Third Quarter Highlights

• Interest income of $23.1 million; net interest income of $14.4 million
• Net income attributable to common stockholders of $9.3 million
• Basic earnings per common share (“EPS”) of $0.40
• Book value per common share of $16.00 at September 30, 2021
• Taxable income of $0.43 per common share
• Formed one joint venture that acquired $517.7 million in unpaid principal balance ("UPB") of mortgage loans with collateral values of $968.6 million and retained $54.7 million of varying classes of related securities issued by the joint venture to end the quarter with $479.6 million of investments in debt securities and beneficial interests
• Purchased $87.5 million of non-performing loans ("NPLs"), with UPB of $90.9 million at 64.0% of property value, and $0.5 million of re-performing mortgage loans ("RPLs"), with UPB of $0.5 million at 61.7% of property value to end the quarter with $1.0 billion in net mortgage loans
• In July 2021 we purchased $170.7 million of RPLs and NPLs into a joint venture securitization that was created in June 2021 with a securitized prefunding structure. We own 20.0% of this joint venture. The purchase price was 97.8% of UPB and 53.2% of underlying property value.
• Collected total cash of $82.8 million from loan payments, sales of real estate owned properties ("REO") and collections from investments in debt securities and beneficial interests
• Held $92.8 million of cash and cash equivalents at September 30, 2021; average daily cash balance for the quarter was $89.2 million
• As of September 30, 2021, approximately 76.6% of portfolio based on UPB made at least 12 out of the last 12 payments

Great Ajax Corp. (NYSE: AJX), a Maryland corporation that is a real estate investment trust, today announces its results of operations for the quarter ended September 30, 2021. We focus primarily on acquiring, investing in and managing a portfolio of RPLs secured by single-family residences and commercial properties and, to a lesser extent, NPLs. In addition to our continued focus on residential RPLs, we also originate and acquire small balance commercial loans ("SBC loans") secured by multi-family retail/residential and mixed use properties.

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Our consolidated net income attributable to our common stockholders was $9.3 million for the quarter ended September 30, 2021, compared to $10.4 million for the June 30, 2021 quarter. The decrease in net income for the third quarter of 2021 compared to the second quarter of 2021 is primarily attributable to a lesser current period impact of the increase in the present value of our expected future cash flows on our loan portfolio.

Our net interest income for the quarter ended September 30, 2021 was $14.4 million, an increase of $0.2 million over the prior quarter primarily due to a reduction in our interest expense. Our interest expense for the quarter ended September 30, 2021 decreased $0.2 million compared to the prior quarter despite a larger average borrowing balance primarily due to a decrease in our cost of funds on our repurchase lines of credit.

During the quarter ended September 30, 2021, we recorded $3.7 million in earnings from a reduction in expected credit losses compared to a $4.7 million reduction in the second quarter of 2021, a decline of $1.0 million due to the cumulative reduction in expected credit losses over the prior several quarters. We generally acquire loans at a discount and record an allowance for expected credit losses at acquisition. We update the allowance periodically based on changing cash flow expectations in accordance with the current expected credit losses accounting standard ("CECL").

We ended the quarter with a book value of $16.00 per common share, compared to a book value per common share of $15.86 for the quarter ended June 30, 2021.

During the quarter we purchased $87.5 million of NPLs with UPB of $90.9 million at 64.0% of property value and $0.5 million of RPLs with UPB of $0.5 million at 61.7% of property value. These loans were acquired and included on our consolidated balance sheet for a weighted average of 41 days of the quarter. We ended the quarter with $1.0 billion of mortgage loans with an aggregate UPB of $1.1 billion.

On July 19, 2021, we co-invested with third party institutional accredited investors to form Ajax Mortgage Loan Trust 2021-E ("2021-E") and retained $54.7 million of varying classes of related rated securities and equity. We acquired 10.01% of the class A securities, class B-1 securities, class B-2 securities and class M securities and acquired 19.57% of the class B-3 securities and trust certificates from the trust. 2021-E acquired 3,142 RPLs and NPLs with UPB of $517.7 million and an aggregate property value of $968.6 million. The AAA through A rated securities represent 83.2% of the UPB of the underlying mortgage loans and carry a weighted average coupon of 1.82%. Based on the structure of the transaction we will not consolidate 2021-E under U.S. GAAP. The assets included in the 2021-E securitization came from loan sales associated with our Ajax Mortgage Loan Trust 2020-C and 2020-D securitizations, all of which were joint ventures with third party institutional accredited investors. This transaction was primarily a refinancing of 2020-C and 2020-D, but we also increased our ownership of the subordinate securities and beneficial interests by purchasing an additional 9.56%. The additional 9.56% ownership was on our consolidated balance sheet for an average of 73 days during the quarter.

In July 2021 we purchased $170.7 million of RPLs and NPLs into a joint venture securitization that was created in June 2021 with a securitized prefunding structure. We own 20.0% of this joint venture. The purchase price was 97.8% of UPB and 53.2% of underlying property value.

We recorded $0.1 million in recoveries from previous impairments on our REO held-for-sale portfolio in real estate operating expense for the quarter ended September 30, 2021. The recovery of impairments for the quarter was driven primarily by increases in property values. Our quantity of REO properties increased during the quarter from 25 properties with a carrying value of $4.8 million to 31 properties with a carrying value of $6.1 million. We sold four properties in the third quarter while 10 were added to REO held-for-sale through foreclosures or deed in lieu proceedings. Limited housing inventory has accelerated our REO liquidation timelines while we are continuing to experience some delays in foreclosure proceedings relating to the COVID-19 pandemic.

We collected $82.8 million of cash during the third quarter as a result of loan payments, loan payoffs, sales of REO, payoff of securities and cash collections on our securities portfolio to end the quarter with $92.8 million in cash and cash equivalents. Cash collections of $55.2 million were derived from our mortgage loan and REO portfolios as a result of loan payments, loan payoffs, and sales of REO during the quarter, and $27.6 million were derived from interest and principal payments on investments in debt securities and beneficial interests excluding proceeds on securities sold. We sold $64.7 million of Class A Debt securities previously issued by our joint ventures for total proceeds of $64.9 million and recorded a gain of $0.2 million in other income.

The following table provides an overview of our portfolio at September 30, 2021 ($ in thousands):

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Subsequent Events

Since quarter end, we have acquired 20 residential RPLs in two transactions from two different sellers, and one NPL in one transaction from a single seller, with aggregate UPB of $2.4 million and $0.4 million, respectively. The purchase price of the RPLs was 68.8% of UPB and 47.3% of the estimated market value of the underlying collateral of $3.5 million. The purchase price of the NPL was 97.4% of UPB and 84.4% of the estimated market value of the underlying collateral of $0.4 million.

We have agreed to acquire, subject to due diligence, four residential RPLs in four transactions, and three NPLs in two transactions, with aggregate UPB of $1.7 million and $0.8 million, respectively. The purchase price of the residential RPLs is 96.5% of UPB and 70.3% of the estimated market value of the underlying collateral of $2.4 million. The purchase price of the NPLs is 93.9% of UPB and 61.8% of the estimated market value of the underlying collateral of $1.2 million.

We have agreed to acquire, subject to due diligence, 2,498 NPL with aggregate UPB of $350.9 million in one transaction from a single seller. The purchase price is 103.5% of UPB and 49.4% of the estimated market value of the underlying collateral of $734.9 million. These loans are expected to be acquired through a joint venture with third party institutional accredited investors. We expect our ownership percentage to be approximately 16.3%.

On November 4, 2021, our Board of Directors declared a cash dividend of $0.24 per share to be paid on November 29, 2021 to stockholders of record as of November 15, 2021.

Conference Call

Great Ajax Corp. will host a conference call at 5:00 p.m. EST on Thursday, November 4, 2021 to review our financial results for the quarter. A live Webcast of the conference call will be accessible from the Investor Relations section of our website www.greatajax.com. An archive of the Webcast will be available for 90 days.

About Great Ajax Corp.

Great Ajax Corp. is a Maryland corporation that is a real estate investment trust, that focuses primarily on acquiring, investing in and managing RPLs secured by single-family residences and commercial properties and, to a lesser extent, NPLs. We also originate and acquire loans secured by multi-family residential and smaller commercial mixed use retail/residential properties and acquire multi-family retail/residential and mixed use and commercial properties. We are externally managed by Thetis Asset Management LLC. Our mortgage loans and other real estate assets are serviced by Gregory Funding LLC, an affiliated entity. We have elected to be taxed as a real estate investment trust under the Internal Revenue Code.

Forward-Looking Statements

This press release contains certain forward-looking statements. Words such as “believes,” “intends,” “expects,” “projects,” “anticipates,” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions, many of which are beyond the control of Great Ajax, including, without limitation, risks relating to the impact of the COVID-19 outbreak and the risk factors and other matters set forth in our Annual Report on Form 10-K for the period ended December 31, 2020 filed with the Securities and Exchange Commission (the “SEC”) on March 5, 2021 and, when filed with the SEC, our Quarterly Report on Form 10-Q for the period ended September 30, 2021. The COVID-19 outbreak has caused significant volatility and disruption in the financial markets both globally and in the United States. If the COVID-19 outbreak continues to spread or the response to contain it is unsuccessful, Great Ajax could experience material adverse effects on its business, financial condition, liquidity and results of operations. Great Ajax undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

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