Business Context and Reporting Period
This Form 8-K Current Report was filed by New York Mortgage Trust, Inc. (the "Company") on September 6, 2005, reporting events occurring on September 1, 2005. The filing details a material definitive agreement involving the Company's taxable REIT subsidiary, The New York Mortgage Company, LLC ("NYMC").
Key Financial Metrics and Transaction Details
- Transaction Type: Private placement of trust preferred securities.
- Principal Amount: $20,000,000 in Trust Preferred Securities issued by NYM Preferred Trust II.
- Common Securities: $619,000 issued to NYMC.
- Total Proceeds: $20,619,000 used to purchase unsecured junior subordinated notes from NYMC.
- Interest Rate: Fixed at 8.35% per annum through October 30, 2010; thereafter floating at LIBOR plus 395 basis points.
- Maturity: October 30, 2035.
- Call Date: Callable at par by the Company on or after October 30, 2010.
- Use of Proceeds: General corporate purposes, including leveraged investment in AAA-rated or Fannie Mae/Freddie Mac guaranteed residential mortgage-backed securities.
Material Changes and Obligations
The filing reports the creation of a direct financial obligation via the issuance of junior subordinated notes. The Company entered into a Parent Guarantee Agreement, guaranteeing the payment obligations of NYMC under the indenture. These obligations are unsecured and rank subordinate and junior to all senior debt of the Company. The filing does not provide comparative financial data (e.g., revenue, profit, or cash flow) as it is a current report regarding a specific transaction rather than a periodic financial statement.
Outlook, Risks, and Contingencies
Management Commentary: The proceeds are intended to expand the Company's investment portfolio in residential mortgage-backed securities on a leveraged basis.
Risks and Events of Default: The Trust Agreement outlines specific events of default, including:
- Non-payment of interest or principal on the Junior Subordinated Notes (with a 30-day cure period for interest).
- Failure to comply with covenants in the Indenture or Trust Agreement.
- Bankruptcy or liquidation of NYMC or the Trust.
Unusual Items: None reported beyond the standard terms of the preferred securities offering.
Investor Verification Checklist
- Verify the impact of the new $20.6 million debt obligation on the Company's leverage ratios.
- Confirm the specific allocation of proceeds to the investment portfolio and the associated risk profile of the target mortgage-backed securities.
- Review the Parent Guarantee Agreement (Exhibit 10.1) to understand the extent of the Company's liability.
- Monitor the floating interest rate exposure post-October 2010 (LIBOR + 395 bps).
- Check for any subsequent filings regarding the actual deployment of funds into the investment portfolio.