Great Ajax Corp's Q2 Earnings Call: Optimistic Sentiment with Challenges Ahead

Great Ajax Corp reported Q2 earnings with a cautiously optimistic sentiment, highlighting significant progress in repositioning and deploying capital, leading to improved financial performance. Despite challenges such as a stock trading at a 50% discount and limited current earnings, the company's strong pipeline and commitment to dividends provide a positive outlook. CEO Michael Nierenberg emphasized the company's strategic repositioning and focus on achieving double-digit returns.

Rithm Property Trust Inc. (NYSE: RPT) reported its Q2 earnings with a cautiously optimistic sentiment, highlighting significant progress in repositioning and deploying capital, leading to improved financial performance. The company successfully repositioned itself as an opportunistic commercial real estate REIT after taking over the management contract from Great Ajax. Over the past year, Rithm Property Trust deployed $300 million in commercial real estate assets and raised new capital without diluting shareholders [1].

The company's GAAP income for the quarter was $1.4 million or $0.03 per diluted share, indicating limited immediate growth. However, the earnings available for distribution (EAD) were approximately $100,000, and the company maintained a strong balance sheet with approximately $98.6 million in cash and liquidity. The stock trading price was approximately $2.70, about a 50% discount to book value, suggesting potential upside in valuation as the company executes its plan.

The company's robust pipeline includes $2 billion of assets under evaluation, with a focus on senior mortgages, subordinate loans, and mezzanine loans. The target yields for future portfolio investments are expected to generate around 15% returns. Despite these positive aspects, the company faces challenges in scaling its operations and achieving profitability, as it requires significant capital deployment and strategic execution.

CEO Michael Nierenberg emphasized the company's strategic repositioning and focus on achieving double-digit returns. The company plans to deploy about $50 million this quarter, focusing on retail, multifamily, office, and industrial sectors. Nierenberg also noted that the company aims to avoid diluting shareholders by tapping into the pref market and bringing in third-party capital for larger transactions.

While the company's dividend of $0.06 per common share may be at risk if earnings do not improve to support the payout, Nierenberg is committed to maintaining the dividend by creating scale around capital formation and deploying capital with teens type returns. The real estate market presents risks, and Rithm Property Trust must be diligent in underwriting and capital deployment to avoid potential losses.

References:
[1] https://finance.yahoo.com/news/rithm-property-trust-inc-rpt-072249978.html