Filing summary
Entity mismatch: The request identifies ADAMAS TRUST, INC., but the supplied filing is for New York Mortgage Trust, Inc. (NYMT). This summary reflects the filing text provided and should not be attributed to Adamas Trust without verification.
Business context and reporting period
NYMT is an internally managed REIT that invests in residential mortgage assets, including residential loans and Agency RMBS, as well as multi-family loans, equity investments and real estate. This unaudited Form 10-Q covers the three months ended March 31, 2024, with results compared with the first quarter of 2023 and balance sheet figures compared with December 31, 2023.
Key financial metrics
| Metric | Q1 2024 | Q1 2023 or prior balance |
|---|---|---|
| Interest income | $83.9 million | $57.1 million |
| Interest expense | $66.0 million | $39.3 million |
| Net interest income | $17.9 million | $17.8 million |
| Net loss from real estate | $(16.4) million | $(9.0) million |
| Net income (loss) attributable to Company | $(57.9) million | $20.9 million |
| Net income (loss) attributable to common stockholders | $(68.3) million; $(0.75) per diluted share | $10.5 million; $0.11 per diluted share |
| Net cash used in operating activities | $(13.1) million | $(11.4) million |
| Cash, cash equivalents and restricted cash at quarter-end | $390.7 million | $343.0 million |
| Total assets | $7.45 billion | $7.40 billion at Dec. 31, 2023 |
| Total liabilities | $5.93 billion | $5.77 billion at Dec. 31, 2023 |
| GAAP book value per common share | $10.21 | $11.31 at Dec. 31, 2023 |
Management reported a 6.38% yield on average interest-earning assets and a 1.31% net interest spread, both non-GAAP measures. Adjusted net interest income was $26.2 million, compared with $17.9 million a year earlier. The filing does not present a conventional operating margin measure.
At March 31, debt included $2.51 billion of repurchase agreements, $2.19 billion of collateralized debt obligations (CDOs), $850.7 million of mortgages payable on real estate, $98.3 million of senior unsecured notes and $45.0 million of subordinated debentures. Company and portfolio recourse leverage ratios were 1.7x and 1.6x, respectively. Cash and cash equivalents were $226.9 million; a further $163.8 million was restricted cash. Management identified $212.6 million of available cash, $151.1 million of unencumbered securities and $186.8 million of unencumbered residential loans for liquidity and collateral needs.
Material changes versus the prior comparable period
- Common-stockholder results swung from $10.5 million of income to a $68.3 million loss. Net interest income was nearly unchanged despite higher interest income, as interest expense also rose substantially.
- Other results included $39.4 million of net unrealized losses, versus $32.9 million of gains in Q1 2023. NYMT attributed current-period losses largely to higher interest rates, particularly their effect on Agency RMBS values. Derivatives generated $49.2 million of net gains, partly offsetting asset valuation losses.
- Real estate impairment rose to $36.2 million from $10.3 million. The quarter also included a $14.6 million loss on reclassification of a disposal group and a $3.2 million provision for uncollectible receivables.
- Interest income increased with greater Agency RMBS investment; interest expense increased with additional repo financing and securitizations. Agency RMBS purchases were approximately $297.6 million, and residential loan purchases were approximately $305.7 million.
- Investing activities used $254.0 million of cash, while financing activities provided $327.2 million. NYMT completed two residential-loan securitizations, receiving approximately $497 million net, and redeemed a securitization with $147.6 million outstanding.
- Assets held for sale declined to $146.4 million from $426.0 million, reflecting sales and reclassifications as well as the company’s multi-family portfolio repositioning.
Outlook, commentary, risks and unusual items
- Management expects to continue expanding Agency RMBS holdings, selectively pursue residential credit investments, opportunistically dispose of assets and seek longer-term or non-mark-to-market financing for portions of the credit portfolio. It expects leverage may rise as Agency RMBS holdings grow.
- Management stated that cash balances, financing availability and operating cash flows should meet liquidity needs for at least the next 12 months, while cautioning that access to additional financing is not assured. No specific earnings or revenue guidance was provided.
- Management described persistent inflation, interest-rate uncertainty, market volatility and geopolitical uncertainty as factors likely to affect asset pricing and markets during the remainder of 2024. It also cited multi-family supply, rent and valuation pressures and potential regulatory changes affecting rental housing.
- Key exposures include interest-rate and fair-value movements, borrower delinquencies and defaults, prepayments, liquidity and repo renewal risk, margin calls, financing-counterparty concentration, credit spreads, real estate operating performance and the ability to sell multi-family interests on favorable terms. Fifty-six percent of specified debt was subject to mark-to-market margin calls at quarter-end.
- NYMT reported one preferred-equity investment more than 90 days delinquent and reduced its fair value to zero. Residential loans with $181.7 million fair value were more than 90 days past due; foreclosure proceedings covered residential loans with $141.1 million fair value.
- Subsequent event: in April 2024, NYMT redeemed another residential-loan securitization with $45.7 million outstanding. The company reported compliance with its debt covenants, effective disclosure controls, and no material changes to previously disclosed risk factors.
Important facts for investors to verify
- Confirm the registrant: the supplied filing is NYMT’s, not an Adamas Trust filing.
- Review how much of the reported loss reflects market-sensitive fair-value changes and real estate impairments, and whether those valuations or impairments change in later periods.
- Assess repo maturities, mark-to-market exposure, collateral haircuts and margin-call capacity against the company’s available, unrestricted liquidity.
- Track whether higher Agency RMBS investment and securitization activity improve recurring net interest income after funding costs and hedging effects.
- Monitor multi-family property performance, delinquent investments, held-for-sale plans and potential debt step-ups on CDOs.
- Consider the common dividend of $0.20 per share in light of the quarter’s loss, book-value decline and management’s statement that dividend policy is reviewed quarterly and is not an obligation.