Great Ajax Corp. (AJX): Business Model Canvas [10-2024 Updated]

Great Ajax Corp. (AJX) stands out in the competitive landscape of real estate investment trusts (REITs) with a unique business model focused on high-yield mortgage assets and a robust operational framework. By leveraging strategic partnerships and a diverse portfolio of mortgage loans, AJX is positioned to deliver attractive returns to its investors. In this blog post, we will delve into the essential components of Great Ajax's business model canvas, exploring how each element contributes to its overall success in the market.

Great Ajax Corp. (AJX) - Business Model: Key Partnerships

Collaborations with Institutional Accredited Investors

Great Ajax Corp. engages in joint ventures with institutional accredited investors to enhance its acquisition of mortgage loans and mortgage-related assets. This strategy capitalizes on the investors' financial backing and expertise. As of September 30, 2024, the total original outstanding principal from these joint ventures amounted to approximately $328.8 million, with the company retaining ownership percentages ranging from 10.01% to 31.90% across various trusts.

Issuing Trust	Total Original Outstanding Principal ($ in thousands)	Ownership Percent	Current Owned Stated Principal Balance Retained ($ in thousands)
Ajax Mortgage Loan Trust 2021-A	146,200	10.01%	16,665
Ajax Mortgage Loan Trust 2021-C	46,722	31.90%	14,860
Ajax Mortgage Loan Trust 2021-D	38,293	20.00%	7,630
Ajax Mortgage Loan Trust 2021-E	518,357	19.57%	218
Ajax Mortgage Loan Trust 2021-F	92,743	12.60%	11,670

Joint Ventures for Mortgage Loan Acquisitions

The company forms joint ventures primarily structured as securitization trusts to acquire mortgage loans. These structures allow Great Ajax to leverage its operational capabilities while minimizing risk exposure. The joint ventures have enabled Great Ajax to acquire a significant volume of loans, with a total of approximately $403.1 million in mortgage loans held for investment as of September 30, 2024. This figure reflects a decrease from $864.6 million at the end of 2023, primarily due to loan paydowns and asset sales.

Type of Mortgage Loans	Amount Held for Investment ($ in thousands)	Amount Held for Sale ($ in thousands)
As of September 30, 2024	403,056	31,315
As of December 31, 2023	864,551	55,718

Relationships with Servicing Partners like Newrez

Great Ajax maintains strategic relationships with servicing partners such as Newrez, which provide essential loan servicing capabilities. These partnerships are vital for managing the company's loan portfolios effectively and ensuring compliance with regulatory requirements. For the nine months ended September 30, 2024, the related party loan servicing fee incurred was approximately $3.7 million, reflecting the ongoing collaboration with these servicing entities.

Category	Amount ($ in thousands)
Related Party Loan Servicing Fee (9 months ended September 30, 2024)	3,651
Related Party Management Fee (9 months ended September 30, 2024)	21,866

Great Ajax Corp. (AJX) - Business Model: Key Activities

Acquiring re-performing and non-performing loans

Great Ajax Corp. primarily targets the acquisition of re-performing loans (RPLs) and non-performing loans (NPLs). As of September 30, 2024, the company reported holdings of mortgage loans held-for-investment at approximately $403.1 million, down from $939.1 million as of December 31, 2023.

In the nine months ended September 30, 2024, the total amount acquired in mortgage loans was $0, while the principal paydowns totaled $40.6 million. The company has adjusted its strategy to focus on a legal entity approach for remaining loans held-for-investment.

Managing mortgage loans and real estate assets

Great Ajax manages a portfolio of mortgage loans and real estate assets. As of September 30, 2024, the company recorded a net loss attributable to common stockholders of $95.1 million for the nine months ended. The management of these assets includes monitoring the performance of loans and making adjustments as necessary to optimize returns.

The company reported a related party loan servicing fee of approximately $3.7 million for the nine months ended September 30, 2024. Additionally, the company’s real estate assets, net, totaled $4.3 million at the end of the third quarter of 2024, down from $6.3 million in the same period of the previous year.

Securitizing mortgage loans through trusts

Great Ajax securitizes its mortgage loans through various trusts, which allows the company to manage risk and leverage capital. The company has established multiple Ajax Mortgage Loan Trusts, including notable issues such as Ajax Mortgage Loan Trust 2023-C, which had an outstanding principal balance of $147.4 million as of September 30, 2024.

The company’s securitization activities help in maintaining liquidity and enhancing the capital structure. As of September 30, 2024, the total original outstanding principal across various mortgage loan trusts was approximately $1.2 billion.

Trust Name	Outstanding Principal ($ millions)	Interest Rate (%)	Maturity Date
Ajax Mortgage Loan Trust 2023-A	163.7	3.46	2062
Ajax Mortgage Loan Trust 2023-B	91.3	4.25	2062
Ajax Mortgage Loan Trust 2023-C	147.4	3.45	2063
Ajax Mortgage Loan Trust 2022-A	154.9	3.47	2061
Ajax Mortgage Loan Trust 2022-B	169.9	3.47	2062

Great Ajax Corp. (AJX) - Business Model: Key Resources

Mortgage Loan Portfolios

As of September 30, 2024, Great Ajax Corp. reported mortgage loans held-for-investment, net of $403.1 million, a decrease from $939.1 million at December 31, 2023. The company has 2,664 loans in its portfolio with a total unpaid principal balance (UPB) of $463.9 million.

Portfolio Composition	As of September 30, 2024	As of December 31, 2023
Number of Loans	2,664	5,023
Total UPB	$463.9 million	$957.2 million
Interest-Bearing Balance	$421.9 million	$875.2 million
Deferred Balance	$42.0 million	$82.0 million

Securitization Trusts

Great Ajax utilizes securitization trusts to manage its mortgage loan portfolios. As of September 30, 2024, the company has $400.6 million of loans transferred to securitization trusts. These loans are exclusively used to settle obligations of the trusts and are not recourse to the company.

Securitization Trusts Details	Outstanding Loans	Amount
Trusts with loans	5	$400.6 million
Secured Borrowings	Not disclosed	$231.5 million

Experienced Management Team and Operational Infrastructure

Great Ajax Corp. benefits from a seasoned management team with extensive experience in mortgage finance and real estate investment. The company's operational infrastructure supports its strategy of acquiring, managing, and disposing of mortgage loans efficiently, which is critical given its portfolio performance metrics and market conditions.

The management team has been pivotal in navigating market challenges, evidenced by their strategy adjustments that have led to a significant reduction in mortgage loans held-for-investment. This strategic pivot reflects an agile operational framework capable of adapting to market demands.

Management Metrics	As of September 30, 2024
Net Loss Attributable to Common Stockholders	$(8.0) million
Weighted Average Number of Shares Outstanding	45,327,254
Total Equity	$247.1 million

Great Ajax Corp. (AJX) - Business Model: Value Propositions

Targeting high-yield mortgage assets

Great Ajax Corp. focuses on acquiring high-yield mortgage assets, specifically re-performing loans (RPLs) and non-performing loans (NPLs). As of September 30, 2024, the total outstanding principal balance (UPB) of mortgage loans held-for-investment was $403.1 million, down from $864.6 million as of December 31, 2023. The company's strategy emphasizes purchasing assets at favorable prices, with the current purchase price representing approximately 80.0% of the total UPB. This strategy allows the company to capitalize on potential appreciation in asset values while managing risk effectively.

Expertise in managing distressed properties

Great Ajax Corp. possesses significant expertise in managing distressed properties acquired through foreclosures or deed in lieu of foreclosure processes. The company recorded a loss of $1.7 million on the mark-to-market of mortgage loans held-for-sale in the third quarter of 2024, highlighting the challenges in this segment. Furthermore, the company has a robust pipeline for the management and sale of real estate owned (REO) properties, with a carrying value of $4.3 million as of September 30, 2024. The management of distressed properties not only enhances the company's asset base but also provides opportunities for value creation through strategic property sales.

Attractive dividend yields for investors

Great Ajax Corp. has positioned itself as an attractive investment option through its commitment to providing strong dividend yields. The company reported a net loss attributable to common stockholders of approximately $8.0 million for the third quarter of 2024. Despite this, it has maintained a focus on delivering dividends, with total dividends paid on common and preferred stock amounting to $8.7 million during the same quarter. The dividend yield, reflecting the company's ability to return value to shareholders, remains a key component of its value proposition, especially in a competitive market where income generation is crucial for investors.

Financial Metrics	Q3 2024	Q3 2023
Net Loss Attributable to Common Stockholders	$8.0 million	$6.1 million
Total Assets	$858.2 million	$1.3 billion
Mortgage Loans Held-for-Investment, Net	$403.1 million	$864.6 million
Dividends Paid	$8.7 million	$17.0 million

Great Ajax Corp. (AJX) - Business Model: Customer Relationships

Engagement through transparent communication

Great Ajax Corp. (AJX) prioritizes transparent communication with its investors. This is reflected in their regular financial disclosures, including quarterly and annual reports. For example, as of September 30, 2024, the company reported a net loss attributable to common stockholders of $8,029,000, compared to a loss of $6,089,000 for the same period in 2023.

Regular updates on financial performance

The company provides consistent updates on its financial performance, helping investors stay informed. In the third quarter of 2024, AJX reported interest income of $12,348,000, down from $17,879,000 in the third quarter of 2023. Conversely, interest expense decreased to $8,660,000 from $14,838,000 over the same period.

Financial Metric	Q3 2024	Q3 2023
Net Loss Attributable to Common Stockholders	$8,029,000	$6,089,000
Interest Income	$12,348,000	$17,879,000
Interest Expense	$8,660,000	$14,838,000

Responsive customer service to investor inquiries

Great Ajax Corp. maintains a responsive customer service approach for investor inquiries. The company’s management is accessible for discussions regarding performance and operational strategy. This has led to a relatively stable investor base, as evidenced by the weighted average number of shares outstanding which increased to 45,327,254 in Q3 2024 from 24,001,702 in Q3 2023.

Additionally, the company’s proactive stance in managing investor relations is highlighted by the termination of the Former Management Agreement in June 2024, which aimed to enhance operational efficiency and investor alignment.

Great Ajax Corp. (AJX) - Business Model: Channels

Direct engagement through investor relations

Great Ajax Corp. actively engages with its investors through a dedicated investor relations team, providing transparent communication regarding financial performance, strategic initiatives, and market developments. In 2024, the company has reported a total equity of approximately $247.1 million as of September 30, 2024, down from $310.9 million at the end of 2023. The weighted average number of shares of common stock outstanding as of September 30, 2024, was 45,327,254.

Online platforms for stock trading and updates

Great Ajax Corp.'s stock is listed on the NYSE under the ticker symbol AJX. As of September 30, 2024, the company's stock price was approximately $5.45, reflecting a decline from $8.19 at the beginning of the year. The company utilizes online trading platforms to facilitate transactions and provide real-time updates on stock performance, which is essential for investors looking to make informed trading decisions. In the nine months ended September 30, 2024, the company reported a net loss attributable to common stockholders of $95.1 million.

Financial reporting via SEC filings

Great Ajax Corp. adheres to stringent regulatory standards by filing comprehensive financial reports with the Securities and Exchange Commission (SEC). These filings include quarterly and annual reports that detail the company's financial health, including revenues, expenses, and net income. For the nine months ended September 30, 2024, the company reported interest income of $40 million, with interest expense totaling $34.3 million, resulting in a net interest income of $5.7 million.

Financial Metrics	September 30, 2024	December 31, 2023
Total Equity	$247.1 million	$310.9 million
Net Loss Attributable to Common Stockholders	$(95.1 million)	$(26.1 million)
Interest Income	$40 million	$54.7 million
Interest Expense	$34.3 million	$44.8 million
Net Interest Income	$5.7 million	$9.9 million
Weighted Average Shares Outstanding	45,327,254	38,482,055

Great Ajax Corp. (AJX) - Business Model: Customer Segments

Institutional investors seeking high returns

Great Ajax Corp. (AJX) targets institutional investors by offering investment opportunities primarily in residential mortgage loans. The company has structured its offerings to appeal to this segment by focusing on re-performing loans (RPLs) and non-performing loans (NPLs). As of September 30, 2024, Great Ajax had a total outstanding principal of $403.1 million in mortgage loans held-for-investment, a significant portion of which is aimed at institutional investors.

Retail investors interested in REITs

Great Ajax also caters to retail investors, particularly those interested in Real Estate Investment Trusts (REITs). The company operates as a mortgage REIT, enabling retail investors to gain exposure to real estate markets through shares. The company declared a cash dividend of $0.06 per share on October 18, 2024, reinforcing its commitment to providing returns to retail shareholders.

Financial entities looking for mortgage investments

Additionally, Great Ajax engages with financial entities seeking mortgage investments. The company forms joint ventures with third-party institutional accredited investors to purchase mortgage loans and related assets. As of the latest report, the average balance of mortgage loans held-for-sale was $31.3 million.

Customer Segment	Investment Focus	Total Outstanding Principal (as of September 30, 2024)	Dividend per Share	Average Balance of Loans Held-for-Sale
Institutional Investors	Residential Mortgage Loans (RPLs & NPLs)	$403.1 million	N/A	N/A
Retail Investors	REITs	N/A	$0.06	N/A
Financial Entities	Mortgage Investments	N/A	N/A	$31.3 million

Great Ajax Corp. (AJX) - Business Model: Cost Structure

Operational costs for managing mortgage assets

As of September 30, 2024, Great Ajax Corp. reported total expenses of $33.57 million for the nine months ended, which includes operational costs associated with managing mortgage assets. The breakdown of these operational costs is reflected in various expense categories, including:

Expense Category	Amount ($ in thousands)
Related party loan servicing fee	3,651
Professional fees	2,643
Other expenses	8,483
Total Operational Costs	33,566

Servicing fees paid to Newrez

Great Ajax Corp. transitioned its servicing agreements to Newrez as of June 1, 2024. The servicing fees for mortgage loans range from 0.42% to 1.25% annually of the unpaid principal balance (UPB) at acquisition, paid monthly. As of September 30, 2024, the company incurred the following servicing fees:

Loan Status	Servicing Fee Rate (%)	Servicing Fee Amount ($ in millions)
Current	0.42	0.5
Delinquent (30-60 days)	0.85	0.7
Delinquent (60-90 days)	1.25	0.3
Total Servicing Fees		1.5

Management fees under the new management agreement

Under the new management agreement established after the termination of the former management agreement, Great Ajax Corp. pays management fees that include a base management fee and an incentive management fee. For the nine months ended September 30, 2024, the management fees were reported as follows:

Fee Type	Amount ($ in thousands)
Base Management Fee	21,866
Incentive Management Fee	2,235
Total Management Fees	24,101

These management fees are essential in overseeing the company's operations and investment strategies.

Great Ajax Corp. (AJX) - Business Model: Revenue Streams

Interest income from mortgage loans

Great Ajax Corp. generates significant revenue through interest income from mortgage loans. For the nine months ended September 30, 2024, the total interest income reported was $40,001,000, down from $54,675,000 for the same period in 2023. The interest income for the third quarter of 2024 alone was $12,348,000 compared to $17,879,000 in Q3 2023.

Period	Interest Income ($)	Change YoY (%)
Q3 2024	12,348,000	-30%
Q3 2023	17,879,000
9M 2024	40,001,000	-27%
9M 2023	54,675,000

Gains from asset sales and securitizations

In addition to interest income, Great Ajax Corp. realizes revenue from gains on asset sales and securitizations. During the nine months ended September 30, 2024, the company reported a loss on the sale of mortgage loans amounting to $4,534,000, while the loss from investments in affiliates was $1,077,000. The net change in the allowance for credit losses was $5,087,000.

Asset Sale Activity	Amount ($)
Loss on sale of mortgage loans	(4,534,000)
Loss from investments in affiliates	(1,077,000)
Net change in allowance for credit losses	(5,087,000)

Management fees from joint ventures and partnerships

Great Ajax Corp. also earns revenue through management fees associated with its joint ventures and partnerships. For the nine months ended September 30, 2024, management fees from related parties amounted to $21,866,000, up from $5,769,000 in the same period of 2023. The related party loan servicing fee was $3,651,000 in the same nine-month period.

Management Fees	Amount ($)
Management fees from joint ventures	21,866,000
Related party loan servicing fee	3,651,000

Article updated on 8 Nov 2024

Resources:

1. Great Ajax Corp. (AJX) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Great Ajax Corp. (AJX)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Great Ajax Corp. (AJX)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.