Great Ajax Corp

CONSOLIDATED BALANCE SHEETS

(1)Mortgage loans held-for-investment, net includes $400.6 million and $628.6 million of loans at September 30, 2024 and December 31, 2023, respectively, transferred to securitization trusts. These loans can only be used to settle obligations of the trusts. Secured borrowings consist of notes issued by the trusts that can only be settled with the assets and cash flows of the specific trust. The creditors do not have recourse to the Company. See Note 9 — Debt. Mortgage loans held-for-investment, net are net of an allowance ofzero and $3.4 million at September 30, 2024 and December 31, 2023, respectively.

(2)Investments in beneficial interest, net of an allowance of $9.1 million and $6.9 million at September 30, 2024 and December 31, 2023, respectively.

The accompanying notes are an integral part of the consolidated financial statements.

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONSOLIDATED STATEMENTS OF CASH FLOWS

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

September 30, 2024

Note 1 —Business and Organization

Great Ajax Corp., a Maryland corporation (“Great Ajax” or the “Company”), is an externally managed real estate investment trust (“REIT”) formed on January 30, 2014, and capitalized on March 28, 2014, by its then sole stockholder, Aspen Yo (“Aspen”), an affiliate of Aspen Capital. The Company operates as a mortgage REIT. Historically, the Company primarily targeted acquisitions of (i) re-performing loans (“RPLs”), which are residential mortgage loans on which at least five of theseven most recent payments have been made, or the most recent payment has been made and accepted pursuant to an agreement, or the full dollar amount, to cover at least five payments has been paid in the last seven months and (ii) non-performing loans (“NPLs”), which are residential mortgage loans on which the most recent three payments have not been made. The Company acquired RPLs and NPLs either directly or in joint ventures with institutional accredited investors. The joint ventures were structured as securitization trusts, from which the Company acquired debt securities and beneficial interests.

On June 11, 2024, the Company completed its previously announced strategic transaction with Rithm Capital Corp. (together with its subsidiaries, “Rithm” and such transactions together, the “Strategic Transaction”). The Strategic Transaction included a Securities Purchase Agreement entered into by the Company, the Operating Partnership (as defined herein), Thetis Asset Management LLC (the “Former Manager”) and Rithm (the “Securities Purchase Agreement”) on February 26, 2024 which provided for, upon the approval of the Company’s stockholders on May 20, 2024, (i) the sale of $14.0 million of the Company’s common stock to Rithm at a price of $4.87 per share (which represents the trailing five-day average closing price of the Company’s common stock on the New York Stock Exchange (“NYSE”) as of the date of the Securities Purchase Agreement and (ii) a new management agreement (as maybe amended, modified or supplemented from time to time, the “Management Agreement”) with RCM GA Manager LLC, an affiliate of Rithm (“RCM GA” or the “New Manager”), under which, RCM GA became the Company’s new external manager. Additionally, on February 26, 2024, the Company entered into a term loan with Rithm (the “Credit Agreement”), the draw period for which has expired. Entry into the Credit Agreement was accompanied by the Company’s agreement to issue detachable warrants to purchase shares of the Company’s common stock to Rithm. The Company issued such warrants to Rithm to purchase 6.5 million shares with an exercise price of $5.36 per share on May 14, 2024 (the “Rithm Warrants”). See Note 8 — Commitments and Contingencies. On February 26, 2024, the Company issued a termination notice to its Former Manager in connection with the Strategic Transaction and on June 11, 2024, the Company terminated the Former Management Agreement (as defined herein), entered into a termination and release agreement with the Former Manager and issued approximately 3.2 million shares of common stock to the Former Manager in connection with the termination of the Former Manager. For a full description of the components of the Strategic Transaction, see the Company’s Definitive Proxy Statement filed with the Securities and Exchange Commission on April 10, 2024.

In connection with the Strategic Transaction, the Company terminated its agreement with Gregory Funding LLC (“Gregory” or “Former Servicer”), the former loan servicer for the Company and disposed of its interest in Great Ajax FS LLC (“GAFS”), the parent company of Gregory. On June 1, 2024, Gregory assigned all of the servicing agreements for its mortgage loans and real property (the “Servicing Agreements”) to Newrez LLC (“Newrez” or “Servicer”), an affiliate of Rithm through a Servicing Transfer Agreement by and between Gregory and Newrez (the “Servicing Transfer Agreement”). The terms of the Servicing Agreements otherwise remain unchanged.

The Company conducts substantially all of its business through its operating partnership, Great Ajax Operating Partnership L.P., a Delaware limited partnership (the “Operating Partnership”), and its subsidiaries. The Company, through a wholly-owned subsidiary, Great Ajax Operating LLC, is the sole general partner of the Operating Partnership. GA-TRS LLC (“GA-TRS”) is a wholly-owned subsidiary of the Operating Partnership that owns the equity interest in the Former Manager and previously owned an equity interest in the Former Servicer. GAJX Real Estate Corp. (“GAJX”) is a wholly owned subsidiary of the Operating Partnership formed to own, maintain, improve and sell REO properties purchased by the Company. The Company elected to treat GA-TRS and GAJX as taxable REIT subsidiaries (“TRS”) under the Internal Revenue Code. Great Ajax Funding LLC is a wholly owned subsidiary of the Operating Partnership formed to act as the depositor of mortgage loans into securitization trusts and to hold the subordinated securities issued by such trusts. AJX Mortgage Trust I and AJX Mortgage Trust II are wholly-owned subsidiaries of the Operating Partnership formed to hold mortgage loans used as collateral for financings under the Company’s repurchase agreements.

The Operating Partnership, through interests in certain entities, as of September 30, 2024, held 99.9% of Great Ajax II REIT Inc. (“Great Ajax REIT II”), which owns Great Ajax II Depositor LLC, which was formed to act as the depositor of mortgage loans into securitization trusts and to hold the subordinated securities issued by such trusts. Similarly, as of September 30, 2024, the Operating Partnership wholly owned Great Ajax III Depositor LLC, which was formed to act as the depositor for a single securitization transaction.

The consolidated interim financial statements should be read in conjunction with the Company’s consolidated financial statements and the notes thereto for the year ended December 31, 2023, included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2024 (“Annual Report”).

Note 2 —Basis of Presentation

Interim Financial Statements—The accompanying consolidated financial statements are prepared in accordance with US generally accepted accounting principles (“GAAP” or “US GAAP”). In the opinion of management, all adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The consolidated financial statements include the accounts of the Company and its consolidated subsidiaries. All significant intercompany transactions and balances have been eliminated. The Company consolidates those entities in which it has control over significant operating, financing and investing decisions of the entity, as well as those entities classified as variable interest entities (each, a “VIE” and collectively “VIEs”) in which the Company is determined to be the primary beneficiary. For entities over which the Company exercises significant influence, but which do not meet the requirements for consolidation, the Company applies the equity method of accounting whereby it records its share of the underlying income of such entities unless a fair value option is elected. Distributions from such investments are classified in the consolidated statements of cash flows based on the cumulative earnings approach, where all distributions up to cumulative earnings are classified as distributions of earnings.

Reclassifications—During the quarter ended September 30, 2024, the Company reclassified its investment in Gaea Real Estate Corp (“Gaea”) from investment in affiliates to investment in equity securities at fair value. As a result of the change in its external manager, the Company has concluded it is no longer appropriate to account for its investment under the equity method of accounting as it no longer has significant influence over Gaea. Also, during the quarter ended September 30, 2024, the Company reclassified its real estate owned properties, net, receivable from servicer and investment in affiliates to other assets. Additionally, it renamed prepaid expense and other assets to other assets. Also, during the quarter ended September 30, 2024, the Company reclassified its management fee payable to accrued expenses and other liabilities. The balances were reclassified because they are not material on the Company’s consolidated balance sheet.

Risks and Uncertainties— In the normal course of its business, the Company primarily encounters two significant types of economic risk: credit risk and market risk. Credit risk is the risk of default on the Company’s investments that results from a borrower’s inability or unwillingness to make contractually required payments. Market risk reflects changes in the value of investments due to changes in prepayment rates, interest rates, spreads or other market factors, including risks that impact the value of the collateral underlying the Company’s investments. Taking into consideration these risks along with estimated prepayments, financings, collateral values, payment histories and other information, the Company believes that the carrying values of its investments are reasonable. Furthermore, for each of the periods presented, a significant portion of the Company’s assets are dependent on its Servicer’s abilities to perform their servicing obligations with respect to the residential mortgage loans underlying loans and securities.

Use of Estimates — The preparation of the consolidated financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect reported amounts in the consolidated financial statements and accompanying notes. Management believes that estimates utilized in preparation of the consolidated financial statements are reasonable. The most critical estimates include those related to fair value measurements of the Company’s assets and liabilities, and the disclosure of contingent assets and liabilities at the reporting date. Actual results could differ from those estimates and such differences could be material.

See Note 2 to the Company’s consolidated financial statements included in the Company’s Annual Report for the complete listing of significant accounting policies.

Note 3 —Mortgage Loans

Included on the Company’s consolidated balance sheets as of September 30, 2024 and December 31, 2023, are approximately $403.1 million and $864.6 million, respectively, of mortgage loans held-for-investment. Also included on the Company’s consolidated balance sheets as of September 30, 2024 and December 31, 2023, are approximately $31.3 million and $55.7 million of mortgage loans held-for-sale. The activity in the Company’s mortgage loan portfolio is included in the tables below ($ in thousands):

Effective June 30, 2024, all loans held at the Operating Partnership are designated as held-for-sale and accordingly no longer subject to ASU 2016-13, Financial Instruments - Credit Losses (known as “CECL”). Conversely, all loans held at Great Ajax REIT II continue to be held-for-investment and remain subject to CECL. Beginning with the quarter ended September 30, 2024, and in connection with the change in the Company’s strategy, the Company determined a legal entity approach was appropriate with the remaining loans held-for-investment based on the relatively homogeneous characteristics of the loans in each entity. Accordingly, the Company uses the following five pools:

1. Ajax Mortgage Trust 2019-D (“2019-D”)

2. Ajax Mortgage Trust 2019-F (“2019-F”)

3. Ajax Mortgage Trust 2020-B (“2020-B”)

4. Ajax Mortgage Trust 2021-A (2021-A”)

5.18-1 LLC

The following table presents information regarding the year of origination of the Company’s mortgage loan portfolio by basis ($ in thousands). The table for the period ending December 31, 2023 reflects the Company’s previous CECL pools:

The following table presents a reconciliation between the purchase price and par value for the Company’s loan acquisitions for the three and nine months ended September 30, 2024 and 2023 ($ in thousands):

The Company performs an analysis of its expectation of the amount of undiscounted cash flows expected to be collected from its mortgage loan pools at the end of each calendar quarter. Loss estimates are determined based on the net present value of the difference between the contractual cash flows and the expected cash flows over the expected life of the loans. Contractual cash flows are calculated based on the stated terms of the loans. Projected cash flows are determined by factoring prepayment and expected losses based on delinquency status, the value of the underlying collateral, borrower age, weighted average coupon and length of a positive pay history.

Under CECL, the Company adjusts its allowance for expected credit losses when there are changes in its expectation of future cash flows as compared to the amounts expected to be contractually received. An increase to the allowance for expected credit losses will occur when there is a reduction in the Company’s expected future cash flows as compared to its contractual amounts due. Reduction to the allowance, or recovery, may occur if there is an increase in expected future cash flows that were previously subject to an allowance for expected credit loss. An analysis of the balance in the allowance for expected credit losses on loans account follows ($ in thousands):

The following table sets forth the carrying value of the Company’s mortgage loans by delinquency status as of September 30, 2024 and December 31, 2023 ($ in thousands). Each column indicates the number of days the borrower is past due on their mortgage payment or whether the Company has initiated foreclosure proceedings. A status of “Current” indicates the borrower is not delinquent. The table for the period ending December 31, 2023, reflects the Company’s previous CECL pools:

Note 4 —Real Estate Assets, Net

The Company acquires real estate properties (“REO”) when it forecloses on a borrower or when the borrower surrenders the deed in lieu of foreclosure. Property is recorded at the present value of expected future cash flows when it is transferred from a mortgage loan to an REO. The Company intends to sell all REO it acquires.

The following table presents the activity in the Company’s carrying value of property held-for-sale for the three and nine months ended September 30, 2024 and 2023 ($ in thousands):

Note 5 —Investments

The Company holds investments in various debt securities and beneficial interests. Beneficial interests are the residual interest of the Company’s investments in securitization trusts holding pools of mortgage loans. Beneficial interests may be trust certificates and/or subordinated notes depending on the structure of the securitization. The Company designates its investments in debt securities as available-for-sale (“AFS”) or held-to-maturity (“HTM”) based on the intent and ability to hold each security to maturity. The Company carries its residential and commercial AFS debt securities at fair value using prices provided by an external pricing service. The Company adopted the fair value option for its investments in commercial mortgage-backed securities (“CMBS”) and any changes in fair value are recorded in earnings in the period incurred. The Company adopted the fair value option as its New Manager believes it is the appropriate measure of accounting for securities as it transitions the balance sheet away from residential mortgage loans. The Company carries its investments in securities HTM and beneficial interests at amortized cost, net of any required allowance for credit losses.

The Company owns a $21.9 million equity investment in Gaea which is held at fair value with any changes in fair value recorded in earnings in the period incurred. The Company previously accounted for the investment in Gaea using the equity method and reflected Gaea as an investment in affiliates but no longer has significant influence over the operations of Gaea.

The Company’s investment in HTM securities represents the 5.01% the company is required to retain under the European risk retention rules for our secured borrowings (the “EU Retained Interest”). Article 6(1) of Regulation (EU) 2017/2402 of the European Parliament and of the Council. Pursuant to the terms of these debt securities, the Company must hold at least 5.01% of the nominal value of each class of securities offered or sold to investors and the Company is prohibited from selling, transferring or otherwise surrendering all or part of the EU Retained Interest until all such classes are paid in full or redeemed.

Transfers of securities from AFS to HTM are non-cash transactions and are recorded at fair value and on the date of transfer. Any unrealized gains or losses continue to be reported in accumulated other comprehensive loss and amortized into interest income on a level-yield basis over the remaining life of the securities. This amortization will offset the effect on interest income of the amortization of the discount resulting from the transfer recorded at fair value. During the three and nine months ended September 30, 2024, the Company recorded amortization of $0.8 million and $2.3 million, respectively, of unrealized losses in accumulated other comprehensive loss and of unamortized discount related to transfers of securities from AFS to HTM. Comparatively, during the three and nine months ended September 30, 2023, the Company recorded amortization of $1.0 million and $4.2 million, respectively, of unrealized losses in accumulated other comprehensive loss and of unamortized discount related to transfers of securities from AFS to HTM.

During the three and nine months ended September 30, 2024 and 2023, the Company reported $0.9 million andzero of fair value gains on securities held at fair value, respectively. The fair value gains are recorded in other income in the consolidated statement of operations.

The following table presents information regarding the Company’s investments in debt securities and investments in beneficial interests ($ in thousands):

(1)Basis amount is net of amortized discount, principal paydowns and interest receivable on securities AFS and HTM before any fair value adjustment.

(1)Basis amount is net of amortized discount, principal paydowns and interest receivable on securities AFS and HTM before any fair value adjustment.

The following table presents a breakdown of the Company’s gross unrealized losses on its investments in debt securities AFS ($ in thousands):

(1)Step-up date is the date at which the coupon interest rate on the security increases.

(2)Basis amount is net of any realized amortized costs and principal paydowns.

(3)This security has been in an unrealized loss position for 12 months or longer.

(4)This line is comprised of two securities that are both due June 2061, and both have been in an unrealized loss position for 12 months or longer.

(1)Step-up date is the date at which the coupon interest rate on the security increases.

(2)Basis amount is net of any realized amortized costs and principal paydowns.

(3)This security has been in an unrealized loss position for less than 12 months.

(4)This security has been in an unrealized loss position for 12 months or longer.

(5)This line is comprised of two securities that are both due June 2061, and both have been in an unrealized loss position for 12 months or longer.

During the three months ended September 30, 2024, the Company acquired $110.0 million in unpaid principal balance (“UPB”) of CMBS. The Company has adopted the fair value option for these investments. Comparatively, during the three and nine months ended September 30, 2023, the Company re-securitized several joint ventures and retained $57.9 million and $16.1 million, respectively, of varying classes of agency rated and non-rated securities and beneficial interests. All of the debt securities retained are classified as AFS while the beneficial interests are held at amortized cost net of any allowance for credit losses.

During the three months ended September 30, 2024, the Company sold debt securities AFS with a UPB of $62.7 million and recorded a loss of $2.4 million, the majority of which was reclassified from other comprehensive loss to the consolidated statement of operations. Comparatively, during the three and nine ended September 30, 2023, the Company sold senior notes issued by certain joint ventures and recognized a loss of $0.4 million and $3.3 million, respectively, which was similarly a reclassification from other comprehensive loss. As of September 30, 2024 and December 31, 2023, the Company hadno debt securities that were past due.

The following table presents a reconciliation between the purchase price and par value for the Company’s beneficial interest acquisitions for the three and nine months ended September 30, 2024 and 2023 ($ in thousands):

The Company generally recognizes accretable yield on its beneficial interests and increases and decreases in the net present value of expected cash flows in earnings in the period they occur. For the three and nine months ended September 30, 2024, the Company recognized accretable yield of $2.4 million and $3.8 million, respectively, on its beneficial interests. Comparatively, for the three and nine months ended September 30, 2023, the Company recognized accretable yield of $1.9 million and $6.0 million, respectively, on its beneficial interests.

For the three and nine months ended September 30, 2024, the Company recognized interest income of $0.3 million and $1.1 million, respectively, on its investments in securities HTM. Comparatively, for the three and nine months ended September 30, 2023, the Company recognized interest income of $0.5 million and $1.7 million, respectively, on its investments in securities HTM.

Under CECL, an expense is recorded to increase the allowance for expected credit losses when there is a reduction in the Company’s expected future cash flows compared to contractual amounts due. Income is recognized if there is an increase in expected future cash flows to the extent an allowance has been recorded against the beneficial interest or investments in securities HTM. If there is no allowance for expected credit losses recorded against a beneficial interest or investments in securities HTM, any increase in expected cash flows is recognized prospectively as a change in yield. A decrease in the allowance for expected credit losses is generally facilitated by reclassifying amounts to non-credit discount from the allowance and then recording the reduction to the allowance through the income statement. Management assesses the credit quality of the portfolio and the adequacy of loss reserves on a quarterly basis, or more frequently as necessary.

During the three and nine months ended September 30, 2024 and 2023, the Company had no activity and balance related to the allowance for expected credit losses for investments in securities HTM.

During the three and nine months ended September 30, 2024, the Company recorded reclassifications to non-credit discount from the allowance for changes in payment expectations. An analysis of the balance in the allowance for expected credit losses for beneficial interests account follows ($ in thousands):

Note 6 —Fair Value

Recurring financial assets and liabilities measured and carried at fair value by level within the fair value hierarchy as of September 30, 2024 and December 31, 2023 ($ in thousands):

The following tables set forth the fair value of financial instruments by level within the fair value hierarchy as of September 30, 2024 and December 31, 2023 ($ in thousands):

The fair value of mortgage loans is estimated using values from its New Manager. The Company relies on the Manager’s proprietary pricing model, as well as vendor pricing, to estimate the underlying cash flows expected to be collected on the loans. The Company’s mortgage loans are secured by real estate. Risks inherent in the Company’s mortgage loan portfolio, affecting both the valuation of its mortgage loans as well as the portfolio’s interest income include the risk of default, delays and inconsistency in the frequency and amount of payments, risks affecting borrowers such as man-made or natural disasters, or a pandemic and damage to or delay in realizing the value of the underlying collateral. Additionally, slower than expected prepayments can result in lower yields as the Company’s mortgage loans were acquired at discounts. The Company monitors the credit quality of the mortgage loans in its portfolio on an ongoing basis, principally by considering loan payment activity or delinquency status. In addition, the Company assesses the expected cash flows from the mortgage loans, the fair value of the underlying collateral and other factors and evaluates whether and when it becomes probable that all amounts contractually due will not be collected.

The fair value of investments in debt securities AFS, and HTM are determined using estimates provided by the Company’s third-party pricing vendors which are then reviewed to ensure the resulting yield is comparable to market yields for similar securities.

The fair value of investments in beneficial interests is determined using prices provided by the Company’s third party pricing vendors which are then reviewed to ensure the resulting yield is comparable to market yields for similar securities.

The Company values its investment in affiliates based on publicly available information, where available, or the expected cash flows to be received. The Company disposed of its investment in the parent of its Former Servicer, GAFS, in the second quarter of 2024 and received liquidating distributions from its investments in AS Ajax E LLC. The Company ownedtwo Loan Pool LLCs were special purposes entities that held RPLs where the Company owned a minority interest. The Company terminated its investment in the Loan Pool LLCs during the quarter ended September 30, 2024. The Company expects to receive a liquidating distribution in the Former Manager in the fourth quarter of 2024 or the first quarter of 2025.

The Company’s investment in Gaea is reported as an investment in equity securities AFS in the Company’s consolidated balance sheet. The fair value of Gaea is estimated using an implied capitalization rate applied to the value of the underlying properties. For properties under contract or listed for sale, the contract or listing price is used, respectively.

The fair value of secured borrowings is estimated using prices provided by the Company’s third-party pricing vendors, which are then reviewed to ensure the resulting yield is comparable to market yields for similar securities.

The Company issued warrants in connection with the issuance of its preferred stock offerings in fiscal year 2020. The warrants were exercisable at $10.0 share or the warrants could be put back to the Company at an accreted value and settled in shares of the Company’s common stock or in cash (the “2020 Warrants”). Historically, the fair value of the Company’s 2020 Warrants liability was adjusted to approximate market value through earnings. The warrant liability was a fixed amount that may have been settled in cash or shares of the Company’s common stock at the option of the Company. Fair value was determined using the discounted cash flow method using a rate to accrete the initial basis, adjusted for subsequent repurchases, to the future warrant liability over the 39-month term. The balance of any outstanding 2020 Warrants liability was settled for shares of the Company’s common stock in February 2024.

The Company’s borrowings under repurchase agreements are short-term in nature, and the New Manager believes it can renew the current borrowing arrangements on similar terms in the future. Accordingly, the carrying value of these borrowings approximates fair value.

The Company’s convertible senior notes due in 2024 (the “2024 Notes”) were publicly traded on the NYSE under the ticker symbol “AJXA”; the 2024 Notes’ fair value was determined from the closing price on the balance sheet date. The 2024 Notes were redeemed in full on April 30, 2024.

The Operating Partnership issued 110.0 million aggregate principal amount of 8.875% senior unsecured notes due September 2027 in August 2022 (the “2027 Notes). The 2027 Notes payable fair value is determined using estimates provided by third-party valuation services using observed transactions for similar financing arrangements. The 2027 Notes will mature on September 1, 2027, unless earlier repurchased or redeemed.

Note 7 — Affiliates

Unconsolidated Affiliates

During the three months ended September 30, 2024 and December 31, 2023, the Company had ownership inone andfive affiliated entities, respectively, accounted for under the equity method of accounting. During the nine months ended September 30, 2024 and 2023, the Company had ownership interests infive affiliated entities accounted for under the equity method of accounting, respectively. As of September 30, 2024, the Company only has ownership in one entity accounted for under the equity method of accounting.

At both September 30, 2024 and December 31, 2023, the Company’s ownership interest in the Former Manager was approximately 19.8%. The Company accounts for its ownership interest in the Former Manager using the equity method.

At September 30, 2024 the Company's ownership of GAFS waszero. At December 31, 2023, the Company’s ownership interest was approximately 9.72% in GAFS. The Company accounted for its investment in GAFS using the equity method.

At both September 30, 2024 and December 31, 2023, the Company owned approximately 22.2% of Gaea. Effective September 30, 2024, the Company accounts for its ownership interest in Gaea at fair value. During the quarter ended September 30, 2024, Gaea ceased being an affiliate of the Company as a result of the Strategic Transaction and the Company no longer has significant influence over Gaea.

At September 30, 2024 and December 31, 2023, the Company’s ownership interest in AS Ajax E LLC waszero and 16.5%, respectively. The Company accounted for its ownership interest using the equity method. The Company received a liquidating distribution in AS Ajax E LLC in the second quarter of 2024 that reduced its investment tozero.

At both September 30, 2024 and December 31, 2023, the Company’s ownership in the Loan pool LLCs waszero and 40.0%, respectively. The Company accounted for its ownership interest using the equity method.

The table below shows the net income/(loss), assets and liabilities for the Company’s unconsolidated affiliates at 100%, and at the Company’s share ($ in thousands):

Net income/(loss), assets and liabilities of unconsolidated affiliates at 100%

Net income/(loss), assets and liabilities of unconsolidated affiliates at the Company’s share

Consolidated Affiliates

The Company consolidates the results and balances of certain securitization trusts which are established to provide debt financing to the Company by securitizing pools of mortgage loans. These trusts are considered to be VIEs, and the Company has determined that it is the primary beneficiary of certain of these VIEs. See Note 9 — Debt.

The Company also consolidates the activities and balances of its controlled affiliates, which includes AS Ajax E II, in which the Company now holds azero interest, Ajax Mortgage Trust 2017-D (“2017-D”), in which the Company owns a 50% interest and Great Ajax II REIT. Great Ajax II REIT wholly owns Great Ajax II Depositor LLC which acts as the depositor of mortgage loans into securitization trusts and holds subordinated securities issued by such trusts. At both September 30, 2024 and December 31, 2023, Great Ajax II REIT was 99.9% owned by the Company.

Note 8 —Commitments and Contingencies

During the nine months ended September 30, 2024, the Company issued the Rithm Warrants to purchase 6.5 million shares with an exercise price of $5.36 per share with a fair value of $2.7 million. Also, during the nine months ended, the Company exchanged its 2020 Warrants for shares of its common stock as part of the Strategic Transaction.

The following table sets forth the details of the Company’s warrant liabilities ($ in thousands):

Litigation, Claims and Assessments

From time to time, the Company may be involved in various claims and legal actions arising in the ordinary course of business. As of September 30, 2024, the Company was not a party to, and its properties were not subject to any pending or threatened legal proceedings that individually or in the aggregate, are expected to have a material impact on its financial condition, results of operations or cash flows.

Note 9 —Debt

Repurchase Agreements

The Company has entered intotwo repurchase facilities whereby the Company, throughtwo wholly-owned Delaware trusts (the “Trusts”) acquires pools of mortgage loans which are then sold by the Trusts, as “Seller” to a counterparty, the “buyer” . As of the quarter ended September 30, 2024, onlyone facility is outstanding. Upon the time of the initial sale to the buyer, the Trust, with a simultaneous agreement, also agrees to repurchase the pools of mortgage loans from the buyer. Mortgage loans sold under these facilities carry interest calculated based on a spread to one-month SOFR, which is fixed for the term of the borrowing. The advance rate is between 75% and 90% of the asset’s acquisition price, d The obligations of the Trust to repurchase these mortgage loans at a future date are guaranteed by the Company’s Operating Partnership.

The Company has also entered into four repurchase facilities, as of September 30, 2024, substantially similar to the mortgage loan repurchase facilities, but where the pledged assets are the Company’s investments in bonds and bonds retained from the Company’s secured borrowings. Each repurchase transaction represents its own borrowing. As such, the ceilings associated with these transactions are the amounts currently borrowed at any one time.

The Company has effective control over the assets subject to all these transactions; therefore, the Company’s repurchase transactions are accounted for as financing arrangements. The Operating Partnership, as guarantor, will provide to the buyers a limited guaranty (“Guaranty”) of certain losses incurred by the buyers in connection with certain events and/or the Seller’s obligations under the mortgage loan purchase agreement, following the breach of certain covenants by the Seller, the occurrence of certain bad acts by the Seller, the occurrence of certain insolvency events of the Seller or other events specified in the Guaranty. As security for its obligations under the Guaranty, the guarantor will pledge the trust certificate representing the guarantor’s 100% beneficial interest in the Seller.

The following table sets forth the details of the Company’s repurchase transactions and facilities ($ in thousands):

(1)Maximum borrowing capacity subject to pledging sufficient collateral is the equivalent of the amount outstanding as of September 30, 2024.

(2)Maximum borrowing capacity subject to pledging sufficient collateral as of September 30, 2024 was $400.0 million.

(3)Includes $42.8 million of bonds that are consolidated on the Company’s balance sheet as of September 30, 2024.

(1)Maximum borrowing capacity subject to pledging sufficient collateral is the equivalent of the amount outstanding as of December 31, 2023.

(2)Maximum borrowing capacity subject to pledging sufficient collateral as of December 31, 2023 was $400.0 million.

(3)Maximum borrowing capacity subject to pledging sufficient collateral as of December 31, 2023 was $150.0 million.

(4)Includes $42.8 million of bonds that are consolidated on the Company’s balance sheet as of December 31, 2023.

The Guaranty establishes a master netting arrangement; however, the arrangement does not meet the criteria for offsetting within the Company’s consolidated balance sheets. A master netting arrangement derives from contractual agreements entered into by two parties to multiple contracts that provides for the net settlement of all contracts covered by the agreements in the event of default under any one contract. As of September 30, 2024 and December 31, 2023, the Company hadzero and $3.8 million, respectively, of cash collateral on deposit with financing counterparties. This cash is included in other assets on its consolidated balance sheets and is not netted against its borrowings under repurchase agreements. The amount outstanding on the Company’s repurchase facilities and the carrying value of the Company’s loans pledged as collateral are presented as gross amounts in the Company’s consolidated balance sheets at September 30, 2024 and December 31, 2023 in the table below ($ in thousands):

Secured Borrowings

The Company uses securitization as a primary financing structure and refers to the transactions as secured borrowings. The secured borrowings are generally structured as debt financings. The loans included in the secured borrowings remain on the Company’s consolidated balance sheet as the Company is the primary beneficiary of the securitization trusts, which are VIEs. The securitization VIEs are structured as pass through entities that receive principal and interest on the underlying mortgages and distribute those payments to the holders of the notes. The Company’s exposure to the obligations of the VIEs is generally limited to its investments in the entities. The notes that are issued by the securitization trusts are secured solely by the mortgages held by the applicable trusts and not by any of the Company’s other assets. The mortgage loans of the applicable trusts are the only source of repayment and interest on the notes issued by such trusts. The Company does not guarantee any of the obligations of the trusts under the terms of the agreement governing the notes or otherwise.

The Company’s non-rated secured borrowings are generally structured with Class A notes, subordinated notes, and trust certificates, which have rights to the residual interests in the mortgages once the notes are repaid. The Company currently hasno non-rated secured borrowing outstanding at September 30, 2024.

The Company’s rated secured borrowings are generally structured as “REIT TMP” transactions which allow the Company to issue multiple classes of securities without using a REMIC structure or being subject to an entity level tax. The Company’s rated secured borrowings generally issue classes of debt from AAA through mezzanine. The Company generally retains the mezzanine and residual certificates in the transactions. The Company has retained the applicable mezzanine and residual certificates from the other four rated secured borrowings outstanding at September 30, 2024.

The following table sets forth the original terms of notes from the Company’s secured borrowings outstanding at September 30, 2024 at their respective cutoff dates:

(1)The Class M notes are subordinated, sequential pay, fixed rate notes. The Company has retained the Class M notes, with the exception of Ajax Mortgage Loan Trust 2021-A.

(2)The Class B notes are subordinated, sequential pay, with B-2 and B-3 notes having variable interest rates and are subordinate to the Class B-1 notes. The Class B-1 notes are fixed rate notes. The Company has retained the Class B notes.

(3)The interest rate is effectively the rate equal to the spread between the gross average rate of interest the trust collects on its mortgage loan portfolio minus the rate derived from the sum of the servicing fee and other expenses of the trust.

Servicing for the mortgage loans in the Company’s secured borrowings is provided by the Servicer at a servicing fee of 0.42% of outstanding UPB and is paid monthly. The following table sets forth the status of the notes held by others at September 30, 2024 and December 31, 2023, and the securitization cutoff date ($ in thousands):

(1)This represents the gross amount of Secured borrowings and excludes the impact of deferred issuance costs of $1.5 million and $3.1 million as of September 30, 2024 and December 31, 2023.

Notes

2024 Notes (Convertible Senior Notes)

The 2024 Notes matured on April 30, 2024 and the Company redeemed the notes in full for an aggregate amount of $103.5 million and 15 days of accrued interest. At September 30, 2024 and December 31, 2023, the Company’s 2024 Notes had carrying values ofzero and $103.5 million, respectively. The 2024 Notes had an interest rate of 7.25% per annum and were payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year.

During the three and nine months ended September 30, 2024, the Company recognized interest expense on its 2024 Notes ofzero and $0.3 million, respectively, which includesno amortization of discount and deferred expenses, respectively. During the three and nine months ended September 30, 2023, the Company recognized interest expense on its 2024 Notes of $1.9 million and $5.9 million, respectively, which includes zero and $0.2 million, of amortization of discount and deferred expenses, respectively.

Coupon interest on the 2024 Notes was recognized using the accrual method of accounting. Discount and deferred issuance costs were carried on the Company’s consolidated balance sheets as a reduction of the carrying value of the 2024 Notes and were amortized to interest expense on an effective yield basis through April 30, 2023.

2027 Notes (Unsecured Notes)

In August 2022, the Operating Partnership issued $110.0 million aggregate principal amount of 8.875% 2027 Notes. The 2027 Notes have afive year term and were issued at 99.009% of par value and are fully and unconditionally guaranteed by the Company. The 2027 Notes are included in the Company’s liabilities in its consolidated balance sheet at September 30, 2024. Interest on the 2027 Notes is payable semi-annually on March 1 and September 1. The 2027 Notes will mature on September 1, 2027. Net proceeds from the sale of the 2027 Notes totaled approximately $106.1 million, after deducting the discount, commissions, and offering expenses which will be amortized over the term of the 2027 Notes using the effective interest method. The Company used $90.0 million of the proceeds to repurchase and retire a portion of its outstanding Series A Fixed-to-Floating Rate Preferred Stock (“Series A”) and Series B Fixed-to-Floating Rate Preferred Stock (“Series B” and together with the Series A, the “Preferred Stock”) at a discount and a proportionate amount of outstanding warrants. The remainder of the proceeds were used for general corporate purposes.

On June 30, 2024, the Company received notification that the 2027 Notes were downgraded from BBB- to BB+. Under the terms of the indenture governing the 2027 Notes, the downgrade resulted in a 100 basis point increase in the interest rate from 8.875% to 9.875% beginning on September 1, 2024.

At September 30, 2024, the outstanding aggregate principal amount of the 2027 Notes was $110.0 million, and discount and deferred expenses in aggregate were $2.6 million. At December 31, 2023, the outstanding aggregate principal amount of the 2027 Notes was $110.0 million, and discount and deferred expenses in aggregate were $3.2 million. During the three and nine months ended September 30, 2024, the Company recognized interest expense on the 2027 Notes of $2.7 million and $7.4 million, respectively, which includes $0.2 million and $0.6 million, respectively, of amortization of discount and deferred expenses. During the three and nine months ended September 30, 2023, the Company recognized interest expense on the 2027 Notes of $2.7 million and $7.9 million, respectively, which includes $0.2 million and $0.6 million, respectively, of amortization of discount and deferred expenses. The effective interest rate for the 2027 Notes for the three months ended September 30, 2024 and 2023 was 10.24% and 9.98%, respectively.

Rithm Credit Agreement

On February 26, 2024, the Company entered into the Credit Agreement with Rithm, as sole lender, administrative agent and collateral agent. The Credit Agreement provides, subject to certain conditions, for a delayed draw term loan facility , in an aggregate amount of up to $70.0 million. As of September 30, 2024, the balance on the Credit Agreement waszero and the draw period has expired.

The following table summarizes the Company’s long term maturities ($ in thousands):

Note 10 —Related Party Transactions

A party is considered to be related to the Company if the party, directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners, management and directors, as well as members of their immediate families or any other parties with which the Company may deal if one party to a transaction controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.

Loan Agreements

During November 2023, the Company renewed a promissory note with Gregory (see Servicing Agreements below) under which Gregory can borrow up to $12.0 million, secured by real property owned by a subsidiary of securitization trusts. Interest on the arrangement accrues at SOFR plus 300 basis points annually. At September 30, 2024 and December 31, 2023, the amount outstanding on the note and interest waszero and $9.3 million, respectively. As of September 30, 2024, the note has been retired.

Also, during November 2023, the Company renewed a promissory note with Gregory under which Gregory can borrow up to $3.5 million secured by equity in servicing advances owned by Gregory, which are first in priority for reimbursement from loan payments. Interest on the arrangement accrues at SOFR plus 300 basis points. The note was originally executed on December 9, 2021 and was secured by securities held by Gregory. At September 30, 2024 and December 31, 2023, the amount outstanding on the note and interest waszero and $3.3 million, respectively. As of September 30, 2024 the note has been retired.

Also, during November 2023, the Company renewed a promissory note with Gaea under which Gaea can borrow up to $11.0 million secured by small balance commercial real estate loans. Interest on the arrangement accrues at SOFR plus 300 basis points. The note was originally executed on December 30, 2020. At September 30, 2024 and December 31, 2023, the amount outstanding on the note and interest was $1.3 million and $7.5 million, respectively.

Management Agreement

Former Management Agreement

The Company was a party to the Third Amended and Restated Management Agreement with the Former Manager (the “Former Management Agreement”) by and between the Company and the Manager. Under the Former Management Agreement, the Manager implemented the Company’s business strategy and managed the Company’s business and investment activities and day-to-day operations subject to oversight by the Company’s board of directors (“Board of Directors”). Among other services, the Manager provided the Company with a management team and necessary administrative and support personnel. Additionally, the Company paid directly for the internal audit function that reported directly to the Audit Committee and the Board of Directors.

Under the Former Management Agreement, the Company paid a quarterly base management fee based on its stockholders' equity, including equity equivalents such as the Company’s issuance of convertible senior notes. Also, under the First Amendment to the Third Amended and Restated Management Agreement with the Former Manager, which had an effective date of March 1, 2023, the Company’s quarterly base management fee included, in its computation of equity managed, its unsecured debt securities to the extent the proceeds were used to repurchase the Company’s preferred stock. The Company was periodically required to pay a quarterly incentive management fee based on its cash distributions to its stockholders and the change in book value and had the option to pay up to 100% of the base and incentive fees in cash or in shares of the Company’s common stock. Management fees were expensed in the quarter incurred and the portion payable in common stock, if any, was accrued at quarter end. On February 26, 2024, the Company issued a termination notice to the Manager, in connection with the Strategic Transaction, and on June 11, 2024, the Company terminated the Former Management Agreement, entered into a termination and release agreement with the Former Manager and issued approximately 3.2 million shares of common stock to the Former Manager in connection with the termination.

New Management Agreement

On June 11, 2024, the Company entered into the Management Agreement. The Management Agreement shall be in effect until June 11, 2027 and shall be automatically renewed for a successivetwo-year term each anniversary date thereafter unless terminated by a party. Under the Management Agreement, RCM GA implements the Company’s business strategy and manages the Company’s business and investment activities and day-to-day operations subject to oversight by the Company’s Board of Directors. Among other services, the RCM GA provides the Company with a management team and necessary administrative and support personnel. Additionally, the Company pays directly for the internal audit function that reports directly to the Audit Committee and the Board of Directors. The Company does not currently have any employees that it pays directly and does not expect to have any employees that it pays directly in the foreseeable future. Each of the Company's executive officers is an employee or officer, the RCM GA.

Under the Management Agreement, the Company pays both a base management fee and an incentive fee to the New Manager calculated and payable quarterly with respect to each calendar quarter (or partial quarter that the agreement is in effect) in arrears in cash. The base management fee equals 1.5% of the Company’s stockholders’ equity, including equity equivalents such as the Company’s issuance of convertible senior notes, per annum. Also, under the Management Agreement, which has an effective date of June 11, 2024, the Company’s quarterly base management fee includes, in its computation of equity managed, its unsecured debt securities to the extent the proceeds were used to repurchase the Company’s preferred stock.

The New Manager is entitled to the Incentive Fee, which is payable quarterly in arrears in cash in an amount equal to 20% of the dollar amount by which (i) Earnings Available for Distribution (as defined below) exceeds the product of (A) the average common book value per share (excluding fair value marks, impairments, transaction/ deal expenses and associated tax impact and such other items that in the judgment of the Company officers should be excluded) of the common stock of Ajax (“Ajax Common Stock”) during such calendar quarter and (B)8%. Notwithstanding either of the foregoing, no Incentive Fee will be payable to the New Manager with respect to any period unless the Company’s cumulative Earnings Available for Distribution is greater than zero for the most recently completed four calendar quarters (which cumulative Earnings Available for Distribution shall be reset at the completion of every fourth quarter following the date hereof and each subsequent fourth quarter thereafter (each, a “Reset Date”) so as not to take into account prior calendar quarters), or, if less, (i) the number of completed calendar quarters since the date hereof or (ii) the number of completed calendar quarters since the last Reset Date. “Earnings Available for Distribution” is a non-GAAP financial measure and is defined as net income (loss) as determined according to GAAP, excluding tax-effected, non-cash equity compensation expense and any unrealized gains or losses from mark-to-market valuation changes (including impairments) that are included in net income for the applicable period. The amount will be adjusted to exclude on a tax-effected basis (A) one-time events pursuant to changes in GAAP, (B) transaction and deal expenses that in the opinion of the New Manager should be excluded for purposes of calculating Earnings Available for Distribution and be amortized over the life of the related investment / transaction, and (C) non-cash items (including depreciation and amortization) that in the judgment of the Company’s officers should not be included in Earnings Available for Distribution, which adjustments in clauses (A), (B) and (C) shall only be excluded after discussions between the New Manager and the Ajax Independent Directors and after approval by a majority of the Ajax Independent Directors. Book value per share of Ajax Common Stock shall be as set forth in the consolidated financial statements of the Company prepared in accordance with GAAP.

The Company also reimburses the New Manager for all third party, out-of-pocket costs incurred by the New Manager for managing its business, including third party due diligence and valuation consultants, legal expenses, auditors and other financial services. The reimbursement obligation is not subject to any dollar limitation. Expenses are reimbursed in cash on a monthly basis.

The Company will be required to pay the New Manager a termination fee in the event that the Management Agreement is terminated as a result of (i) a termination by the Company without cause, (ii) its decision not to renew the Management Agreement upon the determination of at least two-thirds of the Company’s independent directors for reasons including the failure to agree on revised compensation, (iii) a termination by the New Manager as a result of the Company becoming regulated as an “investment company” under the Investment Company Act of 1940, as amended (the “Investment Company Act”) (other than as a result of the acts or omissions of the New Manager in violation of investment guidelines approved by the Company’s Board of Directors), or (iv) a termination by the New Manager if the Company defaults in the performance of any material term of the Management Agreement (subject to a notice and cure period). The termination fee will be equal to three times the combined base fee and incentive fees payable to the New Manager during the 12-month period ended as of the end of the most recently completed fiscal quarter prior to the date of termination.

Servicing Agreements

Until June 1, 2024, the Company and its affiliates were party to various Servicing Agreements with the Former Servicer. The Company owned a 9.72% interest in the Former Servicer which was disposed of in the quarter ending June 30, 2024. On June 1, 2024, the Former Servicer transferred the Servicing Agreements to Newrez, an affiliate of the New Manager, pursuant to the Servicing Transfer Agreement. The terms of the Servicing Agreements remain substantially the same.

Servicing fees for mortgage loans range from 0.42% to 1.25% annually of UPB at acquisition (or the fair market value or purchase price of REO) and are paid monthly. The servicing fee is based upon the status of the loan at acquisition. A change in status from RPL to NPL does not cause a change in the servicing fee rate.

Servicing fees for the Company’s real property assets that are not held in joint ventures are the greater of (i) the servicing fee applicable to the underlying mortgage loan prior to foreclosure and (ii)1.00% annually of the fair market value of the REO or 1.00% annually of the purchase price of any REO otherwise purchased by the Company.

Newrez is reimbursed for all customary, reasonable and necessary out-of-pocket costs and expenses incurred in the performance of its obligations, including the actual cost of any repairs and renovations to foreclosed property undertaken on the Company’s behalf. The total fees incurred by the Company for these services are dependent upon the following: (i) for fees based on mortgage loans, the total fees will be dependent upon the UPB and the type of mortgage loans that the Servicer services; and (ii) for fees based on REO properties, property values, previous UPB of the relevant loan, and the number of REO properties.

If any Servicing Agreement has been terminated other than for cause and/or the Servicer terminates the Servicing Agreement, the Company will be required to pay a termination fee equal to the aggregate servicing fees payable under the applicable Servicing Agreement for the immediately preceding 12-month period.

Trademark Licenses

Aspen has historically granted the Company a non-exclusive, non-transferable, non-sublicensable, royalty-free license to use the name “Great Ajax” and the related logo. The agreement has no specified term, however, if the management contract with the Former Manager expired or was terminated, the trademark license agreement would terminate within 30 days. In connection with the Strategic Transaction, on May 20, 2024, Aspen assigned the trademark to the name “Great Ajax” and the related logo to the Company.

Note 11 —Stock-based Payments and Director Fees

Each of the Company’s independent directors receives an annual retainer of $140,000, payable quarterly. Prior to the third quarter of 2024,50% of the fee was payable in shares of the Company's common stock and 50% was payable in cash. The Company had the option to pay the annual retainer with up to 100% in cash at its discretion. In the third quarter of 2024, the Company’s Board of Directors voted to revise the independent directors’ compensation so that on a quarterly basis, each director may elect to take their fees in either cash or stock. During the nine months ended September 30, 2024, the Company's lead director of the special committee was paid an additional one-time payment of $15,000, paid as a lump sum,100% of which was paid in shares of the Company's common stock in the first quarter of 2024.

The following table sets forth the Company’s stock-based independent director fees ($ in thousands):

Stock-based Director Fees

Restricted Stock

The Company may periodically issue equity or equity-based incentive awards to RCM GA, which may in turn issue incentives to the directors, managers, officers, employees of, or advisors or consultants to, RCM GA or its affiliate. The Company previously granted shares of its common stock to employees of the Former Manager and the Former Servicer. The Company grantedno shares of its common stock during the three months ended September 30, 2024; however, during the nine months ended September 30, 2024 the Company granted 66,421 shares of its common stock, which have vesting periods of up toone year. Comparatively, the Company granted 3,103 and 28,562 shares of its common stock to employees of the Former Manager and the Former Servicer during the three and nine months ended September 30, 2023, respectively, which have vesting periods offour years. Grants of restricted stock use grant date fair value of the stock as the basis for measuring the cost of the grant. All restricted stock granted to employees of the Former Manager and the Former Servicer vested as of May 20, 2024 in connection with stockholder approval of the Strategic Transaction.

The Company may issue grants of its shares of common stock from time to time to its directors. Also, in connection with the Strategic Transaction, any former directors’ shares that did not fully vest as of the transaction date were forfeited. Thetwo remaining directors that remained on the reconstituted Board of Directors remain on the same vesting terms.

Under the Company’s 2014 Director Equity Plan and 2016 Equity Incentive Plan, the Company made grants of restricted stock to its Directors and to employees of the Former Manager and the Former Servicer as set forth in the table below:

(1)Weighted average remaining life of unvested shares for employee and service provider grants at September 30, 2023 is 1.8 years.

(2)Weighted average remaining life of unvested shares for director grants at September 30, 2023 is 1.4 years.

(1)Weighted average remaining life of unvested shares for employee and service provider grants at September 30, 2024 is 0.7 years.

The following table presents the expenses for the Company’s equity incentive plans ($ in thousands):

Note 12 —Income Taxes

The Company intends to qualify as a REIT for each of its tax years through December 31, 2024. A REIT is generally not subject to US federal corporate income tax on that portion of its income that is distributed to stockholders if it distributes at least 90% of its REIT taxable income to its stockholders by prescribed dates and complies with various other requirements.

The Company’s consolidated financial statements include the operations oftwo TRS entities, GA-TRS and GAJX, which are subject to U.S. federal, state and local income taxes on their taxable income. The TRS entities recorded nominal amounts of income tax for the three and nine months ending both September 30, 2024 and September 30, 2023.

Note 13 —Earnings per Share

The following table sets forth the components of basic and diluted EPS ($ in thousands, except per share):

(1)The Company’s outstanding 2020 Warrants for an additional 1,950,672 shares of common stock and effect of the put option share settlement would have an anti-dilutive effect on diluted earnings per share for the three months ended September 30, 2023 and has not been included in the calculation.

(2)The effect of interest expense and assumed conversion of shares from convertible notes on the Company’s diluted EPS calculation for the three months ended September 30, 2024 and 2023 would have been anti-dilutive and have been removed from the calculation.

(3)The effect of restricted stock grants and manager and director fee shares on the Company’s diluted EPS calculation for the three months ended September 30, 2024 would have been anti-dilutive and have been removed from the calculation.

(1)The Company’s 2020 Warrants and Rithm Warrants, which were partially outstanding for the nine months ended September 30, 2024 and the 2020 Warrants which were outstanding for the entire nine months ended September 30, 2023, would have an anti-dilutive effect on diluted earnings per share for the respective periods they were outstanding and have not been included in the calculation.

(2)The effect of interest expense and assumed conversion of shares from convertible notes on the Company’s diluted EPS calculation for the nine months ended September 30, 2024 and 2023 would have been anti-dilutive and have been removed from the calculation.

(3)The effect of restricted stock grants and manager and director fee shares on the Company’s diluted EPS calculation for the nine months ended September 30, 2023 would have been anti-dilutive and have been removed from the calculation.

Note 14 —Equity

Common Stock

As of September 30, 2024 and December 31, 2023, the Company had 44,978,969 and 27,460,161 shares, respectively, of $0.01 par value common stock outstanding with 125,000,000 shares authorized at each period end.

During the nine months ended September 30, 2024 , the Company issued shares in the following transactions:

1.2,874,744 shares of common stock to Rithm at a purchase price of $4.87 per share, for aggregate proceeds of approximately $14.0 million.

2.3,174,645 shares of common stock to the Former Manager in connection with the termination of the Former Management Agreement.

3.12,046,218 shares of common stock to preferred shareholders in exchange for its outstanding preferred stock and related warrants.

Preferred Stock

The Company issued shares of preferred stock which were issued to institutional accredited investors in a series of private placements during the year ended December 31, 2020. The Company issued 2,307,400 shares of Series A Preferred Stock and 2,892,600 shares of Series B Preferred Stock. The shares of Preferred Stock had a liquidation preference of $25.00 per share.

During the year ended December 31, 2022, the Company repurchased and retired 1,882,451 shares of its Series A and 1,757,010 shares of its Series B in a series of repurchase transactions. The Preferred Stock was repurchased for an aggregate of $88.7 million at an average price of $24.37 per share, representing a discount of approximately 2.5% to the face value of $25.00 per share. The repurchase of the Preferred Stock caused the recognition of $8.2 million of preferred stock discount during the year ended December 31, 2022. There wereno repurchases of Preferred Stock in the three and nine months ended September 30, 2024 and 2023.

During the nine months ended September 30, 2024, the Company exchanged the remaining 424,949 shares of its outstanding Series A and 1,135,590 shares of its outstanding Series B and the associated warrants for newly issued shares of its common stock. A total of 12,046,218 shares of common stock were issued during the nine months ended September 30, 2024, with 9,464,524 shares of common stock exchanged during the quarter ended March 31, 2024 and 2,581,694 shares of common stock exchanged subsequent to the approval of the Company’s stockholders on May 20, 2024. No preferred stock or warrants were exchanged during the three and nine months ended September 30, 2023.

At September 30, 2024 and December 31, 2023, the Company hadzero and 424,949 shares of Series A andzero and 1,135,590 shares of Series B outstanding, respectively. There were 25,000,000 shares, cumulative for all series, authorized as of both September 30, 2024 and December 31, 2023.

Treasury Stock and Stock Repurchase Plan

On February 28, 2020, the Company’s Board of Directors approved a stock buyback of up to $25.0 million of its common shares. The amount and timing of any repurchases depends on a number of factors, including but not limited to the price and availability of the common shares, trading volume and general circumstances and market conditions. The Company has repurchased 525,039 shares of common stock for an aggregate purchase price of $5.1 million leaving $19.1 million remaining under the authorization. The Company didnot repurchase any shares during the three and nine months ended September 30, 2024 and September 30, 2023.

As of September 30, 2024, the Company held 1,664,365 shares of treasury stock consisting of 777,414 shares received through distributions of the Company’s shares previously held by the Former Manager, including 628,580 received during the quarter ended September 30, 2024,361,912 shares received through Gregory and 525,039 shares acquired through open market purchases.

As of December 31, 2023, the Company held 1,035,785 shares of treasury stock consisting of 148,834 shares received through distributions of the Company’s shares previously held by its Former Manager,361,912 shares received through its Servicer and 525,039 shares acquired through open market purchases.

Dividend Reinvestment Plan

The Company sponsors a dividend reinvestment plan through which stockholders may purchase additional shares of the Company’s common stock by reinvesting some or all of the cash dividends received on shares of the Company’s common stock. The Company issuedno shares under the plan during the three and nine months ended September 30, 2024 and 2023.

At the Market Offering

The Company has entered into an equity distribution agreement under which the Company may sell shares of its common stock having an aggregate offering price of up to $100.0 million from time to time in any method permitted by law deemed to be an “At the Market” offering as defined in Rule 415 under the Securities Act of 1933, as amended (the “ATM Program”). During the three and nine months ended September 30, 2024, no shares of common stock were sold under the ATM Program. Comparatively, during the three and nine months ended September 30, 2023,2,182,152 and 2,621,742 shares of common stock were sold, respectively, under the ATM Program for total net proceeds of approximately $14.3 million and $17.2 million, respectively. On September 6, 2024, the Company filed a registration statement with the SEC on Form S-3 to increase the maximum aggregate offering price to up to $400 million of common stock, preferred stock, debt securities, warrants and units available to be sold in public offerings or pursuant to the ATM Program. The filed shelf registration statement when declared effective by the SEC will replace the Company’s prior shelf registration statement. The securities described in the recently filed shelf registration statement may not be sold and offers to buy may not be accepted prior to the time the registration statement becomes effective.

Accumulated Other Comprehensive Loss

The Company recognizes unrealized gains or losses on its investment in debt securities AFS as components of other comprehensive loss. Additionally, other comprehensive loss includes unrealized gains or losses associated with the transfer of the Company's investment in debt securities from AFS to HTM. These amounts are subsequently amortized from other comprehensive loss into earnings over the same period as the related unamortized discount. Total accumulated other comprehensive loss on the Company’s balance sheet at September 30, 2024 and December 31, 2023 was as follows ($ in thousands):

Non-controlling Interests

At September 30, 2024, the Company had non-controlling interests attributable to ownership interest fortwo legal entities and at December 31, 2023, the Company had non-controlling interests attributable to ownership interests forthree legal entities.

At September 30, 2024 and December 31, 2023, the Company’s ownership interest is approximately zero and 53.1% of AS Ajax E II, respectively, and it previously consolidated the assets, liabilities, revenues and expenses of the entity.

At both September 30, 2024 and December 31, 2023, the Company’s ownership interest is approximately 50.0% of 2017-D and it consolidates the assets, liabilities, revenues and expenses of the trust.

At both September 30, 2024 and December 31, 2023, the Company’s ownership interest is approximately 99.9% of Great Ajax II REIT and it consolidates the assets, liabilities, revenues and expenses of the entity.

Note 15 —Subsequent Events

On October 18, 2024, the Company’s Board of Directors declared a cash dividend of $0.06 per share to be paid on November 29, 2024, to stockholders of record as of November 15, 2024.

On October 18, 2024, the Company’s Board of Directors approved, and the Company and the New Manager entered into an amendment to the Management Agreement (the “Amendment”) to provide that the base management fee and the incentive fee shall be payable in cash or, at the election of the New Manager, in shares of common stock of the Company, subject to the terms and conditions of the Amendment.