Great Ajax Corp ((RPT)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Great Ajax Corp reflects a company that has found its footing and is actively seeking strategic opportunities to enhance value. While the company has made strides in stabilizing its operations and exploring new ventures, challenges such as the stock trading below book value and flat earnings remain significant concerns.
Stabilization and Dividend Maintenance
Great Ajax Corp has successfully stabilized its financial performance, transitioning from a $10 million quarterly loss to breaking even. This stabilization has allowed the company to maintain a $0.06 dividend, showcasing its commitment to returning value to shareholders despite past challenges.
Strategic Asset Management
The company has taken decisive steps in strategic asset management by liquidating residential assets and adding commercial real estate floaters. This move has provided liquidity and higher yields, positioning Great Ajax Corp to capitalize on more lucrative opportunities.
New Loan Originations
In a bid to enhance its portfolio, Great Ajax Corp has originated a $21 million loan on a grocery-anchored retail center. This loan is expected to yield returns in the mid-teens, reflecting the company’s focus on high-yield, opportunistic lending.
Paramount Transaction Excitement
The company expressed excitement about the Paramount transaction, a significant office REIT deal in NYC and San Francisco. This transaction is anticipated to deliver substantial returns, underscoring Great Ajax Corp’s strategic growth initiatives.
Direct Lending Business Development
Great Ajax Corp plans to expand its direct lending platform in partnership with Genesis, aiming to increase production from $1.7 billion to over $5 billion. This development highlights the company’s commitment to scaling its operations and enhancing its market presence.
No Legacy Issues
Unlike some of its peers, Great Ajax Corp has no legacy issues, which positions it favorably in the market. This clean slate allows the company to focus on growth without the burden of underwater loans.
Stock Trading Below Book Value
A notable challenge for Great Ajax Corp is its stock trading at about 50% of book value. This presents a hurdle for capital growth without diluting shareholders, necessitating strategic actions to unlock value.
Limited Activity and Flat Earnings
The earnings call highlighted limited activity during the quarter, with flat earnings indicating a need for more substantial actions to drive growth. The company acknowledges this challenge and is exploring ways to generate momentum.
Forward-Looking Guidance
CEO Michael Nierenberg provided forward-looking guidance, emphasizing the company’s stable performance and strategic options, including potential equity offerings and the recent Paramount acquisition. With a clean balance sheet and no legacy issues, Great Ajax Corp is well-positioned to explore growth opportunities, despite the stock trading at a discount.
In summary, Great Ajax Corp’s earnings call reflects a company that has stabilized and is actively pursuing strategic growth opportunities. While challenges such as the stock trading below book value and flat earnings persist, the company’s strategic initiatives and clean balance sheet position it well for future growth.