionally, the Company pays servicing fee of 0.65% annually on UPB for any originated SBC loans. Servicing fees are paid monthly. The total fees incurred by the Company for these services depend upon the UPB and type of mortgage loans that the Servicer services pursuant to the terms of the servicing agreement. The fees do not change if a re-performing loan becomes non-performing or vice versa. Servicing fees for the Company’s real property assets are the greater of (i) the servicing fee applicable to the underlying mortgage loan prior to foreclosure, or (ii) 1.00% annually of the fair market value of the REO as reasonably determined by the Manager or 1.00% annually of the purchase price of any REO otherwise purchased by the Company. The Servicer 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 the Servicer 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. Stock-based payments A portion of the management fee is payable 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 of 1933, as amended (the “Securities Act”). The base management fee and Manager’s incentive fee to be payable in cash and shares of the Company’s common stock are retroactive to July 1, 2015. 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 New York Stock Exchange (“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 recognized as an expense in the quarter incurred and recorded in equity at quarter end. Under the Company’s 2014 Director Equity Plan (the “Director Plan”), the Company may make stock-based awards to its directors. 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 units (“LTIP Units”) from the Operating Partnership, available for issuance under the Director Plan is 90,000 shares. The Company has issued to each of its independent directors restricted stock awards of 2,000 shares of its common stock upon joining the Board of Directors, which are subject to a one-year vesting period. In addition, each of the Company’s independent directors receives an annual retainer of $75,000, an increase of $25,000 over the annual retainer paid to the Company’s independent directors through December 31, 2016. The retainer is payable quarterly, half in shares of the Company’s common stock 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. On June 7, 2016, the Company’s stockholders approved the 2016 Equity Incentive Plan (the “2016 Plan”) to attract and retain non-employee directors, executive officers, key employees and service providers, including officers and employees of the Company’s affiliates. The 2016 Plan authorized the issuance of up to 5% of the Company’s outstanding shares from time to time on a fully diluted basis (assuming, if applicable, the exercise of all outstanding options and the conversion of all warrants and convertible securities, including OP Units and LTIP Units, into shares of common stock). Grants of restricted stock to officers of the Company use grant date fair value of the stock as the basis for measuring the cost of the grant. The cost of grants of restricted stock to employees of the Company’s affiliates is determined using the stock price as of the date at which the counterparty's performance is complete. Forfeitures are accounted for in the period in which they occur. The shares vest over three years, with one third of the shares vesting on each of the first, second and third anniversaries of the grant date. The shares may not be sold until the third anniversary of the grant date. Directors’ fees The expense related to directors’ fees is accrued, and the portion payable in common stock is reflected in consolidated Stockholders’ equity in the period in which it is incurred. Variable interest entities In the normal course of business, the Company enters into various types of transactions with special purpose entities, which have primarily consisted of trusts established for the Company’s secured borrowings (See “Secured Borrowings” above and Note 8 to the consolidated financial statements). Additionally, from time to time, the Company may enter into joint ventures with unrelated entities. The Company evaluates each transaction and its resulting beneficial interest to determine if the entity formed pursuant to the transaction should be classified as a VIE. If an entity created in a transaction meets the definition of a VIE and the Company determines that it or a consolidated subsidiary is the primary beneficiary, the Company will include the entity in its consolidated financial statements. 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. Cash held in trust Cash held in trust consists of cash balances legally due to lenders, and is segregated from the Company’s other cash deposits. Cash held in trust is not available to the Company for any purposes other than the settlement of existing obligations to the lender. 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. 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 that 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. 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 Company reviews its discount rates periodically to ensure the assumptions used to calculate fair value are in line with market conditions. The Company calculates the fair value for the senior debt on its consolidated Balance Sheets from securitization trusts by using the Company’s proprietary pricing model to estimate the cash flows expected to be generated from the underlying collateral with the discount rate used in the present value calculation representing an estimate of the average rate for debt instruments with similar durations and risk factors. Income taxes The Company 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. In addition, notwithstanding the Company’s qualification as a REIT, it may also have to pay certain state and local income taxes, because not all states and localities treat REITs in the same manner that they are treated for U.S. federal income tax purposes. GA-TRS, GAJX Real Estate LLC, and any other TRS that the Company forms will be subject to U.S. federal and state income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences or benefits attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which management expects those temporary differences to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period in which the change occurs. Subject to the Company’s judgment, it reduces a deferred tax asset by a valuation allowance if it is “more-likely-than-not” that some or all of the deferred tax asset will not be realized. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in evaluating tax positions, and the Company recognizes tax benefits only if it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authority. 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 furnishes annually to each stockholder a statement setting forth distributions paid during the preceding year and their U.S. federal income tax treatment. Investment in debt securities The Company’s investment in debt securities consists of a $6.3 million investment in subordinated debt securities issued by a related party trust. The notes have a stated final maturity of October 25, 2056. During the three months ended March 31, 2017, the Company made a decision to transfer these notes to available-for-sale status in anticipation of reinvesting the proceeds from any sale into additional mortgage loans. Accordingly, the carrying amount of $6.3 million was transferred from held-to-maturity to available-for-sale during the current quarter. The notes are marked to current market value with an offset reflected in the Company’s consolidated Statements of Comprehensive Income. 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. Although the Company has elected to take advantage of the benefits of this extended transition period, which expires on December 31, 2018, the Company has elected to implement all new accounting standards on the dates such standards would normally apply to all publicly traded entities. Reclassifications Certain amounts in the Company’s 2016 consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on previously reported net income or equity. Recently adopted accounting standards In March 2016, the FASB issued ASU 2016-07, Investments – Equity Method and Joint Ventures, The Company adopted ASU 2016-07 during the quarter ended March 31, 2017, with no effect on its consolidated assets or liabilities, or its consolidated net income or equity In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation In October 2016, the FASB issued ASU No. 2016-17, Consolidation – Interests Held through Related Parties That Are Under Common Control Recently issued accounting standards In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers . In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments |
Mortgage loans
Mortgage loans | 3 Months Ended |
Mar. 31, 2017 | |
Mortgage Loans [Abstract] | |
Mortgage loans | Note 3 — Mortgage loans Included on the Company’s consolidated Balance Sheets as of March 31, 2017 and December 31, 2016 are approximately $856.8 million and $870.6 million, respectively, of RPLs, NPLs, and originated SBCs at carrying value. RPLs and NPLs are categorized at acquisition. The carrying value of RPLs and NPLs reflects the original investment amount, plus accretion of interest income, less principal and interest cash flows received. Additionally originated SBC loans are carried at amortized cost. The carrying value for all loans is decreased by an allowance for loan losses, if any. To date, the Company has not recorded an allowance for losses against its purchased mortgage loan portfolio. The Company’s mortgage loans are secured by real estate. 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. The following table presents information regarding the accretable yield and non-accretable amount for RPLs and NPLs purchased during the following periods. The Company’s loan acquisitions for the three months ended March 31, 2017 consisted of 24 purchased re-performing loans with $3.4 million UPB and two originated SBC loans with $2.5 million UPB; no non-performing loans were acquired in the first quarters of 2017 or 2016. The following table presents the change in the accretable yield for the RPLs and NPLs at March 31, 2017 and March 31, 2016. Accretable yield and accretion amounts at do not include three originated SBC loans at March 31, 2017 and one originated SBC loan at March 31, 2016 ($ in thousands): Three months ended March 31, 2017 Three months ended March 31, 2016 Re-performing Non-performing Re-performing Non-performing Contractually required principal and interest $ 4,856 $ - $ 82,179 $ - Non-accretable amount (888 ) - (29,148 ) - Expected cash flows to be collected 3,968 - 53,031 - Accretable yield (824 ) - (15,853 ) - Fair value at acquisition $ 3,144 $ - $ 37,178 $ - Three months ended March 31, 2017 Three months ended March 31, 2016 Re-performing Non-performing Re-performing Non-performing Balance at beginning of period $ 239,858 $ 12,065 $ 136,455 $ 18,425 Accretable yield additions 824 - 15,853 - Reclassification from (to) non-accretable amount, net 22,323 (662 ) - - Accretion (19,153 ) (1,335 ) (13,540 ) (2,274 ) Balance at end of period $ 243,852 $ 10,068 $ 138,768 $ 16,151 For the three-month periods ended March 31, 2017 and March 31, 2016 the Company accreted $20.6 million and $15.8 million, respectively, into interest income with respect to its loan portfolio. During the three months ended March 31, 2017, the Company reclassified a net $21.7 million from non-accretable amount to accretable yield, consisting of a $22.3 million transfer from non-accretable amount to accretable yield for RPLs, partially offset by a $0.6 million transfer from accretable yield to non-accretable amount for NPLs. Comparatively, during the three months ended March 31, 2016, the Company made no reclassifications between non-accretable amount and accretable yield for either its RPLs or NPLs. The reclassification in the first quarter of 2017 is based on an updated assessment of projected loan cash flows as compared to the projection at December 31, 2016. The primary driver of the increase in accretable yield is higher than expected sustained performance rates on RPLs and lower re-default rates on modified NPLs. Performing loans have a longer duration than NPLs and generate higher cash flows over the expected life of the loan thus increasing the amount of accretable yield. This is offset by the removal of the accretable yield for loans that are removed from the pool at foreclosure and for loans that prepay sooner than expected. The following table sets forth the carrying value of the Company’s mortgage loans, and related unpaid principal balance by delinquency status as of March 31, 2017 and December 31, 2016 ($ in thousands): March 31, 2017 December 31, 2016 Number of Carrying Unpaid Number of Carrying Unpaid Current 2,549 $ 463,967 $ 561,219 2,306 $ 419,643 $ 510,058 30 635 109,692 131,245 797 141,228 173,482 60 401 70,307 85,610 482 84,498 101,727 90 821 134,498 166,430 911 143,061 179,718 Foreclosure 391 78,292 98,842 414 82,157 105,208 Mortgage loans 4,797 $ 856,756 $ 1,043,346 4,910 $ 870,587 $ 1,070,193 |
Real estate assets
Real estate assets | 3 Months Ended |
Mar. 31, 2017 | |
Real Estate [Abstract] | |
Real estate assets | Note 4 — Real estate assets The Company primarily acquires REO when a mortgage loan is foreclosed upon and the Company takes title to the property on the foreclosure date or the borrower surrenders the deed in lieu of foreclosure. Additionally, from time to time, the Company may acquire real estate assets in purchase transactions. Rental property As of March 31, 2017, the Company owned five REO properties with an aggregate carrying value of $1.6 million held for investment as rentals, at which time four of the properties were rented. Four of these properties were acquired through foreclosures, and one was transferred from Property held-for-sale. As of December 31, 2016, the Company had three REO properties having an aggregate carrying value of $1.3 million held for use as rentals, which were all rented at that time. Property held-for-sale The Company classifies REO as held-for-sale if the REO is being actively marketed for sale. As of March 31, 2017 and December 31, 2016, the Company’s net investments in REO held-for-sale were $27.3 million and $23.9 million, respectively. For the quarters ended March 31, 2017 and 2016, all of the additions to REO Property held-for-sale were acquired through foreclosure or deed in lieu of foreclosure, and reclassified out of its mortgage loan portfolio. The following table presents the activity in the Company’s carrying value of property held-for-sale for the three months ended March 31, 2017 and March 31, 2016 ($ in thousands): Property Held-for-sale Three months ended March 31, 2017 March 31, 2016 Count Amount Count Amount Balance at beginning of period 149 $ 23,882 73 $ 10,333 Transfers from mortgage loans 49 8,007 35 4,832 Adjustments to record at lower of cost or fair value - (309 ) - (45 ) Disposals (32 ) (4,062 ) (19 ) (1,814 ) Improvements - - - 232 Transferred from held-for-sale to rental (1 ) (179 ) (2 ) (158 ) Balance at end of period 165 $ 27,339 87 $ 13,380 Dispositions During the three months ended March 31, 2017 and March 31, 2016, the Company sold 32 and 19 REO properties, realizing a net gain of approximately $0.1 million and $0.5 million respectively, which are included in Other income on the Company’s consolidated Statements of Income. The Company recorded a lower of cost or estimated fair market value adjustment for the three months ended March 31, 2017 and 2016 of $309,000 and $45,000, respectively. |
Fair value
Fair value | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair value | Note 5 — Fair value The following tables set forth the fair value of financial assets and liabilities by level within the fair value hierarchy as of March 31, 2017 and December 31, 2016 ($ in thousands): Level 1 Level 2 Level 3 March 31, 2017 Carrying Quoted prices in Observable inputs Unobservable Not recognized on consolidated Balance Sheet at fair value (assets) Mortgage loans $ 856,756 $ - $ - $ 929,279 Not recognized on consolidated Balance Sheet at fair value (liabilities) Secured borrowings, net $ 428,168 $ - $ - $ 422,899 Borrowings under repurchase agreement $ 222,797 $ - $ 222,797 $ - Level 1 Level 2 Level 3 December 31, 2016 Carrying Quoted prices in Observable inputs Unobservable Not recognized on consolidated Balance Sheet at fair value (assets) Mortgage loans $ 870,587 $ - $ - $ 930,226 Not recognized on consolidated Balance Sheet at fair value (liabilities) Secured borrowings, net $ 442,670 $ - $ - $ 436,623 Borrowings under repurchase agreement $ 227,440 $ - $ 227,440 $ - The Company has not transferred any assets between levels during either of the three month periods ended March 31, 2017 or March 31, 2016. The carrying values of its Cash and cash equivalents, Cash held in trust, Receivable from Servicer, Investment in affiliates, Prepaid expenses and other assets, Management fee payable and Accrued expenses and Other liabilities are equal to or approximate fair value. The Company’s borrowings under repurchase transactions are short-term in nature, and the Company’s management believes it can renew the current borrowing arrangements on similar terms in the future. Accordingly, the carrying value of these borrowings approximates fair value. 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 REO is based upon the present value of future expected cash flows of the loans being transferred. The fair value of secured debt is estimated using the Manager’s proprietary pricing model which estimates expected cash flows of the underlying mortgage loans which collateralize the debt, and which drive the cash flows used to make interest payments. The discount rate used in the present value calculation represents the estimated effective yield of the mortgages. |
Unconsolidated affiliates
Unconsolidated affiliates | 3 Months Ended |
Mar. 31, 2017 | |
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | |
Unconsolidated affiliates | Note 6 — Unconsolidated affiliates The Company holds a 40.5% interest in a Delaware trust, GA-E 2014-12, which holds an economic interest in a single small-balance commercial loan secured by a commercial property in Portland, Oregon. The Company accounts for its investment in GA-E 2014-12 using the equity method. Upon the closing of the Company’s original private placement in July 2014, the Company received a 19.8% equity interest in the Manager, a privately held company for which there is no public market for its securities. The Company accounts for its investment in the Manager using the equity method. On March 14, 2016, the Company formed AS Ajax E LLC, to hold an equity interest in a Delaware trust formed to own residential mortgage loans and residential real estate assets. AS Ajax E LLC owns a 5% equity interest in Ajax E Master Trust which holds a portfolio of RPLs. At the time of the original investment, the Company held a 24.2% interest in AS Ajax E LLC. In October 2016, additional capital contributions were made, and the Company’s ownership interest in AS Ajax E, was reduced to a lower percentage of the total. At December 31, 2016, the Company’s interest in AS Ajax E was approximately 16.5%. The Company accounts for its investment using the equity method. During the year ended December 31, 2016, the Company sold $78.2 million of RPLs for total proceeds of $78.1 million to Ajax E Master Trust. Additionally, the Company made a loan to AS Ajax E LLC in the amount of $4.0 million at LIBOR plus 5.22% to fund its interest in the purchase, which was subsequently repaid during the year, less $0.3 million which was converted to equity. The table below shows the net income, assets and liabilities for the Company’s unconsolidated affiliates at 100%, and at the Company’s share ($ in thousands): Net income, assets and liabilities at 100% Net income at 100% Three months ended March 31, 2017 2016 GA-E 2014-12 $ 184 $ 193 The Manager $ 241 $ 222 AS Ajax E LLC $ 95 $ - Assets and liabilities at 100% March 31, 2017 December 31, 2016 Assets Liabilities Assets Liabilities GA-E 2014-12 $ 6,326 $ - $ 6,259 $ - The Manager $ 5,126 $ 1,297 $ 4,846 $ 1,167 AS Ajax E LLC $ 7,951 $ 28 $ 7,964 $ 12 Net income, assets and liabilities at Company share Net income at Company share Three months ended March 31, 2017 2016 GA-E 2014-12 $ 75 $ 78 The Manager $ 48 $ 44 AS Ajax E LLC $ 16 $ - Assets and liabilities at Company share March 31, 2017 December 31, 2016 Assets Liabilities Assets Liabilities GA-E 2014-12 $ 2,562 $ - $ 2,535 $ - The Manager $ 1,015 $ 257 $ 960 $ 231 AS Ajax E LLC $ 1,312 $ 5 $ 1,314 $ 2 |
Commitments and contingencies
Commitments and contingencies | 3 Months Ended |
Mar. 31, 2017 | |
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 March 31, 2017, the Company had commitments to purchase, subject to due diligence, 1,085 RPLs secured by single-family residences with aggregate UPB of $209.2 million. The Company will only acquire loans that meet its acquisition criteria. See Note 13 – Subsequent events, for remaining open acquisitions as of the filing date. 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 March 31, 2017, 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 | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Note 8 — Debt Repurchase agreements The Company has entered into two repurchase facilities whereby the Company, through two wholly-owned Delaware trusts (the “Trusts”) acquires pools of mortgage loans which are then sold by the Trusts, as “Seller” to two separate counterparties, the “buyer” or “buyers.” Each facility has a ceiling of $200.0 million at any one time. Upon the time of the initial sale to the buyer, the Trust, with a simultaneous agreement, also agrees to repurchase the pools of mortgage loans from the buyer. Mortgage loans sold under these facilities carry interest calculated based on a spread to one-month LIBOR, which are fixed for the term of the borrowing. The purchase price that the Trust realizes upon the initial sale of the mortgage loans to the buyer can vary between 70% and 85% of the asset’s acquisition price, depending upon the facility being utilized and /or the quality of the underlying collateral. The obligations of a Trust to repurchase these mortgage loans at a future date are guaranteed by the Operating Partnership. The difference between the market value of the asset and the amount of the repurchase agreement is generally the amount of equity the Company has in the position and is intended to provide the buyer with some protection against fluctuations in the value of the collateral, and / or a failure by the Company to repurchase the asset and repay the borrowing at maturity. The Company has effective control over the assets subject to these transactions; therefore the Company’s repurchase transactions are accounted for as financing arrangements. The Servicer services these mortgage loans pursuant to the terms of a Servicing Agreement by and among the Servicer and each Buyer 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 buyers a limited guaranty of certain losses incurred by the buyers in connection with certain events and/or the Seller’s obligations under the mortgage loan purchase agreement, following the breach of certain covenants by the Seller, the occurrence of certain bad acts by the Seller, the occurrence of certain insolvency events of the Seller 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. Additionally, the Company has sold subordinate securities from its mortgage securitizations in repurchase transactions. The following table sets forth the details of the Company’s repurchase transactions and facilities ($ in thousands): March 31, 2017 Maturity Date Origination date Maximum Borrowing Capacity Amount Amount of Interest May 8, 2017 November 9, 2016 $ 14,986 $ 14,986 $ 21,409 3.35 % September 8, 2017 March 9, 2017 10,320 10,320 14,742 3.52 % September 29, 2017 March 30, 2017 10,762 10,762 15,375 3.53 % November 21, 2017 November 22, 2016 200,000 19,521 35,077 4.41 % July 12, 2019 July 15, 2016 200,000 167,208 220,708 3.48 % Totals $ 436,068 $ 222,797 $ 307,311 3.56 % December 31, 2016 Maturity Date Origination date Maximum Amount Amount of Interest March 9, 2017 September 9, 2016 $ 10,310 $ 10,309 $ 14,728 3.32 % March 30, 2017 September 30, 2016 10,797 10,797 15,424 3.34 % May 8, 2017 November 9, 2016 14,986 14,986 21,409 3.35 % November 21, 2017 November 22, 2016 200,000 21,302 36,044 4.20 % July 12, 2019 July 15, 2016 200,000 170,046 226,192 3.25 % Totals $ 436,093 $ 227,440 $ 313,797 3.35 % 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 consolidated Balance Sheets at March 31, 2017 and December 31, 2016 ($ in thousands). Gross amounts not offset in consolidated Balance Balance Sheet date Gross amount of Gross amount Net amount March 31, 2017 $ 222,797 $ 307,311 $ 84,514 December 31, 2016 $ 227,440 $ 313,797 $ 86,357 Secured borrowings From inception (January 30, 2014) to March 31, 2017, the Company has completed eight securitizations pursuant to Rule 144A under the Securities Act. The securitizations are structured as debt financings and not sales through a real estate investment conduit (“REMIC”), and the loans included in the securitizations remain on the Company’s consolidated Balance Sheet as the Company is the primary beneficiary of the securitization trusts, which are 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 trust certificates which have rights to the residual interests in the mortgages once the notes are repaid. For each of the Company’s six securitizations outstanding at March 31, 2017, 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 trusts 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 outstanding at March 31, 2017 at their respective cutoff dates: Issuing Trust/Issue Date Security Original Principal Interest Rate Ajax Mortgage Loan Trust 2015-A / May 2015 Class A notes due 2054 $35.6 million 3.88 % Class B-1 notes due 2054 (1) (3) $8.7 million 5.25 % Class B-2 notes due 2054 (1) (3) $8.7 million 5.25 % Trust certificates (2) $22.8 million – Deferred issuance costs $(0.8) million – Ajax Mortgage Loan Trust 2015-B / July 2015 Class A notes due 2060 $87.2 million 3.88 % Class B-1 notes due 2060 (1) (3) $15.9 million 5.25 % Class B-2 notes due 2060 (1) (3) $7.9 million 5.25 % Trust certificates (2) $47.5 million – Deferred issuance costs $(1.5) million – Ajax Mortgage Loan Trust 2015-C / November 2015 Class A notes due 2057 $82.0 million 3.88 % Class B-1 notes due 2057 (1) (3) $6.5 million 5.25 % Class B-2 notes due 2057 (1) (3) $6.5 million 5.25 % Trust certificates (2) $35.1 million – Deferred issuance costs $(2.7) million – Ajax Mortgage Loan Trust 2016-A / April 2016 Class A notes due 2064 $101.4 million 4.25 % Class B-1 notes due 2064 (1) (3) $7.9 million 5.25 % Class B-2 notes due 2064 (1) (3) $7.9 million 5.25 % Trust certificates (2) $41.3 million – Deferred issuance costs $(2.7) million – Ajax Mortgage Loan Trust 2016-B / August 2016 Class A notes due 2065 $84.4 million 4.00 % Class B-1 notes due 2065 (1) (3) $6.6 million 5.25 % Class B-2 notes due 2065 (1) (3) $6.6 million 5.25 % Trust certificates (2) $34.1 million – Deferred issuance costs $(1.6) million – Ajax Mortgage Loan Trust 2016-C/October 2016 Class A notes due 2057 $102.6 million 4.00 % Class B-1 notes due 2057 (1) (3) $7.9 million 5.25 % Class B-2 notes due 2057 (1) (3) $7.9 million 5.25 % Trust certificate (2) $39.4 million – Deferred issuance costs $(1.6) million – (1) The Class B notes are subordinate, sequential pay, fixed rate notes with Class B-2 notes subordinate to the Class B-1 notes. The Company has retained the Class B notes. (2) The trust certificates issued by the trusts and the beneficial ownership of the trusts are retained by Great Ajax Funding LLC as the depositor. As the holder of the trust certificates, the Company is entitled to receive any remaining amounts in the trusts after the Class A notes and Class B notes have been paid in full. (3) These securities are encumbered under a repurchase agreement. Servicing for the mortgage loans in the Company’s securitizations is provided by the Servicer at a servicing fee rate of 0.65% annually of outstanding UPB for RPLs at acquisition and 1.25% annually of outstanding UPB for loans that are non-performing at acquisition, and is paid monthly. The determination of RPL or NPL status is based on the status of the loan at acquisition and does not change regardless of the loan’s subsequent performance. The following table sets forth the status of the notes held by others at March 31, 2017, December 31, 2016, and the securitization cutoff date ($ in thousands): Balances at March 31, 2017 Balances at December 31, 2016 Original balances at securitization Class of Notes Carrying value Bond principal Carrying value of Bond principal Mortgage Bond principal b alance 2015-A 50,776 27,717 51,388 29,476 75,835 35,643 2015-B 101,818 72,325 104,111 75,258 158,498 87,174 2015-C 97,709 63,649 100,614 66,979 130,130 81,982 2016-A 116,298 94,368 118,189 96,158 158,485 101,431 2016-B 96,595 78,750 97,660 80,672 131,746 (1) 84,430 2016-C 122,880 97,488 126,681 101,209 157,808 102,575 $ 586,076 $ 434,297 $ 598,643 $ 449,752 $ 812,502 $ 493,235 (1) Includes $1.9 million of cash collateral. The Company’s obligations under its secured borrowings are not fixed, and the payments on these borrowings are predicated upon cash flows received on the underlying mortgage loans. |
Related party transactions
Related party transactions | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related party transactions | Note 9 — Related party transactions The Company’s consolidated Statements of Income included the following significant related party transactions ($ in thousands): Three months ended March 31, 2017 Three months ended March 31, 2016 Amount Counterparty Consolidated Amount Counterparty Consolidated Loan servicing fees $ 1,904 Gregory Related party $ 1,403 Gregory Related party expense – loan servicing fees Management fee 1,072 Thetis Related party 906 Thetis Related party expense – management fee Due diligence and related loan acquisition costs 37 Gregory Loan transaction expense 26 Gregory Loan transaction expense Expense reimbursements 16 Great Ajax FS Other expense - Great Ajax FS Other expense Expense reimbursements 3 Gregory Other expense - Gregory Other expense The Company’s consolidated Balance Sheets included the following significant related party balances ($ in thousands): March 31, 2017 December 31, 2016 Amount Counterparty Consolidated Balance Amount Counterparty Consolidated Balance Receivable from Servicer $ 13,695 Gregory Receivable from servicer $ 12,481 Gregory Receivable from servicer Investment in subordinated debt securities 6,255 Oileus Residential Loan Trust Investment in securities 6,323 Oileus Residential Loan Trust Investment in securities Management fee payable 750 Thetis Management fee payable 750 Thetis Management fee payable Servicing fees payable 232 Gregory Accrued expenses and other liabilities 195 Gregory Accrued expenses and other liabilities Additionally, Gregory is the holder of record for one loan each in Georgia and Illinois because the Company does not hold the necessary licenses to hold those assets directly in such states. Gregory sells a 95% participation interest in the assets to the Company in exchange for 95% of the purchase price for the assets to be purchased by Gregory, which pays for the balance of such assets. During October 2016, the Company acquired 370 RPLs with aggregate UPB of $69.9 million in three transactions from three related party trusts. These loans, which have been serviced by Gregory, have made at least 24 payments of scheduled principal and interest in the last 24 months and have a weighted average coupon of 5.84%. The loans were acquired at 93% of UPB and the estimated market value of the underlying collateral was $92.2 million. In October 2016, the Company purchased subordinate debt securities for $6.3 million from Oileus Residential Loan Trust, a related party. The notes have a stated final maturity of October 25, 2056. During the three months ended March 31, 2017, the Company made a decision to transfer these notes to available-for-sale status in anticipation of reinvesting the proceeds from any sale into additional mortgage loans. Accordingly, the carrying amount of $6.3 million was transferred from held-to-maturity to available-for-sale during the quarter. At March 31, 2017, these securities had an amortized cost basis of $6.4 million. For the three months ended March 31, 2017, the Company recorded an unrealized loss of $0.1 million which is offset reflected in the Company’s consolidated Statements of Comprehensive Income. Management Agreement The Company is a party to the Management Agreement with the Manager, which expires on July 8, 2029. 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 (other than its Chief Financial Officer) and does not expect to have any other employees in the foreseeable future. Each of the Company’s executive officers is an employee or officer, or both, of the Manager or the 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: the sum of (i) the net proceeds from any issuances of common stock or other equity securities, including debt that is convertible into equity of the company, 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 consolidated 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. The initial $1.0 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 $1.0 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. The quantity of common stock will be determined using the higher of the most recently reported book value or the average of the closing prices of the Company’s common stock on the NYSE on the five business days after the date on which the most recent regular quarterly dividend to holders of the Company’s 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. The Manager is also entitled to an incentive fee, payable quarterly and calculated in arrears, of 20% of the amount by which total dividends on common stock and distributions on OP units exceeds 8% of book value. However, no incentive fee will be payable to the Manager with respect to any calendar quarter unless the Company’s cumulative core earnings, defined as U.S. GAAP net income or loss less non-cash equity compensation, unrealized gains or losses from mark-to-market adjustments, one-time adjustments to earnings resulting from changes to U.S. GAAP, and certain other non-cash items, is greater than zero for the most recently completed eight calendar quarters. 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. To date, no incentive fees have been paid to the Manager. 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 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, as amended (the “Investment Company Act”) (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. Servicing Agreement The Company is also a party to the Servicing Agreement, expiring July 8, 2029, 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 current 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 the Servicer 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 Servicing 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 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 also granted to the Manager a substantially identical non-exclusive, non-transferable, non-sublicensable, royalty-free license use of the name “Thetis.” |
Stock-based payments and direct
Stock-based payments and director fees | 3 Months Ended |
Mar. 31, 2017 | |
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 its common stock on the NYSE on the five business days after the date on which the most recent regular quarterly dividend to holders of its common stock is paid. The Company paid the Manager a base management fee for the three months ended March 31, 2017 of $1.1 million, of which the Company paid $0.3 million, in 21,075 shares, of its common stock. The shares issued to the Manager are restricted securities subject to transfer restrictions and were issued in private placement transactions, with 21,075 shares still issuable at March 31, 2017. See Note 9 — Related party transactions. In addition, for the three months ended March 31, 2017, each of the Company’s independent directors receives an annual retainer of $75,000, 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. Previously, directors received an annual retainer of $50,000 payable quarterly, half of which was paid in shares of the Company’s common stock and half in cash. The following table sets forth the Company’s stock-based management fees and independent director fees ($ in thousands except share amounts). Management fees and director fees For the three months ended For the three months ended March 31, 2017 March 31, 2016 Number of Amount of expense recognized (1) Number of Amount of expense recognized (1) Management fees 21,075 $ 322 14,916 $ 227 Independent director fees 2,456 38 1,648 25 23,531 $ 360 16,564 $ 252 Restricted stock grants Each independent director is issued a restricted stock award of 2,000 shares of the Company’s common stock subject to a one-year vesting period. On August 17, 2016, the Company granted 153,000 shares of restricted stock to employees of its Manager and Servicer. The shares vest over three years, with one third of the shares vesting on each of the first, second and third anniversaries of the grant date. The shares may not be sold until the third anniversary of the grant date. Grants of restricted stock to officers of the Company use grant date fair value of the stock as the basis for measuring the cost of the grant. The cost of grants of restricted stock to employees of the Company’s affiliates is determined using the stock price as of the date at which the counterparty's performance is complete. The following table sets forth the activity in the Company’s restricted stock plan ($ in thousands, except share and per share amounts): Total grants Current period activity Non-vested shares at Fully-vested shares Three months Total Total Shares Total Grant Shares Per Shares Weighted Directors’ Grants (1) 10,000 $ 146 - $ - $ 7 2,000 $ 13.79 8,000 $ 13.79 Employee and Service Provider Grant (2) 153,000 2,042 - - 169 153,000 13.50 - - Totals 163,000 $ 2,188 - $ - $ 176 155,000 $ 13.50 8,000 $ 13.79 (1) Vesting period is one year from grant date. Weighted average remaining life of grant at March 31, 2017 is 0.3 years. (2) Vesting is ratable over three-year period from grant date. Weighted average remaining life of grant at March 31, 2017 is 2.4 years. Total grants Current period activity Non-vested shares at Fully-vested shares Three months Total Total Shares Total Grant Shares Per Shares Weighted Directors’ Grants (1) 8,000 $ 119 2,000 $ 29 $ 2 2,000 $ 14.25 6,000 $ 15.00 Employee and Service Provider Grant - - - - - - - - - Totals 8,000 $ 119 2,000 $ 29 $ 2 2,000 $ 14.25 6,000 $ 15.00 (1) Vesting period is one year from grant date. |
Income taxes
Income taxes | 3 Months Ended |
Mar. 31, 2017 | |
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 two TRS entities, GA-TRS and GAJX Real Estate LLC, which are subject to U.S. federal, state and local income taxes on their taxable income. For the three months ended March 31, 2017, the Company’s consolidated taxable income was $7.1 million; and a provision for income taxes of $1,000 was recorded for the three-month period. For the three months ended March 31, 2016, the Company’s consolidated taxable income was $3.6 million; and a benefit for income taxes of $3,000 was recorded for the three-month period. The Company recognized no deferred income tax assets or liabilities on its consolidated Balance Sheet at March 31, 2017 or December 31, 2016. The Company also recorded no interest or penalties for either of the three-month periods ended March 31, 2017 or 2016. |
Earnings per share
Earnings per share | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings per share | Note 12 — Earnings per share The following table sets forth the components of basic and diluted earnings per share ($ in thousands, except share and per share amounts): Three months ended March 31, 2017 Three months ended March 31, 2016 Income Shares Per Share Income Shares Per Share Basic EPS Consolidated net income attributable to common stockholders $ 8,409 17,976,710 $ 7,651 15,306,519 Allocation of earnings to participating restricted shares (88 ) - (14 ) - Consolidated net income attributable to unrestricted common stockholders $ 8,321 17,976,710 $ 0.46 $ 7,637 15,306,519 $ 0.50 Effect of dilutive securities Operating partnership units 289 624,106 312 624,106 Restricted stock grants and Manager and director fee shares 88 190,415 14 28,577 Diluted EPS Consolidated net income attributable to common stockholders and dilutive securities $ 8,698 18,791,231 $ 0.46 $ 7,963 15,959,202 $ 0.50 |
Subsequent events
Subsequent events | 3 Months Ended |
Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent events | Note 13 — Subsequent events Loan Acquisitions During April 2017, the Company acquired 513 RPLs with an aggregate UPB of $98.8 million in five transactions from five different sellers. The loans were acquired at 84.4% of UPB and the estimated market value of the underlying collateral is $148.6 million. The purchase price equaled 56.1% of the estimated market value of the underlying collateral. The Company also originated one SBC loan with UPB of $0.6 million at 97.2% of UPB. Its investment equaled 72.8% of the underlying collateral value of $0.8 million. Additionally, the Company has agreed to acquire, subject to due diligence, 808 RPLs with aggregate UPB of $164.4 million in twelve transactions from eight different sellers. The purchase price equals 87.7% of UPB and 60.0% of the estimated market value of the underlying collateral of $240.2 million. Any loans the Company purchases must meet its acquisition criteria, therefore the Company has not entered into a definitive agreement with respect to these loans, and there is no assurance that it will enter into a definitive agreement relating to these loans or, if such an agreement is executed, that it will actually close the acquisitions or that the terms will not change. Dividend declaration On April 19, 2017 the Company’s Board of Directors declared a dividend of $0.28 per share, to be paid on May 30, 2017 to stockholders of record as of May 16, 2017. Convertible debt offering On April 25, 2017, the Company completed the public offer and sale of $87.5 million aggregate principal amount of its 7.25% Convertible Senior Notes due 2024. The notes bear interest at a rate of 7.25% per annum, payable quarterly. The notes will mature on April 30, 2024, unless earlier converted, redeemed or repurchased. The conversion rate will equal 1.6267 shares of common stock per $25.00 principal amount of notes (equivalent to a conversion price of approximately $15.37 per share of common stock), a 17.5% premium over the Company’s stock price on the issue date. The Company intends to use the net proceeds to acquire additional mortgage loans and mortgage-related assets consistent with its investment strategy and for general corporate purposes. Management fees On May 2, 2017 the Company issued 21,075 shares of its common stock to the Manager in payment of the stock-based portion of the management fee due for the first quarter of 2017 in a private transaction. The management fee expense associated with these shares was recorded as an expense in the first quarter of 2017. Directors’ retainer On May 2, 2017 the Company issued each of its independent directors 614 shares of its common stock in payment of half of their quarterly director fees for the first quarter of 2017. |
Summary of significant accoun21
Summary of significant accounting policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
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 bid price for mortgage loans, the Company uses a proprietary discounted cash flow valuation model to project expected cash flows, and consider alternate loan resolution probabilities, including liquidation or conversion to REO. Observable inputs to the model include 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. |
Loans acquired with deterioration in credit quality | Loans acquired with deterioration in credit quality The loans acquired by the Company have generally suffered some credit deterioration subsequent to origination. As a result, the Company is required to account for the mortgage loans pursuant to ASC 310-30, Accounting for Loans with Deterioration in Credit Quality . Under ASC 310-30, acquired loans may be aggregated and accounted for as a pool of loans if the loans 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. RPLs have been determined to have common risk characteristics and are accounted for as a single loan pool for loans acquired within each three-month calendar quarter. Similarly, NPLs 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 calendar quarter. Excluded from the aggregate pools are loans that pay in full subsequent to the acquisition closing date but prior to pooling. Any gain on these loans is recognized as Interest income in the period the loan pays in full. The Company’s accounting for loans under ASC 310-30 gives rise to an accretable yield and a non-accretable amount. The excess of all undiscounted cash flows expected to be collected at acquisition over the initial investment in the loans is the accretable yield. Cash flows expected at acquisition include all cash flows directly related to the acquired loan, including those expected from the underlying collateral. The Company recognizes the accretable yield as Interest income on a prospective level yield basis over the life of the pool. The excess of a loan’s contractually required payments over the amount of cash flows expected at the acquisition is the non-accretable amount. The Company’s expectation of the amount of undiscounted cash flows expected to be collected is evaluated at the end of each calendar quarter. If the Company expects to collect greater cash flows over the life of the pool, the accretable yield amount increases and the expected yield to maturity is adjusted on a prospective basis. A provision for loan losses may be established when it is probable the Company will not collect all amounts previously estimated to be collectible. Management assesses the credit quality of the portfolio and the adequacy of loan loss reserves on a quarterly basis, or more frequently as necessary. Significant judgment is required in this analysis. Depending on the expected recovery of its investment, the Company considers the estimated net recoverable value of the loan pools as well as other factors, such as the fair value of the underlying collateral. When a loan pool is determined to be impaired, the amount of loss accrual is calculated by comparing the recorded investment to the value determined by discounting the expected future cash flows at the loan pool’s effective interest rate or the fair value of the underlying collateral. Because these determinations are based upon projections of future economic events, which are inherently subjective, the amounts ultimately realized may differ materially from the carrying value as of the reporting date. Borrower payments on the Company’s mortgage loans are classified as principal, interest, payments of fees or escrow deposits. Amounts applied as interest on the borrower account are similarly classified as interest for accounting purposes and are classified as operating cash flows in the Company’s consolidated Statement of Cash Flows. Amounts applied as principal on the borrower account are similarly classified as principal for accounting purposes and are classified as investing cash flows in the consolidated Statement of Cash Flows. Amounts received as payments of fees are recorded in Other income and classified as operating cash flows in the consolidated Statement of Cash Flows. Escrow deposits are recorded on our Servicer’s Balance Sheet and do not impact the Company’s cash flow. |
Loans acquired or originated that have not experienced a deterioration in credit quality | Loans acquired or originated that have not experienced a deterioration in credit quality While the Company generally acquires loans that have experienced deterioration in credit quality, it does, from time to time, acquire or originate loans that have not missed a scheduled payment and have not experienced a deterioration in credit quality. The Company recognizes any related loan discount and deferred expenses pursuant to ASC 310-20 by amortizing these amounts over the 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. Loans are tested quarterly for impairment and impairment reserves are recorded to the extent the net realizable value of the underlying collateral falls below net book value. If necessary, an 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. |
Real estate | Real estate The Company acquires REO properties when it forecloses on the borrower and takes title to the underlying property or the borrower surrenders the deed in lieu of foreclosure. Property is recorded at cost if purchased, or at the present value of future cash flows 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, net realizable value (fair market value less expected selling costs). Fair market value is determined based on appraisals, broker price opinions (“BPOs”), or other market indicators of fair 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. Property is held for investment as rental property if the cash flows from use as a rental exceed the present value of expected cash flows from a sale. Depreciation is provided for using the straight-line method over the estimated useful lives of the assets of three to 27.5 years. The Company performs an impairment analysis for all rental property 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. The 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 and other market indicators may be available and used in addition to BPOs. The Company may perform property renovations to maximize the value of the property for its rental strategy. Such expenditures are part of its 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. Expenditures for ordinary maintenance and repairs are charged to expense as incurred. |
Secured borrowings | Secured borrowings The Company, through securitization trusts, issues callable debt secured by its mortgage loans in the ordinary course of business. The secured borrowings are structured as debt financings, and the loans remain on the Company’s consolidated Balance Sheet as the Company is the primary beneficiary of the securitization trusts which are variable interest entities (“VIEs”). These secured borrowing 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 creditors do not have recourse to the primary beneficiary. Coupon interest on the debt is recognized using the accrual method of accounting. Deferred issuance costs, including original issue discount and debt issuance costs, are carried on the Company’s consolidated Balance Sheets as a deduction from Secured borrowings, and are amortized on an effective yield basis based on the underlying cash flow of the mortgage loans. The Company assumes the debt will be called at the specified call date for purposes of amortizing discount and issuance costs because the Company believes it will have the intent and ability to call the debt on the call date. Changes in the actual or projected underlying cash flows are reflected in the timing and amount of deferred issuance cost amortization. |
Repurchase facilities | Repurchase facilities The Company enters into repurchase financing facilities under which it nominally sells assets to a counterparty and simultaneously enters into an agreement to repurchase the sold assets at a price equal to the sold amount plus an interest factor. Despite being legally structured as sales and subsequent repurchases, repurchase transactions are generally accounted for as debt secured by the underlying assets. At the maturity of a repurchase financing, unless the repurchase financing is renewed, the Company is required to repay the borrowing including any accrued interest and concurrently receives back its pledged collateral from the lender. The repurchase financings are treated as collateralized financing transactions; pledged assets are recorded as assets in the Company’s consolidated Balance Sheets, and debt is recognized at the contractual amount. Interest is recorded at the contractual amount on an accrual basis. Costs associated with the set-up of a repurchasing contract are recorded as deferred expense at inception and amortized over the contractual life of the agreement. Any draw fees associated with individual transactions and any facility fees assessed on the amounts outstanding are recorded as deferred expense when incurred and amortized over the contractual life of the related borrowing. |
Management fee and expense reimbursement | Management fee and expense reimbursement The Company entered into an amended and restated management agreement with the Manager on October 27, 2015, which had an initial 15-year term (the “Management Agreement”). 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 Yo LLC (“Aspen”) affiliates, provides the Company with a management team and necessary administrative and support personnel. The Company does not currently have any employees that it pays directly and does not expect to have any employees that it pays directly in the foreseeable future. Each of the Company’s executive officers is an employee or officer, or both, of the Manager or the Servicer. Under the Management agreement, 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 consolidated Stockholders’ equity at quarter end. See Note 9 — Related party transactions. |
Servicing fees | Servicing fees On July 8, 2014, the Company entered into a 15-year Servicing Agreement (the “Servicing Agreement”) with Gregory (the “Servicer”). Under the Servicing Agreement by and between the Company and the Servicer, the Servicer receives servicing fees of 0.65% annually of the Unpaid Principal Balance (UPB) for loans that are re-performing at acquisition and 1.25% annually of UPB for loans that are non-performing at acquisition. Additionally, the Company pays servicing fee of 0.65% annually on UPB for any originated SBC loans. Servicing fees are paid monthly. The total fees incurred by the Company for these services depend upon the UPB and type of mortgage loans that the Servicer services pursuant to the terms of the servicing agreement. The fees do not change if a re-performing loan becomes non-performing or vice versa. Servicing fees for the Company’s real property assets are the greater of (i) the servicing fee applicable to the underlying mortgage loan prior to foreclosure, or (ii) 1.00% annually of the fair market value of the REO as reasonably determined by the Manager or 1.00% annually of the purchase price of any REO otherwise purchased by the Company. The Servicer 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 the Servicer 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. |
Stock-based payments | Stock-based payments A portion of the management fee is payable 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 of 1933, as amended (the “Securities Act”). The base management fee and Manager’s incentive fee to be payable in cash and shares of the Company’s common stock are retroactive to July 1, 2015. 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 New York Stock Exchange (“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 recognized as an expense in the quarter incurred and recorded in equity at quarter end. Under the Company’s 2014 Director Equity Plan (the “Director Plan”), the Company may make stock-based awards to its directors. 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 units (“LTIP Units”) from the Operating Partnership, available for issuance under the Director Plan is 90,000 shares. The Company has issued to each of its independent directors restricted stock awards of 2,000 shares of its common stock upon joining the Board of Directors, which are subject to a one-year vesting period. In addition, each of the Company’s independent directors receives an annual retainer of $75,000, an increase of $25,000 over the annual retainer paid to the Company’s independent directors through December 31, 2016. The retainer is payable quarterly, half in shares of the Company’s common stock 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. On June 7, 2016, the Company’s stockholders approved the 2016 Equity Incentive Plan (the “2016 Plan”) to attract and retain non-employee directors, executive officers, key employees and service providers, including officers and employees of the Company’s affiliates. The 2016 Plan authorized the issuance of up to 5% of the Company’s outstanding shares from time to time on a fully diluted basis (assuming, if applicable, the exercise of all outstanding options and the conversion of all warrants and convertible securities, including OP Units and LTIP Units, into shares of common stock). Grants of restricted stock to officers of the Company use grant date fair value of the stock as the basis for measuring the cost of the grant. The cost of grants of restricted stock to employees of the Company’s affiliates is determined using the stock price as of the date at which the counterparty's performance is complete. Forfeitures are accounted for in the period in which they occur. The shares vest over three years, with one third of the shares vesting on each of the first, second and third anniversaries of the grant date. The shares may not be sold until the third anniversary of the grant date. |
Directors' fees | Directors’ fees The expense related to directors’ fees is accrued, and the portion payable in common stock is reflected in consolidated Stockholders’ equity in the period in which it is incurred. |
Variable interest entities | Variable interest entities In the normal course of business, the Company enters into various types of transactions with special purpose entities, which have primarily consisted of trusts established for the Company’s secured borrowings (See “Secured Borrowings” above and Note 8 to the consolidated financial statements). Additionally, from time to time, the Company may enter into joint ventures with unrelated entities. The Company evaluates each transaction and its resulting beneficial interest to determine if the entity formed pursuant to the transaction should be classified as a VIE. If an entity created in a transaction meets the definition of a VIE and the Company determines that it or a consolidated subsidiary is the primary beneficiary, the Company will include the entity in its consolidated financial statements. |
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. |
Cash held in trust | Cash held in trust Cash held in trust consists of cash balances legally due to lenders, and is segregated from the Company’s other cash deposits. Cash held in trust is not available to the Company for any purposes other than the settlement of existing obligations to the lender. |
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. |
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 that 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. 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 Company reviews its discount rates periodically to ensure the assumptions used to calculate fair value are in line with market conditions. The Company calculates the fair value for the senior debt on its consolidated Balance Sheets from securitization trusts by using the Company’s proprietary pricing model to estimate the cash flows expected to be generated from the underlying collateral with the discount rate used in the present value calculation representing an estimate of the average rate for debt instruments with similar durations and risk factors. |
Income taxes | Income taxes The Company 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. In addition, notwithstanding the Company’s qualification as a REIT, it may also have to pay certain state and local income taxes, because not all states and localities treat REITs in the same manner that they are treated for U.S. federal income tax purposes. GA-TRS, GAJX Real Estate LLC, and any other TRS that the Company forms will be subject to U.S. federal and state income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences or benefits attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted rates expected to apply to taxable income in the years in which management expects those temporary differences to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period in which the change occurs. Subject to the Company’s judgment, it reduces a deferred tax asset by a valuation allowance if it is “more-likely-than-not” that some or all of the deferred tax asset will not be realized. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in evaluating tax positions, and the Company recognizes tax benefits only if it is more likely than not that a tax position will be sustained upon examination by the appropriate taxing authority. 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 furnishes annually to each stockholder a statement setting forth distributions paid during the preceding year and their U.S. federal income tax treatment. |
Investment in debt securities | Investment in debt securities The Company’s investment in debt securities consists of a $6.3 million investment in subordinated debt securities issued by a related party trust. The notes have a stated final maturity of October 25, 2056. During the three months ended March 31, 2017, the Company made a decision to transfer these notes to available-for-sale status in anticipation of reinvesting the proceeds from any sale into additional mortgage loans. Accordingly, the carrying amount of $6.3 million was transferred from held-to-maturity to available-for-sale during the current quarter. The notes are marked to current market value with an offset reflected in the Company’s consolidated Statements of Comprehensive Income. |
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. Although the Company has elected to take advantage of the benefits of this extended transition period, which expires on December 31, 2018, the Company has elected to implement all new accounting standards on the dates such standards would normally apply to all publicly traded entities. |
Reclassifications | Reclassifications Certain amounts in the Company’s 2016 consolidated financial statements have been reclassified to conform to the current period presentation. These reclassifications had no effect on previously reported net income or equity. |
Recently adopted accounting standards | Recently adopted accounting standards In March 2016, the FASB issued ASU 2016-07, Investments – Equity Method and Joint Ventures, The Company adopted ASU 2016-07 during the quarter ended March 31, 2017, with no effect on its consolidated assets or liabilities, or its consolidated net income or equity In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation In October 2016, the FASB issued ASU No. 2016-17, Consolidation – Interests Held through Related Parties That Are Under Common Control |
Recently issued accounting standards | Recently issued accounting standards In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers . In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments |
Mortgage loans (Tables)
Mortgage loans (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Mortgage Loans [Abstract] | |
Schedule of contractually required payments and estimated cash flows expected to be collected | Three months ended March 31, 2017 Three months ended March 31, 2016 Re-performing Non-performing Re-performing Non-performing Contractually required principal and interest $ 4,856 $ - $ 82,179 $ - Non-accretable amount (888 ) - (29,148 ) - Expected cash flows to be collected 3,968 - 53,031 - Accretable yield (824 ) - (15,853 ) - Fair value at acquisition $ 3,144 $ - $ 37,178 $ - |
Schedule of accretable yield | Three months ended March 31, 2017 Three months ended March 31, 2016 Re-performing Non-performing Re-performing Non-performing Balance at beginning of period $ 239,858 $ 12,065 $ 136,455 $ 18,425 Accretable yield additions 824 - 15,853 - Reclassification from (to) non-accretable amount, net 22,323 (662 ) - - Accretion (19,153 ) (1,335 ) (13,540 ) (2,274 ) Balance at end of period $ 243,852 $ 10,068 $ 138,768 $ 16,151 |
Schedule of carrying value of mortgage loans and related UPB by delinquency status | March 31, 2017 December 31, 2016 Number of Carrying Unpaid Number of Carrying Unpaid Current 2,549 $ 463,967 $ 561,219 2,306 $ 419,643 $ 510,058 30 635 109,692 131,245 797 141,228 173,482 60 401 70,307 85,610 482 84,498 101,727 90 821 134,498 166,430 911 143,061 179,718 Foreclosure 391 78,292 98,842 414 82,157 105,208 Mortgage loans 4,797 $ 856,756 $ 1,043,346 4,910 $ 870,587 $ 1,070,193 |
Real estate assets (Tables)
Real estate assets (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Real Estate [Abstract] | |
Schedule of activity in the Company's carrying value held-for-sale | Property Held-for-sale Three months ended March 31, 2017 March 31, 2016 Count Amount Count Amount Balance at beginning of period 149 $ 23,882 73 $ 10,333 Transfers from mortgage loans 49 8,007 35 4,832 Adjustments to record at lower of cost or fair value - (309 ) - (45 ) Disposals (32 ) (4,062 ) (19 ) (1,814 ) Improvements - - - 232 Transferred from held-for-sale to rental (1 ) (179 ) (2 ) (158 ) Balance at end of period 165 $ 27,339 87 $ 13,380 |
Fair value (Tables)
Fair value (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of financial assets and liabilities | Level 1 Level 2 Level 3 March 31, 2017 Carrying Quoted prices in Observable inputs Unobservable Not recognized on consolidated Balance Sheet at fair value (assets) Mortgage loans $ 856,756 $ - $ - $ 929,279 Not recognized on consolidated Balance Sheet at fair value (liabilities) Secured borrowings, net $ 428,168 $ - $ - $ 422,899 Borrowings under repurchase agreement $ 222,797 $ - $ 222,797 $ - Level 1 Level 2 Level 3 December 31, 2016 Carrying Quoted prices in Observable inputs Unobservable Not recognized on consolidated Balance Sheet at fair value (assets) Mortgage loans $ 870,587 $ - $ - $ 930,226 Not recognized on consolidated Balance Sheet at fair value (liabilities) Secured borrowings, net $ 442,670 $ - $ - $ 436,623 Borrowings under repurchase agreement $ 227,440 $ - $ 227,440 $ - |
Unconsolidated affiliates (Tabl
Unconsolidated affiliates (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | |
Schedule of assets and liabilities for the Company's unconsolidated affiliates at 100%, and at the Company's share | Net income, assets and liabilities at 100% Net income at 100% Three months ended March 31, 2017 2016 GA-E 2014-12 $ 184 $ 193 The Manager $ 241 $ 222 AS Ajax E LLC $ 95 $ - Assets and liabilities at 100% March 31, 2017 December 31, 2016 Assets Liabilities Assets Liabilities GA-E 2014-12 $ 6,326 $ - $ 6,259 $ - The Manager $ 5,126 $ 1,297 $ 4,846 $ 1,167 AS Ajax E LLC $ 7,951 $ 28 $ 7,964 $ 12 Net income, assets and liabilities at Company share Net income at Company share Three months ended March 31, 2017 2016 GA-E 2014-12 $ 75 $ 78 The Manager $ 48 $ 44 AS Ajax E LLC $ 16 $ - Assets and liabilities at Company share March 31, 2017 December 31, 2016 Assets Liabilities Assets Liabilities GA-E 2014-12 $ 2,562 $ - $ 2,535 $ - The Manager $ 1,015 $ 257 $ 960 $ 231 AS Ajax E LLC $ 1,312 $ 5 $ 1,314 $ 2 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of details of repurchase agreement | March 31, 2017 Maturity Date Origination date Maximum Borrowing Capacity Amount Amount of Interest May 8, 2017 November 9, 2016 $ 14,986 $ 14,986 $ 21,409 3.35 % September 8, 2017 March 9, 2017 10,320 10,320 14,742 3.52 % September 29, 2017 March 30, 2017 10,762 10,762 15,375 3.53 % November 21, 2017 November 22, 2016 200,000 19,521 35,077 4.41 % July 12, 2019 July 15, 2016 200,000 167,208 220,708 3.48 % Totals $ 436,068 $ 222,797 $ 307,311 3.56 % December 31, 2016 Maturity Date Origination date Maximum Amount Amount of Interest March 9, 2017 September 9, 2016 $ 10,310 $ 10,309 $ 14,728 3.32 % March 30, 2017 September 30, 2016 10,797 10,797 15,424 3.34 % May 8, 2017 November 9, 2016 14,986 14,986 21,409 3.35 % November 21, 2017 November 22, 2016 200,000 21,302 36,044 4.20 % July 12, 2019 July 15, 2016 200,000 170,046 226,192 3.25 % Totals $ 436,093 $ 227,440 $ 313,797 3.35 % |
Schedule of amount outstanding on repurchase transactions and carrying value collateral | Gross amounts not offset in consolidated Balance Balance Sheet date Gross amount of Gross amount Net amount March 31, 2017 $ 222,797 $ 307,311 $ 84,514 December 31, 2016 $ 227,440 $ 313,797 $ 86,357 |
Schedule of securitization of notes | Issuing Trust/Issue Date Security Original Principal Interest Rate Ajax Mortgage Loan Trust 2015-A / May 2015 Class A notes due 2054 $35.6 million 3.88 % Class B-1 notes due 2054 (1) (3) $8.7 million 5.25 % Class B-2 notes due 2054 (1) (3) $8.7 million 5.25 % Trust certificates (2) $22.8 million – Deferred issuance costs $(0.8) million – Ajax Mortgage Loan Trust 2015-B / July 2015 Class A notes due 2060 $87.2 million 3.88 % Class B-1 notes due 2060 (1) (3) $15.9 million 5.25 % Class B-2 notes due 2060 (1) (3) $7.9 million 5.25 % Trust certificates (2) $47.5 million – Deferred issuance costs $(1.5) million – Ajax Mortgage Loan Trust 2015-C / November 2015 Class A notes due 2057 $82.0 million 3.88 % Class B-1 notes due 2057 (1) (3) $6.5 million 5.25 % Class B-2 notes due 2057 (1) (3) $6.5 million 5.25 % Trust certificates (2) $35.1 million – Deferred issuance costs $(2.7) million – Ajax Mortgage Loan Trust 2016-A / April 2016 Class A notes due 2064 $101.4 million 4.25 % Class B-1 notes due 2064 (1) (3) $7.9 million 5.25 % Class B-2 notes due 2064 (1) (3) $7.9 million 5.25 % Trust certificates (2) $41.3 million – Deferred issuance costs $(2.7) million – Ajax Mortgage Loan Trust 2016-B / August 2016 Class A notes due 2065 $84.4 million 4.00 % Class B-1 notes due 2065 (1) (3) $6.6 million 5.25 % Class B-2 notes due 2065 (1) (3) $6.6 million 5.25 % Trust certificates (2) $34.1 million – Deferred issuance costs $(1.6) million – Ajax Mortgage Loan Trust 2016-C/October 2016 Class A notes due 2057 $102.6 million 4.00 % Class B-1 notes due 2057 (1) (3) $7.9 million 5.25 % Class B-2 notes due 2057 (1) (3) $7.9 million 5.25 % Trust certificate (2) $39.4 million – Deferred issuance costs $(1.6) million – (1) 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. (2) The trust certificates issued by the trusts and the beneficial ownership of the trusts are retained by Great Ajax Funding LLC as the depositor. As the holder of the trust certificates, the Company is entitled to receive any remaining amounts in the trusts after the Class A notes and Class B notes have been paid in full. (3) These securities are encumbered under a repurchase agreement. |
Schedule of status of mortgage loans | Balances at March 31, 2017 Balances at December 31, 2016 Original balances at securitization Class of Notes Carrying value Bond principal Carrying value of Bond principal Mortgage Bond principal b alance 2015-A 50,776 27,717 51,388 29,476 75,835 35,643 2015-B 101,818 72,325 104,111 75,258 158,498 87,174 2015-C 97,709 63,649 100,614 66,979 130,130 81,982 2016-A 116,298 94,368 118,189 96,158 158,485 101,431 2016-B 96,595 78,750 97,660 80,672 131,746 (1) 84,430 2016-C 122,880 97,488 126,681 101,209 157,808 102,575 $ 586,076 $ 434,297 $ 598,643 $ 449,752 $ 812,502 $ 493,235 (1) Includes $1.9 million of cash collateral. |
Related party transactions (Tab
Related party transactions (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Schedule of consolidated statement of income | Three months ended March 31, 2017 Three months ended March 31, 2016 Amount Counterparty Consolidated Amount Counterparty Consolidated Loan servicing fees $ 1,904 Gregory Related party $ 1,403 Gregory Related party expense – loan servicing fees Management fee 1,072 Thetis Related party 906 Thetis Related party expense – management fee Due diligence and related loan acquisition costs 37 Gregory Loan transaction expense 26 Gregory Loan transaction expense Expense reimbursements 16 Great Ajax FS Other expense - Great Ajax FS Other expense Expense reimbursements 3 Gregory Other expense - Gregory Other expense |
schedule of related party transactions for consolidated balance sheet | March 31, 2017 December 31, 2016 Amount Counterparty Consolidated Balance Amount Counterparty Consolidated Balance Receivable from Servicer $ 13,695 Gregory Receivable from servicer $ 12,481 Gregory Receivable from servicer Investment in subordinated debt securities 6,255 Oileus Residential Loan Trust Investment in securities 6,323 Oileus Residential Loan Trust Investment in securities Management fee payable 750 Thetis Management fee payable 750 Thetis Management fee payable Servicing fees payable 232 Gregory Accrued expenses and other liabilities 195 Gregory Accrued expenses and other liabilities |
Stock-based payments and dire28
Stock-based payments and director fees (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of management fees and director fees | For the three months ended For the three months ended March 31, 2017 March 31, 2016 Number of Amount of expense recognized (1) Number of Amount of expense recognized (1) Management fees 21,075 $ 322 14,916 $ 227 Independent director fees 2,456 38 1,648 25 23,531 $ 360 16,564 $ 252 |
Schedule of activity in restricted stock | Total grants Current period activity Non-vested shares at Fully-vested shares Three months Total Total Shares Total Grant Shares Per Shares Weighted Directors’ Grants (1) 10,000 $ 146 - $ - $ 7 2,000 $ 13.79 8,000 $ 13.79 Employee and Service Provider Grant (2) 153,000 2,042 - - 169 153,000 13.50 - - Totals 163,000 $ 2,188 - $ - $ 176 155,000 $ 13.50 8,000 $ 13.79 (1) Vesting period is one year from grant date. Weighted average remaining life of grant at March 31, 2017 is 0.3 years. (2) Vesting is ratable over three-year period from grant date. Weighted average remaining life of grant at March 31, 2017 is 2.4 years. Total grants Current period activity Non-vested shares at Fully-vested shares Three months Total Total Shares Total Grant Shares Per Shares Weighted Directors’ Grants (1) 8,000 $ 119 2,000 $ 29 $ 2 2,000 $ 14.25 6,000 $ 15.00 Employee and Service Provider Grant - - - - - - - - - Totals 8,000 $ 119 2,000 $ 29 $ 2 2,000 $ 14.25 6,000 $ 15.00 (1) Vesting period is one year from grant date. |
Earnings per share (Tables)
Earnings per share (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Components of basic and diluted earnings per share | Three months ended March 31, 2017 Three months ended March 31, 2016 Income Shares Per Share Income Shares Per Share Basic EPS Consolidated net income attributable to common stockholders $ 8,409 17,976,710 $ 7,651 15,306,519 Allocation of earnings to participating restricted shares (88 ) - (14 ) - Consolidated net income attributable to unrestricted common stockholders $ 8,321 17,976,710 $ 0.46 $ 7,637 15,306,519 $ 0.50 Effect of dilutive securities Operating partnership units 289 624,106 312 624,106 Restricted stock grants and Manager and director fee shares 88 190,415 14 28,577 Diluted EPS Consolidated net income attributable to common stockholders and dilutive securities $ 8,698 18,791,231 $ 0.46 $ 7,963 15,959,202 $ 0.50 |
Organization and basis of pre30
Organization and basis of presentation (Details Textuals) $ in Millions | Mar. 31, 2017USD ($) |
Organization And Basis Of Presentation [Line Items] | |
Percentage of outstanding OP units owned | 96.70% |
Percentage of outstanding OP owned by an unaffiliated holder | 3.30% |
Maximum | |
Organization And Basis Of Presentation [Line Items] | |
Principal balance of small balance commercial mortgage loans secured by multi-family residential and commercial mixed use retail/residential properties | $ 5 |
Thetis Asset Management LLC | |
Organization And Basis Of Presentation [Line Items] | |
Ownership percentage | 19.80% |
Summary of significant accoun31
Summary of significant accounting policies (Details Textuals) | Jun. 07, 2016 | Jul. 08, 2014 | Mar. 31, 2017USD ($)Segmentshares | Dec. 31, 2016USD ($) |
Summary Of Significant Accounting Policies [Line Items] | ||||
Investment in subordinated debt securities | $ 6,255,000 | $ 6,323,000 | ||
Depreciation method | straight-line method | |||
Estimated useful lives of an assets | three to 27.5 years | |||
Number of operating segment | Segment | 1 | |||
Servicing agreement | Gregory | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Percentage of fair market value of REO | 1.00% | |||
Percentage of purchase price of REO | 1.00% | |||
Terms of agreement | 15 years | |||
Agreement renew term | 1 year | |||
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% | ||
Management agreement | Thetis Asset Management LLC | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Terms of agreement | 15 years | |||
2014 Director Equity Plan | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Number of shares available under for distribution | shares | 90,000 | |||
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 | $ 75,000 | |||
Increase in annual retainer amount | $ 25,000 | |||
2016 Equity Incentive Plan | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Vesting period | 3 years | |||
Percentage of outstanding shares on a fully diluted basis | 5.00% |
Mortgage loans (Details)
Mortgage loans (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Mar. 31, 2016 |
Re-performing loans | ||
Mortgage Loans on Real Estate [Line Items] | ||
Contractually required principal and interest | $ 4,856 | $ 82,179 |
Non-accretable amount | (888) | (29,148) |
Expected cash flows to be collected | 3,968 | 53,031 |
Accretable yield | (824) | (15,853) |
Fair value at acquisition | 3,144 | 37,178 |
Non-performing loans | ||
Mortgage Loans on Real Estate [Line Items] | ||
Contractually required principal and interest | ||
Non-accretable amount | ||
Expected cash flows to be collected | ||
Accretable yield | ||
Fair value at acquisition |
Mortgage loans (Details 1)
Mortgage loans (Details 1) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward] | ||
Reclassification from (to) non-accretable amount, net | $ 21,700 | |
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 | 239,858 | $ 136,455 |
Accretable yield additions | 824 | 15,853 |
Reclassification from (to) non-accretable amount, net | 22,323 | |
Accretion | (19,153) | (13,540) |
Balance at end of period | 243,852 | 138,768 |
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 | 12,065 | 18,425 |
Accretable yield additions | ||
Reclassification from (to) non-accretable amount, net | (662) | |
Accretion | (1,335) | (2,274) |
Balance at end of period | $ 10,068 | $ 16,151 |
Mortgage loans (Details 2)
Mortgage loans (Details 2) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017USD ($)Loan | Dec. 31, 2016USD ($)Loan | ||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Number of loans | Loan | 4,797 | 4,910 | |
Carrying value | [1] | $ 856,756 | $ 870,587 |
Unpaid principal balance | $ 1,043,346 | $ 1,070,193 | |
Current | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Number of loans | Loan | 2,549 | 2,306 | |
Carrying value | $ 463,967 | $ 419,643 | |
Unpaid principal balance | $ 561,219 | $ 510,058 | |
30 | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Number of loans | Loan | 635 | 797 | |
Carrying value | $ 109,692 | $ 141,228 | |
Unpaid principal balance | $ 131,245 | $ 173,482 | |
60 | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Number of loans | Loan | 401 | 482 | |
Carrying value | $ 70,307 | $ 84,498 | |
Unpaid principal balance | $ 85,610 | $ 101,727 | |
90 | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Number of loans | Loan | 821 | 911 | |
Carrying value | $ 134,498 | $ 143,061 | |
Unpaid principal balance | $ 166,430 | $ 179,718 | |
Foreclosure | |||
Financing Receivable, Recorded Investment, Past Due [Line Items] | |||
Number of loans | Loan | 391 | 414 | |
Carrying value | $ 78,292 | $ 82,157 | |
Unpaid principal balance | $ 98,842 | $ 105,208 | |
[1] | Mortgage loans include $586,076 and $598,643 of loans at March 31, 2017 and December 31, 2016, 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 Thousands | 3 Months Ended | |||
Mar. 31, 2017USD ($)Loan | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($) | ||
Mortgage Loans on Real Estate [Line Items] | ||||
Mortgage loans | [1] | $ 856,756 | $ 870,587 | |
Interest income on loans | 20,600 | $ 15,800 | ||
Certain loans acquired in transfer not accounted for as debt securities, accretable yield, reclassifications (to) from nonaccretable difference | 21,700 | |||
Re-performing loans | ||||
Mortgage Loans on Real Estate [Line Items] | ||||
Certain loans acquired in transfer not accounted for as debt securities, accretable yield, reclassifications (to) from nonaccretable difference | $ 22,300 | |||
Number of mortgage loans on real estate | Loan | 24 | |||
Unpaid principal balance of loan acquisitions | $ 3,400 | |||
Non-performing loans | ||||
Mortgage Loans on Real Estate [Line Items] | ||||
Certain loans acquired in transfer not accounted for as debt securities, accretable yield, reclassifications (to) from nonaccretable difference | $ 600 | |||
SBC loan | ||||
Mortgage Loans on Real Estate [Line Items] | ||||
Number of mortgage loans on real estate | Loan | 2 | |||
Unpaid principal balance of loan acquisitions | $ 2,500 | |||
[1] | Mortgage loans include $586,076 and $598,643 of loans at March 31, 2017 and December 31, 2016, 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. |
Real estate assets (Details)
Real estate assets (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017USD ($)Property | Mar. 31, 2016USD ($)Property | |
Real Estate Held For Sale [Roll Forward] | ||
Balance at beginning of period, count | Property | 149 | 73 |
Balance at beginning of period | $ | $ 23,882 | $ 10,333 |
Transfers from mortgage loans, count | Property | 49 | 35 |
Transfers from mortgage loans | $ | $ 8,007 | $ 4,832 |
Adjustments to record at lower of cost or fair value, count | Property | ||
Adjustments to record at lower of cost or fair value | $ | $ (309) | $ (45) |
Disposals, count | Property | (32) | (19) |
Disposals | $ | $ (4,062) | $ (1,814) |
Improvements, count | Property | ||
Improvements | $ | $ 232 | |
Transferred from held-for-sale to rental, count | Property | (1) | (2) |
Transferred from held-for-sale to rental | $ | $ (179) | $ (158) |
Balance at end of period , count | Property | 165 | 87 |
Balance at end of period | $ | $ 27,339 | $ 13,380 |
Real estate assets (Details Tex
Real estate assets (Details Textuals) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2017USD ($)Property | Mar. 31, 2016USD ($)Property | Dec. 31, 2016USD ($)Property | Dec. 31, 2015USD ($)Property | |
Real Estate [Line Items] | ||||
Number of properties owned | 5 | 3 | ||
Aggregate carrying value REO properties | $ | $ 1,600,000 | $ 1,300,000 | ||
Number of REO properties held for rental | 4 | |||
Number of REO properties acquired through foreclosures | 4 | |||
Number of properties transferred from property held-for-sale | 1 | |||
Number of held-for-sale residential properties disposed | 32 | 19 | ||
Gain on sale of property | $ | $ 109,000 | $ 545,000 | ||
Net investments in REO held-for-sale | $ | $ 27,339,000 | $ 13,380,000 | $ 23,882,000 | $ 10,333,000 |
Number of REO properties held-for-sale | 165 | 87 | 149 | 73 |
Adjustment to record REO properties at lower of cost | $ | $ 309,000 | $ 45,000 | ||
Other Income | ||||
Real Estate [Line Items] | ||||
Number of held-for-sale residential properties disposed | 32 | 19 | ||
Gain on sale of property | $ | $ 100,000 | $ 500,000 |
Fair value (Details)
Fair value (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Not recognized on consolidated balance sheet at fair value (assets) | |||
Mortgage loans, net | [1] | $ 856,756 | $ 870,587 |
Not recognized on consolidated balance sheet at fair value (liabilities) | |||
Secured borrowings | [2] | 428,168 | 442,670 |
Borrowings under repurchase agreement | 222,797 | 227,440 | |
Carrying Value | |||
Not recognized on consolidated balance sheet at fair value (assets) | |||
Mortgage loans, net | 856,756 | 870,587 | |
Not recognized on consolidated balance sheet at fair value (liabilities) | |||
Secured borrowings | 428,168 | 442,670 | |
Borrowings under repurchase agreement | 222,797 | 227,440 | |
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) | |||
Secured borrowings | |||
Borrowings under repurchase agreement | |||
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) | |||
Secured borrowings | |||
Borrowings under repurchase agreement | 222,797 | 227,440 | |
Level 3 Unobservable inputs | |||
Not recognized on consolidated balance sheet at fair value (assets) | |||
Mortgage loans, net | 929,279 | 930,226 | |
Not recognized on consolidated balance sheet at fair value (liabilities) | |||
Secured borrowings | 422,899 | $ 436,623 | |
Borrowings under repurchase agreement | |||
[1] | Mortgage loans include $586,076 and $598,643 of loans at March 31, 2017 and December 31, 2016, respectively, transferred to securitization trusts that are variable interest entities ("VIEs"); these loans can only be used to settle obligations of the VIEs. Secured borrowings consist of notes issued by VIEs that can only be settled with the assets and cash flows of the VIEs. The creditors do not have recourse to the primary beneficiary (Great Ajax Corp.). See Note 8-Debt. | ||
[2] | Secured borrowings are presented net of deferred issuance costs. |
Unconsolidated affiliates (Deta
Unconsolidated affiliates (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Schedule of Equity Method Investments [Line Items] | |||
Assets | $ 942,112 | $ 957,402 | |
Liabilities | 654,968 | 674,679 | |
Delaware Trust | |||
Schedule of Equity Method Investments [Line Items] | |||
Net income | 184 | $ 193 | |
Assets | 6,326 | 6,259 | |
Liabilities | |||
Net income | 75 | 78 | |
Assets | 2,562 | 2,535 | |
Liabilities | |||
The Manager | |||
Schedule of Equity Method Investments [Line Items] | |||
Net income | 241 | 222 | |
Assets | 5,126 | 4,846 | |
Liabilities | 1,297 | 1,167 | |
Net income | 48 | 44 | |
Assets | 1,015 | 960 | |
Liabilities | 257 | 231 | |
AS Ajax E LLC | |||
Schedule of Equity Method Investments [Line Items] | |||
Net income | 95 | ||
Assets | 7,951 | 7,964 | |
Liabilities | 28 | 12 | |
Net income | 16 | ||
Assets | 1,312 | 1,314 | |
Liabilities | $ 5 | $ 2 |
Unconsolidated affiliates (De40
Unconsolidated affiliates (Detail Textuals) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Mar. 31, 2017 | Mar. 14, 2016 | |
Delaware Trust GA-E 2014-12 | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership percentage | 40.50% | ||
The Manager | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership percentage | 19.80% | ||
Ajax E Master Trust | Re-performing loans | Sale of re-performing mortgage loans | |||
Schedule of Equity Method Investments [Line Items] | |||
Loans sold value | $ 78.2 | ||
Proceeds of mortgage loans | $ 78.1 | ||
Ajax E Master Trust | AS Ajax E LLC | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership interest in real estate trust, percentage | 5.00% | ||
AS Ajax E LLC | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership percentage | 16.50% | 24.20% | |
Converted to equity investment | $ 0.3 | ||
AS Ajax E LLC | Re-performing loans | Loan to equity method investee | |||
Schedule of Equity Method Investments [Line Items] | |||
Loan to AS Ajax E LLC | $ 4 | ||
Basis of variable rate | LIBOR | ||
Interest rate | 5.22% |
Commitments and contingencies (
Commitments and contingencies (Details Textuals) - One-to-four family residences - Re-performing loans - Purchase commitment $ in Millions | Mar. 31, 2017USD ($)Loan |
Mortgage Loans on Real Estate [Line Items] | |
Number of mortgage loans on real estate | Loan | 1,085 |
Aggregate unpaid principal balance of mortgage loans on real estate | $ | $ 209.2 |
Debt (Details)
Debt (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2017 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | ||
Amount of collateral | $ 307,311 | $ 313,797 |
Master Repurchase Agreement | ||
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | 436,068 | 436,093 |
Amount outstanding | 222,797 | 227,440 |
Amount of collateral | $ 307,311 | $ 313,797 |
Interest rate | 3.56% | 3.35% |
Master Repurchase Agreement | March 9, 2017 | ||
Debt Instrument [Line Items] | ||
Maturity Date | Mar. 9, 2017 | |
Origination date | Sep. 9, 2016 | |
Maximum borrowing capacity | $ 10,310 | |
Amount outstanding | 10,309 | |
Amount of collateral | $ 14,728 | |
Interest rate | 3.32% | |
Master Repurchase Agreement | March 30, 2017 | ||
Debt Instrument [Line Items] | ||
Maturity Date | Mar. 30, 2017 | |
Origination date | Sep. 30, 2016 | |
Maximum borrowing capacity | $ 10,797 | |
Amount outstanding | 10,797 | |
Amount of collateral | $ 15,424 | |
Interest rate | 3.34% | |
Master Repurchase Agreement | May 8, 2017 | ||
Debt Instrument [Line Items] | ||
Maturity Date | May 8, 2017 | May 8, 2017 |
Origination date | Nov. 9, 2016 | Nov. 9, 2016 |
Maximum borrowing capacity | $ 14,986 | $ 14,986 |
Amount outstanding | 14,986 | 14,986 |
Amount of collateral | $ 21,409 | $ 21,409 |
Interest rate | 3.35% | 3.35% |
Master Repurchase Agreement | September 8, 2017 | ||
Debt Instrument [Line Items] | ||
Maturity Date | Sep. 8, 2017 | |
Origination date | Mar. 9, 2017 | |
Maximum borrowing capacity | $ 10,320 | |
Amount outstanding | 10,320 | |
Amount of collateral | $ 14,742 | |
Interest rate | 3.52% | |
Master Repurchase Agreement | September 29, 2017 | ||
Debt Instrument [Line Items] | ||
Maturity Date | Sep. 29, 2017 | |
Origination date | Mar. 30, 2017 | |
Maximum borrowing capacity | $ 10,762 | |
Amount outstanding | 10,762 | |
Amount of collateral | $ 15,375 | |
Interest rate | 3.53% | |
Master Repurchase Agreement | November 21, 2017 | ||
Debt Instrument [Line Items] | ||
Maturity Date | Nov. 21, 2017 | Nov. 21, 2017 |
Origination date | Nov. 22, 2016 | Nov. 22, 2016 |
Maximum borrowing capacity | $ 200,000 | $ 200,000 |
Amount outstanding | 19,521 | 21,302 |
Amount of collateral | $ 35,077 | $ 36,044 |
Interest rate | 4.41% | 4.20% |
Master Repurchase Agreement | July 12, 2019 | ||
Debt Instrument [Line Items] | ||
Maturity Date | Jul. 12, 2019 | Jul. 12, 2019 |
Origination date | Jul. 15, 2016 | Jul. 15, 2016 |
Maximum borrowing capacity | $ 200,000 | $ 200,000 |
Amount outstanding | 167,208 | 170,046 |
Amount of collateral | $ 220,708 | $ 226,192 |
Interest rate | 3.48% | 3.25% |
Debt (Details 1)
Debt (Details 1) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
Gross amount of recognized liabilities | $ 222,797 | $ 227,440 |
Gross amount pledged as collateral | 307,311 | 313,797 |
Net amount | $ 84,514 | $ 86,357 |
Debt (Details 2)
Debt (Details 2) - Mortgage loans $ in Millions | 3 Months Ended | |
Mar. 31, 2017USD ($) | ||
Class A Notes | Ajax Mortgage Loan Trust 2015-A / May 2015 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,054 | |
Original Principal | $ 35.6 | |
Interest Rate | 3.88% | |
Class A Notes | Ajax Mortgage Loan Trust 2015-B / July 2015 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,060 | |
Original Principal | $ 87.2 | |
Interest Rate | 3.88% | |
Class A Notes | Ajax Mortgage Loan Trust 2015-C / November 2015 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,057 | |
Original Principal | $ 82 | |
Interest Rate | 3.88% | |
Class A Notes | Ajax Mortgage Loan Trust 2016-A/ April 2016 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,064 | |
Original Principal | $ 101.4 | |
Interest Rate | 4.25% | |
Class A Notes | Ajax Mortgage Loan Trust 2016-B / August 2016 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,065 | |
Original Principal | $ 84.4 | |
Interest Rate | 4.00% | |
Class A Notes | Ajax Mortgage Loan Trust 2016-C/ October 2016 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,057 | |
Original Principal | $ 102.6 | |
Interest Rate | 4.00% | |
Class B 1 Notes | Ajax Mortgage Loan Trust 2015-A / May 2015 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,054 | [1],[2] |
Original Principal | $ 8.7 | [1],[2] |
Interest Rate | 5.25% | [1],[2] |
Class B 1 Notes | Ajax Mortgage Loan Trust 2015-B / July 2015 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,060 | [1],[2] |
Original Principal | $ 15.9 | [1],[2] |
Interest Rate | 5.25% | [1],[2] |
Class B 1 Notes | Ajax Mortgage Loan Trust 2015-C / November 2015 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,057 | [1],[2] |
Original Principal | $ 6.5 | [1],[2] |
Interest Rate | 5.25% | [1],[2] |
Class B 1 Notes | Ajax Mortgage Loan Trust 2016-A/ April 2016 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,064 | [1],[2] |
Original Principal | $ 7.9 | [1],[2] |
Interest Rate | 5.25% | [1],[2] |
Class B 1 Notes | Ajax Mortgage Loan Trust 2016-B / August 2016 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,065 | [1],[2] |
Original Principal | $ 6.6 | [1],[2] |
Interest Rate | 5.25% | [1],[2] |
Class B 1 Notes | Ajax Mortgage Loan Trust 2016-C/ October 2016 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,057 | [1],[2] |
Original Principal | $ 7.9 | [1],[2] |
Interest Rate | 5.25% | [1],[2] |
Class B 2 Notes | Ajax Mortgage Loan Trust 2015-A / May 2015 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,054 | [1],[2] |
Original Principal | $ 8.7 | [1],[2] |
Interest Rate | 5.25% | [1],[2] |
Class B 2 Notes | Ajax Mortgage Loan Trust 2015-B / July 2015 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,060 | [1],[2] |
Original Principal | $ 7.9 | [1],[2] |
Interest Rate | 5.25% | [1],[2] |
Class B 2 Notes | Ajax Mortgage Loan Trust 2015-C / November 2015 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,057 | [1],[2] |
Original Principal | $ 6.5 | [1],[2] |
Interest Rate | 5.25% | [1],[2] |
Class B 2 Notes | Ajax Mortgage Loan Trust 2016-A/ April 2016 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,064 | [1],[2] |
Original Principal | $ 7.9 | [1],[2] |
Interest Rate | 5.25% | [1],[2] |
Class B 2 Notes | Ajax Mortgage Loan Trust 2016-B / August 2016 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,065 | [1],[2] |
Original Principal | $ 6.6 | [1],[2] |
Interest Rate | 5.25% | [1],[2] |
Class B 2 Notes | Ajax Mortgage Loan Trust 2016-C/ October 2016 | ||
Debt Instrument [Line Items] | ||
Notes due | 2,057 | [1],[2] |
Original Principal | $ 7.9 | [1],[2] |
Interest Rate | 5.25% | [1],[2] |
Trust Certificate | Ajax Mortgage Loan Trust 2015-A / May 2015 | ||
Debt Instrument [Line Items] | ||
Original Principal | $ 22.8 | [3] |
Trust Certificate | Ajax Mortgage Loan Trust 2015-B / July 2015 | ||
Debt Instrument [Line Items] | ||
Original Principal | 47.5 | [3] |
Trust Certificate | Ajax Mortgage Loan Trust 2015-C / November 2015 | ||
Debt Instrument [Line Items] | ||
Original Principal | 35.1 | [3] |
Trust Certificate | Ajax Mortgage Loan Trust 2016-A/ April 2016 | ||
Debt Instrument [Line Items] | ||
Original Principal | 41.3 | [3] |
Trust Certificate | Ajax Mortgage Loan Trust 2016-B / August 2016 | ||
Debt Instrument [Line Items] | ||
Original Principal | 34.1 | [3] |
Trust Certificate | Ajax Mortgage Loan Trust 2016-C/ October 2016 | ||
Debt Instrument [Line Items] | ||
Original Principal | 39.4 | [3] |
Deferred issuance costs | Ajax Mortgage Loan Trust 2015-A / May 2015 | ||
Debt Instrument [Line Items] | ||
Deferred issuance costs | (0.8) | |
Deferred issuance costs | Ajax Mortgage Loan Trust 2015-B / July 2015 | ||
Debt Instrument [Line Items] | ||
Deferred issuance costs | (1.5) | |
Deferred issuance costs | Ajax Mortgage Loan Trust 2015-C / November 2015 | ||
Debt Instrument [Line Items] | ||
Deferred issuance costs | (2.7) | |
Deferred issuance costs | Ajax Mortgage Loan Trust 2016-A/ April 2016 | ||
Debt Instrument [Line Items] | ||
Deferred issuance costs | (2.7) | |
Deferred issuance costs | Ajax Mortgage Loan Trust 2016-B / August 2016 | ||
Debt Instrument [Line Items] | ||
Deferred issuance costs | (1.6) | |
Deferred issuance costs | Ajax Mortgage Loan Trust 2016-C/ October 2016 | ||
Debt Instrument [Line Items] | ||
Deferred issuance costs | $ (1.6) | |
[1] | 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. | |
[2] | These securities are encumbered under a repurchase agreement. | |
[3] | The trust certificates issued by the trusts and the beneficial ownership of the trusts are retained by Great Ajax Funding LLC as the depositor. As the holder of the trust certificates, the Company is entitled to receive any remaining amounts in the trusts after the Class A notes and Class B notes have been paid in full. |
Debt (Details 3)
Debt (Details 3) - Mortgage loans - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 | |
Debt Instrument [Line Items] | |||
Carrying value of mortgages | $ 586,076 | $ 598,643 | |
Bond principal balance | 434,297 | 449,752 | |
Original balances at securitization cutoff date Mortgage UPB | 812,502 | ||
Original balances at securitization cutoff date Bond principal balance | 493,235 | ||
2015-A | |||
Debt Instrument [Line Items] | |||
Carrying value of mortgages | 50,776 | 51,388 | |
Bond principal balance | 27,717 | 29,476 | |
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 | 101,818 | 104,111 | |
Bond principal balance | 72,325 | 75,258 | |
Original balances at securitization cutoff date Mortgage UPB | 158,498 | ||
Original balances at securitization cutoff date Bond principal balance | 87,174 | ||
2015-C | |||
Debt Instrument [Line Items] | |||
Carrying value of mortgages | 97,709 | 100,614 | |
Bond principal balance | 63,649 | 66,979 | |
Original balances at securitization cutoff date Mortgage UPB | 130,130 | ||
Original balances at securitization cutoff date Bond principal balance | 81,982 | ||
2016-A | |||
Debt Instrument [Line Items] | |||
Carrying value of mortgages | 116,298 | 118,189 | |
Bond principal balance | 94,368 | 96,158 | |
Original balances at securitization cutoff date Mortgage UPB | 158,485 | ||
Original balances at securitization cutoff date Bond principal balance | 101,431 | ||
2016-B | |||
Debt Instrument [Line Items] | |||
Carrying value of mortgages | 96,595 | 97,660 | |
Bond principal balance | 78,750 | 80,672 | |
Original balances at securitization cutoff date Mortgage UPB | [1] | 131,746 | |
Original balances at securitization cutoff date Bond principal balance | 84,430 | ||
2016 C | |||
Debt Instrument [Line Items] | |||
Carrying value of mortgages | 122,880 | 126,681 | |
Bond principal balance | 97,488 | $ 101,209 | |
Original balances at securitization cutoff date Mortgage UPB | 157,808 | ||
Original balances at securitization cutoff date Bond principal balance | $ 102,575 | ||
[1] | Includes $1.9 million of cash collateral. |
Debt (Details 3) (Parenthetical
Debt (Details 3) (Parentheticals) $ in Millions | Mar. 31, 2017USD ($) |
Mortgage loans | 2016-B | |
Debt Instrument [Line Items] | |
Cash collateral | $ 1.9 |
Debt (Details Textuals)
Debt (Details Textuals) $ in Millions | 3 Months Ended |
Mar. 31, 2017USD ($)Facility | |
Debt Instrument [Line Items] | |
Percentage of guarantors beneficial interest | 100.00% |
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 | Re-performing loans | 2015-C | |
Debt Instrument [Line Items] | |
Servicing fees percentage | 0.65% |
Mortgage loans | Re-performing loans | 2016-A | |
Debt Instrument [Line Items] | |
Servicing fees percentage | 0.65% |
Mortgage loans | Re-performing loans | 2016-B | |
Debt Instrument [Line Items] | |
Servicing fees percentage | 0.65% |
Mortgage loans | Re-performing loans | 2016 C | |
Debt Instrument [Line Items] | |
Servicing fees percentage | 0.65% |
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% |
Mortgage loans | Non-performing loans | 2015-C | |
Debt Instrument [Line Items] | |
Servicing fees percentage | 1.25% |
Mortgage loans | Non-performing loans | 2016-A | |
Debt Instrument [Line Items] | |
Servicing fees percentage | 1.25% |
Mortgage loans | Non-performing loans | 2016-B | |
Debt Instrument [Line Items] | |
Servicing fees percentage | 1.25% |
Mortgage loans | Non-performing loans | 2016 C | |
Debt Instrument [Line Items] | |
Servicing fees percentage | 1.25% |
Master Repurchase Agreement | Delaware Trust | Mortgage loans | |
Debt Instrument [Line Items] | |
Number of facilities repurchased | Facility | 2 |
Ceiling for each repurchase facility | $ | $ 200 |
Variable rate basis of borrowing | one-month LIBOR |
Master Repurchase Agreement | Delaware Trust | Mortgage loans | Maximum | |
Debt Instrument [Line Items] | |
Percentage of purchase price for each mortgage loan or REO | 85.00% |
Master Repurchase Agreement | Delaware Trust | Mortgage loans | Minimum | |
Debt Instrument [Line Items] | |
Percentage of purchase price for each mortgage loan or REO | 70.00% |
Related party transactions (Det
Related party transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Gregory | Loan servicing fees | ||
Related Party Transaction [Line Items] | ||
Loan servicing fees | $ 1,904 | $ 1,403 |
Gregory | Loan transaction expense | ||
Related Party Transaction [Line Items] | ||
Due diligence and related loan acquisition costs | 37 | 26 |
Gregory | Other expense | ||
Related Party Transaction [Line Items] | ||
Expense reimbursements | 3 | |
Thetis | Management fees | ||
Related Party Transaction [Line Items] | ||
Management fee | 1,072 | 906 |
Great Ajax FS | Other expense | ||
Related Party Transaction [Line Items] | ||
Expense reimbursements | $ 16 |
Related party transactions (D49
Related party transactions (Details 1) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Related Party Transaction [Line Items] | ||
Receivable from servicer | $ 13,695 | $ 12,481 |
Investment in subordinated debt securities | 6,255 | 6,323 |
Management fee payable | 750 | 750 |
Gregory | Receivables from Servicer | ||
Related Party Transaction [Line Items] | ||
Receivable from servicer | 13,695 | 12,481 |
Gregory | Accrued expenses and other liabilities | ||
Related Party Transaction [Line Items] | ||
Servicing fees payable | 232 | 195 |
Oileus Residential Loan Trust | Investment in securities | ||
Related Party Transaction [Line Items] | ||
Investment in subordinated debt securities | 6,255 | 6,323 |
Thetis | Management fee payable | ||
Related Party Transaction [Line Items] | ||
Management fee payable | $ 750 | $ 750 |
Related party transactions (D50
Related party transactions (Details Textuals) $ in Thousands | Jul. 08, 2014 | Oct. 31, 2016USD ($)Loan | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) |
Related Party Transaction [Line Items] | ||||
Investment in debt securities | $ 6,255 | $ 6,323 | ||
Securities carried on amortized cost basis | 6,400 | |||
Unrealized loss | 100 | |||
Management fee payable | $ 750 | 750 | ||
Servicer | ||||
Related Party Transaction [Line Items] | ||||
Percentage of participation interest held | 95.00% | |||
Three Related Party Trusts | Re-performing loans | ||||
Related Party Transaction [Line Items] | ||||
Number of mortgage loans on real estate | Loan | 370 | |||
Aggregate unpaid principal balance of mortgage loans on real estate | $ 69,900 | |||
Weighted average coupon rate | 5.84% | |||
Percentage of unpaid principal balance of loan acquired | 93.00% | |||
Estimated market value of the underlying collateral | $ 92,200 | |||
Oileus Residential Loan Trust | Investment in securities | ||||
Related Party Transaction [Line Items] | ||||
Investment in debt securities | $ 6,255 | $ 6,323 | ||
Management agreement | Thetis Asset Management LLC | ||||
Related Party Transaction [Line Items] | ||||
Base management fee percentage | 1.50% | |||
Description of incentive management fee payable | The Manager is also entitled to an incentive fee, payable quarterly and calculated in arrears, of 20% of the amount by which total dividends on common stock and distributions on OP units exceeds 8% of book value. However, no incentive fee will be payable to the Manager with respect to any calendar quarter unless the Company’s cumulative core earnings, defined as U.S. GAAP net income or loss less non-cash equity compensation, unrealized gains or losses from mark-to-market adjustments, one-time adjustments to earnings resulting from changes to U.S. GAAP, and certain other non-cash items, is greater than zero for the most recently completed eight calendar quarters. 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. To date, no incentive fees have been paid to the Manager. | |||
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% | ||
Amended And Restated Management Agreement | Thetis Asset Management LLC | ||||
Related Party Transaction [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 $1.0 million will be payable in shares of the Company's common stock until payment is 50% in cash and 50% in shares (the "50/50 split"). | |||
Percentage of remaining incentive fee payable in common stock | 20.00% | |||
Percentage of remaining incentive fee payable in cash | 8.00% |
Stock-based payments and dire51
Stock-based payments and director fees (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares | 23,531 | 16,564 |
Amount of expense recognized | $ 360 | $ 252 |
Management fees | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares | 21,075 | 14,916 |
Amount of expense recognized | $ 322 | $ 227 |
Independent director fees | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares | 2,456 | 1,648 |
Amount of expense recognized | $ 38 | $ 25 |
Stock-based payments and dire52
Stock-based payments and director fees (Details 1) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total shares granted | 163,000 | 8,000 | ||
Total expected cost of grant | $ 2,188 | $ 119 | ||
Shares granted during the year | 2,000 | |||
Total expected cost of current year grant | $ 29 | |||
Grant expense recognized for the year | $ 176 | $ 2 | ||
Non-vested shares | 155,000 | 2,000 | ||
Non-vested Per share grant fair value | $ 13.50 | $ 14.25 | ||
Fully-vested shares | 8,000 | 6,000 | ||
Fully-vested shares weighted average grant date fair value | $ 13.79 | $ 15 | ||
Restricted stock | Directors' Grants | Director | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total shares granted | 10,000 | [1] | 8,000 | [2] |
Total expected cost of grant | $ 146 | [1] | $ 119 | [2] |
Shares granted during the year | [1] | 2,000 | [2] | |
Total expected cost of current year grant | [1] | $ 29 | [2] | |
Grant expense recognized for the year | $ 7 | [1] | $ 2 | [2] |
Non-vested shares | 2,000 | [1] | 2,000 | [2] |
Non-vested Per share grant fair value | $ 13.79 | [1] | $ 14.25 | [2] |
Fully-vested shares | 8,000 | [1] | 6,000 | [2] |
Fully-vested shares weighted average grant date fair value | $ 13.79 | [1] | $ 15 | [2] |
Restricted stock | Employee and Service Provider Grants | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total shares granted | 153,000 | [3] | ||
Total expected cost of grant | $ 2,042 | [3] | ||
Shares granted during the year | [3] | |||
Total expected cost of current year grant | [3] | |||
Grant expense recognized for the year | $ 169 | [3] | ||
Non-vested shares | 153,000 | [3] | ||
Non-vested Per share grant fair value | $ 13.50 | [3] | ||
Fully-vested shares | [3] | |||
Fully-vested shares weighted average grant date fair value | [3] | |||
[1] | Vesting period is one year from grant date. Weighted average remaining life of grant at March 31, 2017 is 0.3 years. | |||
[2] | Vesting period is one year from grant date. | |||
[3] | Vesting is ratable over three-year period from grant date. Weighted average remaining life of grant at March 31, 2017 is 2.4 years. |
Stock-based payments and dire53
Stock-based payments and director fees (Details 1) (Parentheticals) - Restricted stock | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Directors' Grants | Director | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 1 year | 1 year |
Weighted average remaining life of grant | 3 months 18 days | |
Employee and Service Provider Grants | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 3 years | |
Weighted average remaining life of grant | 2 years 4 months 24 days |
Stock-based payments and dire54
Stock-based payments and director fees (Details Textuals) - USD ($) | Aug. 17, 2016 | Mar. 31, 2017 | Dec. 31, 2016 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Management fees | $ 1,100,000 | ||
Management fee paid with shares of stock | $ 300,000 | ||
Number of shares issued for payment for management fee | 21,075 | ||
Annual retainer amount | $ 75,000 | $ 50,000 | |
Restricted stock | Employees | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of restricted stock awards issued to employees and service providers | 153,000 | ||
Vesting period | 3 years | ||
Private Placement | Restricted stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of restricted stock awards issued to company's Manager | 21,075 | ||
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 | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Distribution percentage of Real Estate Investment Trust (REIT) taxable income | 90.00% | |
Taxable income | $ 7,100 | $ 3,600 |
Provision (benefit) for income tax | $ 1 | $ (3) |
Earnings per share (Details)
Earnings per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Basic EPS | ||
Consolidated net income attributable to common stockholders | $ 8,409 | $ 7,651 |
Allocation of earnings to participating restricted shares | (88) | (14) |
Consolidated net income attributable to unrestricted common stockholders | 8,321 | 7,637 |
Effect of dilutive securities | ||
Operating partnership units | 289 | 312 |
Restricted stock grants and Manager and director fee shares | 88 | 14 |
Diluted EPS | ||
Consolidated net income attributable to common stockholders and dilutive securities | $ 8,698 | $ 7,963 |
Basic EPS | ||
Consolidated net income attributable to common stockholders, shares | 17,976,710 | 15,306,519 |
Allocation of earnings to participating restricted shares, shares | ||
Consolidated net income attributable to unrestricted common stockholders, shares | 17,976,710 | 15,306,519 |
Effect of dilutive securities | ||
Operating partnership units, shares | 624,106 | 624,106 |
Restricted stock grants and Manager and director fee shares, shares | 190,415 | 28,577 |
Diluted EPS | ||
Consolidated net income attributable to common stockholders and dilutive securities, shares | 18,791,231 | 15,959,202 |
Per Share Amount | ||
Consolidated net income attributable to unrestricted common stockholders (in dollars per share) | $ 0.46 | $ 0.50 |
Consolidated net income attributable to common stockholders and dilutive securities (in dollars per share) | $ 0.46 | $ 0.50 |
Subsequent events (Details Text
Subsequent events (Details Textuals) - Subsequent events $ in Millions | 1 Months Ended |
Apr. 30, 2017USD ($)LoanTransactionSeller | |
Re-performing loans | Five different sellers | |
Subsequent Event [Line Items] | |
Number of mortgage loans on real estate | Loan | 513 |
Aggregate unpaid principal balance of mortgage loans on real estate | $ 98.8 |
Number of transaction | Transaction | 5 |
Number of different sellers | Seller | 5 |
Percentage of unpaid principal balance of loan acquired | 84.40% |
Estimated market value of the underlying collateral | $ 148.6 |
Percentage of estimated market value of the underlying collateral | 56.10% |
Re-performing loans | Eight different sellers | |
Subsequent Event [Line Items] | |
Number of mortgage loans on real estate | Loan | 808 |
Aggregate unpaid principal balance of mortgage loans on real estate | $ 164.4 |
Number of transaction | Transaction | 12 |
Number of different sellers | Seller | 8 |
Percentage of unpaid principal balance of loan acquired | 87.70% |
Estimated market value of the underlying collateral | $ 240.2 |
Percentage of estimated market value of the underlying collateral | 60.00% |
SBC loan | |
Subsequent Event [Line Items] | |
Number of mortgage loans on real estate | Loan | 1 |
Aggregate unpaid principal balance of mortgage loans on real estate | $ 0.6 |
Percentage of unpaid principal balance of loan acquired | 97.20% |
Estimated market value of the underlying collateral | $ 0.8 |
Percentage of estimated market value of the underlying collateral | 72.80% |
Subsequent events (Details Te58
Subsequent events (Details Textuals 1) - USD ($) $ / shares in Units, $ in Millions | May 02, 2017 | Apr. 25, 2017 | Apr. 19, 2017 | Mar. 31, 2017 | Mar. 31, 2016 |
Common Stock | |||||
Subsequent Event [Line Items] | |||||
Stock issued in lieu of management fee | 20,352 | 14,910 | |||
Subsequent events | Convertible Senior Notes | |||||
Subsequent Event [Line Items] | |||||
Aggregate principal amount of Convertible Senior Notes | $ 87.5 | ||||
Interest rate | 7.25% | ||||
Frequency of interest payment | quarterly | ||||
Due date | Apr. 30, 2024 | ||||
Percentage of premium over the stock price | 17.50% | ||||
Subsequent events | Common Stock | |||||
Subsequent Event [Line Items] | |||||
Number of shares issued in payment of half of their quarterly director fees | 614 | ||||
Subsequent events | Common Stock | Convertible Senior Notes | |||||
Subsequent Event [Line Items] | |||||
Conversion rate | 1.6267 | ||||
Debt instrument convertible principal amount per share | $ 25 | ||||
Conversion price per share | $ 15.37 | ||||
Subsequent events | Thetis Asset Management LLC | Common Stock | |||||
Subsequent Event [Line Items] | |||||
Stock issued in lieu of management fee | 21,075 | ||||
Subsequent events | Board of directors | |||||
Subsequent Event [Line Items] | |||||
Dividend declared date | Apr. 19, 2017 | ||||
Dividends payable, amount per share | $ 0.28 | ||||
Dividend paid date | May 30, 2017 | ||||
Dividend record date | May 16, 2017 |