Great Ajax Corp Reports Fourth Quarter Loss and Decline in Book Value
Net Loss: Great Ajax Corp (NYSE:AJX) reported a net loss attributable to common stockholders of $(23.2) million.
Earnings Per Share (EPS): The company recorded a loss of $(0.86) per basic common share.
Net Interest Income: Net interest income was $3.2 million, a slight decrease from the previous quarter.
Book Value: Book value per common share decreased to $9.99 at the end of the quarter.
Cash Position: AJX held $52.8 million in cash and cash equivalents by the end of the quarter.
Portfolio Performance: Approximately 80.4% of the loan portfolio made at least 12 out of the last 12 payments.
Dividends: A cash dividend of $0.10 per share was declared, payable on March 29, 2024.
On February 27, 2024, Great Ajax Corp (NYSE:AJX) released its 8-K filing, announcing the financial results for the quarter ended December 31, 2023. The externally managed real estate investment trust (REIT), which primarily focuses on acquiring, investing in, and managing a portfolio of mortgage loans, faced a challenging quarter with a net loss attributable to common stockholders of $(23.2) million and a decrease in book value per common share to $9.99.
Financial Performance and Challenges
Great Ajax Corp's performance in the fourth quarter was marked by a net loss per basic common share of $(0.86), with an operating loss of $(1.8) million or $(0.07) per basic common share. The company's net interest income, excluding any adjustment for expected credit losses, was $3.2 million, reflecting a slight decrease from the previous quarter. This decline in net interest income is significant for a REIT like AJX, as it directly impacts the company's ability to generate cash flow and pay dividends to shareholders.
The challenges faced by Great Ajax Corp included a decrease in the book value per common share, which is a critical metric for investors as it represents the net asset value of the company. The decrease from $11.07 in the previous quarter to $9.99 is indicative of the difficulties the company faced during the period, including market volatility and adjustments in cash flow projections for their joint ventures.
Income Statement and Balance Sheet Highlights
Great Ajax Corp's total cash collected during the quarter amounted to $30.4 million, stemming from loan payments, sales of REO properties, and collections from investments in debt securities and beneficial interests. Despite this, the company's interest income decreased slightly due to lower average balances on mortgage, debt security, and beneficial interest portfolios. The interest expense also decreased by $0.4 million compared to the prior quarter, primarily due to a decrease in the average balance of interest-bearing debt.
The balance sheet showed that AJX ended the quarter with $52.8 million in cash and cash equivalents. The company's average daily cash balance for the quarter was $55.2 million, and the average carrying value of RPLs was $882.1 million. The average carrying value of NPLs and SBC loans was $42.1 million and $8.6 million, respectively.
Analysis of Company Performance
The reported net loss and decrease in book value per share are concerning indicators for Great Ajax Corp. The company's performance is crucial as it affects its ability to sustain dividend payments, a key factor for REIT investors. The decrease in net interest income, although marginal, and the reported net loss suggest that the company may need to reassess its portfolio strategy and cost management to improve profitability and shareholder value.
Great Ajax Corp's taxable loss for the quarter was $0.03 per share of net income available to common stockholders, which is an improvement from the $(0.06) per share of taxable net income available to common stockholders for the previous quarter. This suggests that despite the net loss, the company may be making progress in managing its taxable income.
In summary, Great Ajax Corp's fourth quarter was marked by a net loss and a decrease in book value per share, reflecting the challenges faced in the current economic environment. The company's ability to navigate these challenges and improve its financial metrics will be critical for its future success and attractiveness to investors.
For more detailed information, readers are encouraged to review the full 8-K filing by Great Ajax Corp.
Explore the complete 8-K earnings release (here) from Great Ajax Corp for further details.
This article first appeared on GuruFocus.
