AJX - Earnings call transcript Q1 2018 | Rithm Property Trust Inc.

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Operator

Good afternoon and welcome to the Great Ajax Corporation's First Quarter 2018 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. Please note, this event is being recorded. With that, I'd like to turn the conference over to Larry Mendelsohn. ahead. go Please

Larry Mendelsohn

look much. regard first very jump -- for us Q&A. the that, a joining we Harbor with our Thank and And this disclosure XXXX Thank in. presentation quarter-end right our discussing quick take you quarter started, statements to will page call. on X, get Safe with you forward-looking have you at to I'd I before any like and

discussion X than due usual, subsequent first that and this will busy. on and in discuss a As events. of slower later two January picked as up the pretty are was trend and we for we April, year, give one overview closings and also quarter quarter page and a week usually week. even you of that, to quarter first are a March, lot very dramatically, as four any lot in the February of are got one business go, will buy and Usually, did then changes. in But I slower, and loans quarter jump of a to this the quarters diligence quarters so our January of March, and -- two agreed And and typical earnings and followed and quarter quarters of busier. With it more March three quick February will closings the next first for and in and

from or of the relative May frequently other April, who network our coming we now, loans, have our and and or where at we things most we June, at the how acquired we liquidity you do, to to find ability types and is [owe] to the important pay want banks, ratio in loans important loan-to-values sourcing providers will May prices the and to what's loans. through extremely types issues of sheet We get of in the the to people. management prices [ph] what and is balance see to acquire have One them, and funds and June and we

loan Having us Our as own managers' only want to and people driving very Makes important. data to characteristics and own, a the an don't the well we drive buy we want of lot on forecast index like or to analyzing target the servicer see to and based understand. we a necessarily other determine of spent gives built, analytics, in demographics don't does data affiliated efficient, really loan this the that. to properties pattern lot to helpful time also in want. ability loans and loan servicing loans We analysis predictions based going of that more where loans, going loans it's as we as also strategies recognition certain fund important. We exist. happen We things a happen proprietary what's be really that actually us on is rents outcomes, lot markets, a loan-by-loan-by-loan. to it use analysis well captive and data in acquisition and in help but only strategy, Not and to that loans of patterns of what's

don't create helps and our other our loans to servicer outcomes Our get. people and closeness that servicer really

and will extra our well important and leverage. get also for servicer venture our also June, joint and the and the both as that bigger brand done own It's for in end well servicer, warrants now servicer have partners We interest good the servicer in -- institutional very of moderate January, our value in benefit and the of bigger, also of the our as JV good be they as acquire more rely non-mark-to-market increasing April, it's servicer, in servicer in as it's of we and warrants an an overall the we of which use get structures servicer. As valuation our on. have the to the interest through we and

only a QX, ending QX. will If average re-performing You page through talk we we were of re-performing than busy, didn't lower we this, at but go the we We any as in will see, to quarter, of loans. end about. the at we actually bought even $XX.X the than jump little non-performing first, that QX, more highlights; million though throughout X QX and that's leverage something loans, our the buy end bought leverage bit the is in lower we loans pretty of and

purchase Our XX% balance, approximately of was of the but value. it principal only XX% property the was price unpaid underlying

property relative low, very property So values. to good value, average

an bought is of area in an upside, lot XX significant and there talk has about we building per interest We a the income, location. interest $XXX,XXX apartment about urban apartment and that also today. Phoenix From Phoenix, revenue building a to unit in net in a believe unit, for

interest First, about income of $X.XX income share interest earnings. about million, and a $XX.X of $XX.X million, net

important the in down Some are defaulting. income income were more trade-off. when the points, because loans significantly due XX our an than far and unusual We a receive for decrease. more overperformance. fewer basis are yields XX causes than this They average some. is loans yield We load, the is better we our points significantly odd thing. to But extends, approximately loans expected on factors quarter. loans basis about talk expectation, and interest cash interest duration and that performance be talk an increased net income. on It's to but on Monthly going about, to down concept to interest had Net

cash our quarter significantly too the QX, receive than in lower during you leverage So even leverage QX XXXX even lower and way from and is months quarter the our than are ago. loans see average many that than performance we level have leverage. this of the that leverage paying, the flow, more problem end will three our unusual collections continues, changed and better is so quarter, ending QX much We that

In approximately cost the as talk loans these in we another our of little more, in that enables will us REO as in is a we to do really an despite addition, securitization declined bit structure April Also, well, LIBOR, this see of did numbers, an impairment we and on $XXX,XXX. as increase overperformance what of side. to financing funds

REO a REO to you gains that offset you have foreclosure, when gains. sales that's $XXX,XXX REO. first under make about and little on you REO happens at determination, the later, talked when impairment is before by sales Although happen that We some GAAP, calls, bit sell of get

lag So sales have gains a always taking the impairment. versus

future payoffs. from quarter, value collections well as GAAP gain come of loan a comes REO first. time. REO always or from net gains but in $XX.X portfolio as basis, well second, a gains a taxable income future any than $XX that Interest impairment are we remember, gain $X.XX from existing to overall of of The not payoffs, from tax as comes so modifications, modifications. expected share. is Other XX.XX, net loan over and GAAP as modifications higher Our But continues cash of always Book aware tax impairments significantly that those quarter, income, on have income million million highlights, of. last loan gain

more $XXX it collections, the little annualize to the were than of million, a which XX% of is would be you $XXX entire our about million, basis If loans. approximately

as quarter, a a over of a more half day our of three three really bigger that, XX, last well collected days, business portfolio of quarter. as it's give the X% March of -- of and So you remarkable amount X, entire sign the in And April we business first the of three of one two business money. to the combined business April had of payoffs days. even day approximately kind X On period, days second those

an but down of QX it's cash during following quarter. $XX.X cash our on million like the flows quarter, amount So we during QX. of were on first quarter. and throughout because had, QX cash the our the and having actually pretty velocity of our million quarter, cash end $XX.X stayed had the from the remarkable of million At payoffs and the the we of average It's average looking same, of cash collections so high that went $XX.X leverage

January in On the step our as XX, will balance an for also much of maintain set kind still X.X% at cash and the that acquiring few -- number at it's capital we about from corporate we having acquired While quarter, versus our end is interest all two XX, unchanged. unusual same level but future this servicer. leverage, talked bit, both a our overlapping call interest your acquisitions declined we availability, cash. of during January same step of the the decreased May. our closed but in income it the It end having decreased great event income transaction subsequent it was time, much leverage January, loan back. items. another cash a are X% a months in of cash. cash of Having amount so X.X, the Quarter flow down X.X% close cash does an level while late less QX. first hurt X.X, We the end a of Leverage those asset the ratios,

at can the capitalize servicer, on on and servicer at for additional that warrants servicer the We created the so optionality, the also acquired is the value itself. XX% creating brand a we of

and page Our later we will XX.X% QX. change loans, still but bit, presentation later we a loans X, the about in about little in are re-performing as that non-performing will see portfolio on X.X%

cash have OREO XXX, On we over time. reinvest purchased that short turn then including XX for to we to is sale, of the for us is portfolio, the rentals, we turn grow. continues expect we cash a But year. On multifamily REO Phoenix did XX most At in held page it look when primarily loan it side, sale, unit held at X, it to of will we period REO part, January in it. relatively and the buildings, re-performing and for our this for and multi-unit principally to

to within continue RPL buy loan-to-value overall We the purchase. loans lower

happened Our This purchase represents approximately include of balance. price price that doesn't value of XX% appreciation value acquisition. since principal XX% any property and of property

price is our below our actually is value. property XX% that significantly of So belief the

we same world offense methodology than harder typically play offense, the at in time the we live continue and at financial same defense that in, to and offense to play in is found markets, as We and defense go performance time, our well as and would the loans and it a a allows a on than to can do loans, loan re-performing what from we make rather like if it yields our always is level, doesn't pay. actually pay, down, it up, works well, to us although defense

the ago, in property down look graph, March XX% versus you portfolio purchase ago, bottom If ago, the re-performing progression versus price of our was our value two it of XX% years XX%, three XXXX, you years it at was XX.X%. is it was year see loan XX, versus a

So has our including source. price down home price of REO and value significantly, loans we of purchase we just and come down. that's come without the way appreciation. buy loans actually the That's price has Purchase straight, to property kinds

side, NPL dollars. continued NPLs the our On have to absolute in decline

of talk venture, the part in in June some about additional acquire as to few However, we a of will minutes, we XXXX. NPLs expect joint

it sales, XX foreclosures, properties gets never we through the of accounted foreclosure directly quarter, turns for loan a the During into to had but That for third property parties the actually cash. in which of own. pool XX we XX accounting, sold

as became of type REO. So of but it's properties XX the it's pay-off, loan if a

also XX REOs in quarter. this We sold

of are portfolio. the our So is XX% loans? California portfolio, before, continues to had of we REOs on our we and same that California a Southern of XX% entire about represent about Well, XX% XX% or the approximately Where of net quarter perspective. from have the number that basis, overall our

future Diego Los We very especially and for County Indianapolis. that's potentially performance certain consistent what evaluate loans payment will in in parts Probably, and are centers, characteristics in the very are patterns we the only in loans that like to continue is, we and different County, San with item do. into predictable California San urban California California, Angeles, seeing find Francisco, Orange of they

page X, on the it target of another migration; started feet gathering, we made We we been ground, the unbelievable. have late whether now. in with describe QX, I I number data or not should still at our one and looking for months the a it of word We at don't it have few visits On portfolio become there, have that here and a are in are it looking determine markets. to with. our can numbers

million million $XXX the QX our of are last is better. of UPB up from So $XXX XX portfolio XXXX. payments That's XX approximately of

Okay.

X better, on the billion $X.XX is, buy. significance of of addition, is that In X data of X and we the X loans of analysis or

to data X driven, be find, back time going all is up now, early consecutive to or buying the the when the have specific on to -- buy way cusp that are we payments, the the XX% hits loans So of and of loans, once XX. loan gets subsequent loan, that to point what we that of characteristics that XX --

or plus And you we which X $XXX another $XXX XX chance of XX better. million have so, think or of plus a about becoming or it, XX% another million when $XXX better, million have for of of of XX XX X,

hardest of bought other and are or and XX-XX we $X.X or in to cusp, have That many up that, expectation than billion X performance. is of going that what $XXX loans over is getting well loan found terms and are better, better. portfolio the Really we our share We because to remarkable being close is of just getting in are that going XX the these we paying where part, payoffs, of our lion's being loans every our are the expectation goes loans to So when have overperformed wake loans. to XX to million months, going so point month. but to up back of we the X of of or X six we every X have knew

the increasing this these outperformance payment over NAV, cost the base time. pattern, of because lowers of pattern, and cash our to payment of flow significant addition the asset In loans, funds

that the advance the at XXXX, We than our total that QX, significant declined cost a the that velocity LIBOR. despite And you'd of our loans have and see securitizations on three the flow increase rates, seen, in up be did next points on there debt slide, from December we average us the to cash the basis enables years. in able cost XX previous to fact versus QX in lower push was

on we that done So in XX, a what joint venture significant we a which XXXX is, we requires us XX, it. XX-XX you may metrics on did to BlackRock, some and venture, have look recall, at joint was page page consolidate late with

of consolidation. would So have been what first we and -- the have QX done quarter

great yields flow in above than these the this showing period you to or don't to QX, lower So NAV shown loans, LTV. put to down X.X we XX. to done is of for yields one QX is, time. then of them too, at Material and show the the that what performance. keep for thing actually are you market for and both extra four over QX we in cash mind, comparing rolling cash month period, primarily, to deconsolidated. if to deconsolidated in on have back increasing and on market tie a average but next increase that see you pools consolidated larger year, to deconsolidated creation, about loan have over though yields and has XX But from XX dramatically us the and of QX principal performance When is we the calculate loan the is so X.X XX of it's a page, see extend yield the continues flow gone page because we are consolidated, and our in yield permit duration, XXX longer calculations because an the Also, will significantly deconsolidated, a look can

to are go because principal, are paying monthly have or can't in we XXX that and income on we we LTV higher LTV, until are income getting principal XXX loans they model, expect for our that below of payments they not if So take we collect. didn't

part with, So of loan LTV and yield it's a high a comply unusual that it's accounting actually helps modeling. very pool we well piece yield, GAAP the performing versus hurts

also asset at balance level total down from debt well, down QX, come if and come as as you cost, look at it it entire cost, on from has as you has If QX. sheet, look our debt well average

in in venture non-interest those last are XXXX If quarter. and on we plural, small D updated -- transaction. number shows expense a if in That two and fees, number times, facilities, closed leverage joint and level, had fees values you previous the loans convertible at JPMorgan is all two often, two, the that those see previous Quarter of credit show X.X expenses, our ending things, facility we ending valuation property December, servicing will including by and January, servicer are credit facilities, property primarily servicer And occurred go in X.X we to of the at quarter our in one those bottom, up is driven look weeks you the the operating our at That's one corporate leverage, loans. interim pay is, require in we at up our that that loans the amount. for bond servicing is large to Nomura times. and our interim

we are mortgage equity deconsolidated for return is sure. We since I are that running Page world, XX. we think XX.X% on we typical times X.X XX which required do, not to reconsolidated in that's leverage, reconciliation the on on is the REIT page with page XX, average

at page April venture, structure. that a this XX% there I very XX, of because on So was about a One bonds then of time account. will balance unusual that a an structure UPB, On the structure, bond XXXX-A was million, see XX% as up senior closed which the were and going we a pre-funding closing XX, $XXX our that set XX, of is is of made another can lot and thing joint $XXX million jump the everybody included the to or April on. tie-out, It certificate. equity

day of at-par, remaining XX% loans at with buy buy The of loans a and money XX% no the rate life bond done coupon about the at was bond only the can closing all. So spent until on the June. the X.XX% XXth to used senior of step-up senior to the was of be interest during

over with having XXXX and envelope having senior, pushed pre-funding by our pushed an we XX% we to the by pre-funding envelope XXXX-A, D, D, the about XX% The step-up similar no the XX% account. a XXXX So the life account.

can You going that side into to pre-funding are page, of expect left the go see that on this loans we the hand account.

see You what XX million closed the into two the into about to early next batches, of and million. close million will or the is the totaling $XXX the on expected NPL of first then the and in month structure, RPL during the structure, $XXX are June May $X.X

at have loans the see pool. to you find bond a the and loans so LTV XX.X% is of is are account the and diligence be NPL purchase look pre-funding people though, the collateral the and prices we really If that for way go you the investors identified willing we to to purchase and low and the then low loans to difference property value with up and big that set our due way of to become The pattern they continuing value. XX.X%, value loans, the will that we if RPL, XX.X%, do comfortable price into way we are XX%

June, of loans a $XXX The about on will new be about collateral. close of those joint loans. price expect we in to second value non-performing our XXXX-B week And million we purchase non-performing about property have $XXX,XXX. to The that that, those In average the that XX% structure. that, is addition collateral is now, of of as will have right venture to in

at next what loans JVs, comfort $XXX,XXX value of we the have it's just purchase re-performing So expect the the low the same the is Separate call, about about property play collateral, and we Again, of property weeks. the to talked the average time. or value, April price few continue offense venture. joint to the $XX you about to of value. zone I look discount close in defense to we at price purchase property We Again, that's price. protection will about On if XX, in of, from price the million underlying that XX% XXXX-A. to

next I Taxable as part and declared XX, to to of are take a we We modifications our for of in XX in should of income improved, comfortable excess we our they of today, dividend, as as few any those based dividend loan $X.XX, look sheets, questions. also, payable performance income the the well be our will payment be the stockholders board was May a dividend is release of to with and loans, than as open XX, $X.XX of as XX on board on whether record $X.XX, quarters, have. balance the will press certainly May go payday. up it continued $X.XX fee the happy might income statements and on page and On that in through rather see detail,

Operator

Instructions]. [Operator

Our Hayes from today comes FBR. Tim question with first ahead. Please go Riley B.

Tim Hayes

Hey Larry. Good afternoon here.

Larry Mendelsohn

you? are how Hi,

Tim Hayes

all just talk you Good. -- the JVs new the between between And investment these how on just, of entered you the Can you on investment? strategy new to have Doing you into, plan executing you. versus then vehicles? balance view how allocate and JV thank about sheet your how differed well, kind

Larry Mendelsohn

cases, what different will be, will a goals, goals -- some they JV. or have share loans JV we and a some are are Sure. take or loans different larger in take cases, share itself the of histories JV and and Depending pay smaller on different in much identified, with we looking partners some we for our performance might yield than

land. the And itself, those as than from of importantly, has important see fact, have is reasons JVs, servicer, servicer them. have on our servicer clearly, the the results in impact the servicing was institutional also warrants, and these the investors the us the even material warrants in because to delivered the for servicer real an so a brand it a investment valuation on performance and because these why of to but make investment, JVs just servicer have in more One can

see So don't institutions some portfolio it a more the to provided bring in these I ability us will see the mean, loans. and JV some us. of see, will has to cases, that we

that do the understand happen with will analysis them, we we help So what loans. for to can the them think

helps more servicing we how the servicer have that loans put it to we get equity these have So these before. helps each access for to loans institutions, don't we one. It into us not to much preset. -- It's see see and us JVs choose all wanted and

had For and example, in institutional December expectation X, And equity the transaction, the is only in in retained we [XX%] XXXX-A two our that we XX% institutions, and name interest, be retained June we brands transaction. about transaction, will a it in that XXXX-B, X.X% interest. JV, [ph] the of the a

it much to how of a do decide want kind gives we to benefit So -- have ourselves. us to

operating the are We partner.

have due prices rights We diligence or sell negotiate do after loans also ones and us. we and the manage everybody, to for the on to affiliated captive the are a who and the two call gets with the are who we loans off the ones also basis for to these structures daily our structures years, servicer, the and

about So very to cheap we ability and coupons senior for financing also want low to us loans we with with that XX% get bonds, them. to know acquire. no step-ups It have a lot the gives

the the of XX% value we gives what X% another funds, servicer lowers buy that cost us the have versus also as increases at warrants to on less same optionality to time. we buy, it want and of of, and more our own it So

pieces us XX% of So multiple that own we ways, are -- find we going create REIT is manager. kind kind can thinks other land, raise everybody and helps value of and in what three always the in you it we We to that significant different of on here. capital,

So the it of on upside XX% We gets own value. servicer.

So when our it we of and get went and to plus much choose balance own how gets want we we use. sheet value, pick to

Tim Hayes

on the a a Yes. some they of sense. about that. you call like balance with to Thank relative you more line JV, looks mostly page, it is the you do event acquiring you talked better NPLs is in little and subsequent the just really that Makes see bit. lot on And value you are are strategy Ajax for seeing it's And but or the on going taking looking all show it there, for? sheet more your partner NPLs,

Larry Mendelsohn

the No. is liked one, along two, These were are these in they had than pretty higher these to far than of thing one And NPLs in different NPLs seeing about pools. most the we used NPLs we see, the average value process. were much NPLs, NPL we that property

seeing see are to similar We the are Mae pools. to they and used and what under pools, properties Jumbo tend $XXX,XXX loans. be worth to NPL that Fannie much these in you a in are more HUD type And pools

So further along better process. in property values and the

fixed NPL cost we price, our business. buy purchase a able really a with of have So are at to of kind And resolution discount. land we is them price where about $XXX,XXX

absolute want dollar can percentage much have, margin. as not as you margin you So

lot or of property XX% than a is an $XXX,XXX $XX,XXX on $XXX,XXX. property, cheaper So XX%

because with in XX%, up mid-July, along So that we this I XX%, they the to that, my we set that will like pool, extent process. loans like want up pool, we is pre-funding because to this think them in guess we property going just and end decide much XX% the can prior identify We a more structure most the likely. into be we will or to choose to price far also, value, ultimately this and the the to up we -- how how are will

Tim Hayes

you. Thank it. Got Okay.

Larry Mendelsohn

percentage all venture property see and acquisitions, purchase you pending to price, mid-Xs relative are the California. low the And value those then, if non-joint in RPLs, high with coupon

existing really it our were on pasting RPLs fit top. if just So almost portfolio as those you

Tim Hayes

all and are for you see more Thanks last then right. of pull kind on doing if Right, talked one out much the that, cash you about of expense could thinking for do, securitization, just about your call, savings you wondering And just and potentially XXXX-A you about potentially type me; calling there? that Larry. how then, you still think if you could

Larry Mendelsohn

about $XX probably could call and lower of million we three costs about if we a other were it If the direct we we to that, out were by assets funding probably to some with loans, pull Sure. those $XX percent. million, to resecuritize on quarters would

Tim Hayes

helpful. for taking really my Thank That's it. Got you questions.

Larry Mendelsohn

Sure.

rate. So of or be or it $XX the wouldn't face be $XX of the will million cash. million. three a amount The the It net $XX million million on quarters would bond's be $XX on percent

Tim Hayes

Got it.

Operator

The next Laws ahead. the Please James. of Stephen line with question comes Raymond from go

Stephen Laws

Larry. Hi. Good afternoon

of can about to maybe talk as property about with roughly Tim's opposed Following you little subsequent more a loan like seeing? the as gave absolute the in to about regards as color your month. you pipeline, on early for But ago. regards well the the a place are values closed as bit up this pipeline to second you the on comments, NPLs, the events having you what agreements towards to February, percentage done on with amount March, in and talked January know, dollars in appreciate call seasonality; point you loans here close quarter, looks questions here. I you the Really

the year? or closed, we about the we pipeline, can talk about remainder think should as kind investments how move So being and the to you the of of portfolio building

Larry Mendelsohn

Sure.

to quarters. busy tend Second be the and quarter quarter fourth two

on XX, capital for XX well, others XXX tend QX loans the expect, -- get some the obvious lot couple the we XXth There to adding regulatory very July. million the the closing, XX have. were of roll second seeing XXX the in start gets quarter week liquidity that set pre-funding so week as of close a XX come in expectation of to an $XXX week of closings should that other -- would the re-performing XX to mid-July, a XXX, it of find two we under couldn't up between will in that identify of latest, banks to is about between I buy sometime to that maybe next that or loans dates, is lot call and close reasons be plus will mid-March. to second some have hours to date, agreement, June, whatever weeks. a this and of of XXth probably June end-September of the at then, at it it XXth June, The again, but for we in like June XXth A as account our and closings. so would second slow usually June they You -- now ago. funds that July, of June and of We contract and close second that loans

are anywhere we I happen $X.X any at and $XXX and know, But, million. probably between So some million with are loan point X pools somewhere in will between what at different XX don't that time, looking those.

the of So these, number anticipate in I or in will July. pools, will half month of that a there close during would the be second would May, that that identify early addition of to June

Stephen Laws

other of that like new the question what income higher at one helpful. other appropriate, or went million a the And that's about you $X.X than Is That's Great. run to talk this that line; smaller level sequentially looks income doubled into can this quarter? rate.

Larry Mendelsohn

-- a out There just income real let the quick. statement is pull Yeah. me

apples-to-apples. So

So was added paid on one number income, to a pretty of based loan which a we modifications, as that thing material fees happened other amount.

me REO written notes of look, But have gains. about $XXX,XXX because -- some had keep impairment. $XXX,XXX operating I Let the has mind, real expense state REO of We on in that. some exactly

of net So But gains a lot before. we are you to numbers. the so you continued kind of REO happens to become getting regular, selling pretty REO we a point should those net two the income of impairment because where are see and quarter, each have $XXX,XXX, other gain now REO is

big you deferred didn't have. had other thing, last we a quarter, calling costs of is securitization, $XXX,XXX in The issuance from which the that

the quarter. was something in that So last

of have expense that. didn't related to $XXX,XXX you So

the When that portfolio, you The it get future Affordable fees, you to some finally HAMP are from to Modification to could have you Home so of other consecutive Program. also. thing expect XX the more is and mod, loan our months would fees, on the that fees in a borrowers performance see paid get entitled we

Stephen Laws

the you Appreciate color much. that. on Great. Thank very

Larry Mendelsohn

yield don't any Sure. have models, In fee our we income.

all gravy. that's So just

Stephen Laws

Fantastic. Okay.

Operator

Valentin Scott go Please question The Compass ahead. next with from Point. comes

Scott Valentin

question. Thanks my for taking

Just duration is as Yields but down up, things, on yields debt. of extension, two use refinance out cash with because that you are are regard of overall high pointed to margin, coming cost funds you down. cost are Larry, so -- one means down, the

of [indiscernible] stock, another on more markets are reinvested cash Just wondering, the business, capital you makes of for going like a to to are getting up flow. the that to but maybe now trading values, forward you it you it how of is kind funding now, now room it's sense below in grow. Is to think JVs book obviously, do given apprehensive is about as that, excess avenue the -- there buyback

in Just provide the wondering how management think the the and flexibility flow are cash seeing that JVs higher portfolio? of off capital the capital about you you light strategy, whole

Larry Mendelsohn

would from think thought assets board's value. long we additional cheap have are term of that Kind to perceptive, Sure. good is first and our find be,

that, if would the it that the better income like us fairly back larger buy think true decrease whether a we they increase not to shareholders. extent taxable these value. a keeps of I and To at of to trade and because market bigger the our cap, can't we'd that a the cap, income. number market not our number obviously in heard that would but a at us shareholders were up that cap that to that's -- relative taxable large bit or little think, have the true, they from bit would we market tell stays levels, dividend prove would I absolutely prefer stock, it they a be little really bigger, to

coming are on -- that that loans. and capacity at debt those there also, side, actually thing -- at market, are could that looking they available board on given where is the other our than have look think bond cheap structured individual we have going rather loans -- just acquisitions they platforms the us off securitized the basis well, cash we a think as on significant as credit The other asset they flow are to

her I investments. here, because is our based have and Doyle, Mary CFO feel bad kinds on scenarios of of different running for assumptions different Mary And dozens so, group, a they -- for because they her have

And the redevelopment as so side, loan some for we well, of could well side, property working where side and a at underlying commercial, that bridge individual there, we financing lot are interesting out the platforms side There assets. and the asset as commercial, as, based are providing on is hard. there the both look they financing opportunities the understand

-- can places So our buy I to company, just from assets, about it's see be do we you that sources. but current looking is are don't that we want we not an not there operating think,

Scott Valentin

GAAP, Fair it's a brought just, for I Then up there, below XQ flipped. of I Okay. think taxable kind enough. last the earnings you and think earnings, were and and now while taxable the for XQ,

Just you wondering, that. forward, of is the concerns trends I how optics of But going GAAP because EPS in having timing, look EPS that your taxable the below understand of it wondering, the one think again, tax going see just is at, taxable taxable just dividend, you EPS people forward?

Larry Mendelsohn

Sure.

amount having, of over go flow time. up taxable to has Given cash the mathematically we EPS are

loan, becomes foreclosure the purchase is a event. time you Just becomes from discount taxable there the EPS. taxable Every time The on a EPS. payoff, discount the that taxable payoffs, think foreclose about every becomes

of foreclosures. have throughout taxable to you is of had so certainly, acquired. was half later months. the $XXX tell typical to XX less after XXXX so on your why non-performing rather taxable maybe was months X what X to These of tends down, X But will a will we and and But XX NPLs, NPLs about little that. themselves peak that's to income second more than about less are I a we NPLs early staged months, than XX are time you expect taxable reasons see cash loans million just you going income that At as have and of buying off little less the velocity would loans. growing, part the stop less loans, our GAAP those end because the if of the from left, you the have tax coming had sheer same. day, of NPLs, be and One to when income the generation NPLs from no XXXX, flow that,

and life. is contractual and maturity being loans for said, So tax a paid expected payment, considerably. GAAP grow never if to has to tax is to That years miss XX

have you If to of all the years. at income are a a lot I go think to going don't taxable GAAP them didn't years, of you earlier. loans income But expect to XX little our XX end and all would

Scott Valentin

guess has think that Then final I the amount question; [indiscernible], Okay. on one of the I work call, last do. Mary to

to tax under different XX the in You out. new guys review scenarios law, figure

Just wondering the progress that process? on that,

Larry Mendelsohn

eight those the they do. took more is, news only board about good seven gave or the her more scenarios And to Yes. and

decision having Board on progress. to different decide. you place, if REIT, now, that got and board years zero you Theoretically, depends they they gets law But filing to to couple tax tax -- to will being the and make run, lot a from kind to the of that that, decide dramatically and if the That decision, the they July. that a the expecting I that complicated, need asked day ever to they to to So And do July probability make of decision, in will am scenarios that's that's think easy as which the not prior return, to meeting. of changed were to and the a I you at opposed isn't have between would be a make on out how REIT. a some that a extent know defensive the ability figure ability, were to pretty now have, ever be to don't a said, re-REIT,

Scott Valentin

Okay. very Thanks much.

Larry Mendelsohn

the really be be at as okay. would -- what that be that as of yourself changed, And be well law bad any a the people into scenarios, tax spending tax the time as requires changes with would our get that. just changes would what would against to and the protecting you When of Deloitte, world, these if lot mixing complicated it tax different

think different is XXX% different I don't there this point, unanimity on I members have side. Board So either opinions. think at

Scott Valentin

Okay. you. Thank

Operator

comes question with next go ahead. our Advisors. from Nikolic Please JPL And Lazar

Lazar Nikolic

call. my Thanks Hi. for taking

Larry Mendelsohn

worries at pleasure. My No all.

Lazar Nikolic

the your of this comparable prices And estimate trading to an per was if the am -- know, went value observable tried with I every NAV several came on that don't subordinated plus company, where $XX bonds, of in ago, conference investor share. call of calls, assets. net correctly, based consecutive several you actually up you remember I to the Ajax. through Is exercise, you I quarters

QX this a to [ph] number, little single bit per puzzled, at I buyer. am share as So XX handle in issued to given a have XXXX you shares why

NAV such you little On mean, I seem it troubling, we of and getting is didn't discounts. more we a kind from it, estimates, keep it standpoint, to than do this did XX% your at it. if discount made diluted big huge own shareholder the we call, to a wasn't had deal, have like, aah, it's a

thoughts on would appreciate that. your I So

Larry Mendelsohn

a of Yeah. was do an we We the did at about convert, at wanted was the almost long to it no it convert, enquiry. the at as do add-on did all and third out as $XX.XX wanted add-on, exercise which looked also one the approximately they X value. reverse in the of then they in convert, equity time, $XX.XX, so QX, to book a because of buyer But issued issued the the to and million The about in price to combined equity. it, board they

the where the to issued premium $X be convert the wanted August was at the $X would of a of approximately because the they convert was in million and book Absent issued, have they million. equity. issued mix So not that,

Lazar Nikolic

I see.

that So issuing equity right? the foresee going don't forward, is current valuations, near anywhere you

Larry Mendelsohn

No.

Lazar Nikolic

Okay.

Larry Mendelsohn

the we buyer. I did, If would be

Lazar Nikolic

diluting is Yeah. at idea. large a always But the shareholder pool I discounts bad mean,

-- have I question Another

Larry Mendelsohn

thing, I what do. one that, Hang that, on do the second, it say although agree money. depend does with one would I is with I you

opportunity that if acquisition. opportunity of make might to issue an equity we that for saw equity. be that to we we But years, we said, we example, make to someone an X% bit going four four thought little issue are for if year thought if wouldn't year years, willing someone saw on for make we So a or XX% -- could we if said we three

Lazar Nikolic

could this Right. But in XX%? situation this even situation, you though -- in even make

Larry Mendelsohn

if XX% book. it. That's necessarily book ultimately and to the be dilutive, of on not equity earnings, little would you Issuing were it value, accretive to actually even accretive be a would bit diluting unlevered. earnings,

would you it in issued be Just I like, invested dilutive. you equity if at $XX would say, it absolutely cash, and

Lazar Nikolic

couldn't mean, returns. that. [indiscernible] the equity. a $XX share issuing you I and deploy [Indiscernible] NAV, understand there I is subordinate Right. XX% in then we No bonds capital, and crystallize a sell that But

Larry Mendelsohn

agree Yes. that. I XXX% Yes. with

Lazar Nikolic

thanks dilutions Well right. your kind this hope future there be I All of Thank for answers. Okay. of magnitude. you. won't

Larry Mendelsohn

Yes. I am a large holder too.

Operator

for At today. question-and-answer conclude this session this will the time,

conference Mendelsohn let over turn Larry So closing me to the back for any remarks.

Larry Mendelsohn

Thank through you first go to conference call everybody us on quarter of XXXX. for joining our

and we we busy, we has have anybody very second are XX. particular already quarter ending call for June are is quarter we happy And forward Second questions, to looking conference early to are when our August, around, if answer.

Operator

conference you concluded. for Thank has The attending presentation. now today's

lines. your disconnect now may You

Rithm Property Trust (RPT) 1 May 182018 Q1 Earnings call transcript