Business Context and Reporting Period
This Form 8-K is filed by New York Mortgage Trust, Inc. (Note: Metadata lists "ADAMAS TRUST, INC." but the filing text identifies the registrant as New York Mortgage Trust, Inc.) on March 23, 2020. The report addresses the impact of global financial market turmoil caused by the COVID-19 pandemic on the Company's financing arrangements and dividend policy.
Key Financial Metrics and Liquidity
The filing does not provide specific numerical values for revenue, profit, cash flow, or total debt. However, it highlights critical liquidity events:
- Margin Calls: The Company received margin calls from repurchase agreement financing counterparties due to market volatility.
- Payment Status: All margin calls through March 20, 2020, were met. The Company notified counterparties on March 23, 2020, that it does not expect to fund existing or anticipated future margin calls in the near term.
- Default Status: As of March 23, 2020, no financing counterparty had provided notice of an event of default.
Material Changes and Events
The following material changes were reported for the period:
- Financing Arrangements: The Company is unable to meet new margin calls and is seeking forbearance agreements with counterparties to prevent immediate default.
- Dividend Suspension: The Board of Directors approved the suspension of quarterly dividends for the first quarter of 2020 (payable in April 2020). This applies to:
- Common Stock
- 7.75% Series B Cumulative Redeemable Preferred Stock
- 7.875% Series C Cumulative Redeemable Preferred Stock
- 8.000% Series D Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock
- 7.875% Series E Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock
Outlook, Risks, and Management Commentary
Management Commentary: The suspension of dividends reflects a strategic focus on conserving capital during difficult market conditions. The Company is actively engaging in discussions to secure forbearance agreements, though the timing and terms remain uncertain.
Risks and Contingencies:
- Default Risk: If the Company fails to meet margin calls or secure forbearance, counterparties may declare an event of default, demand immediate payment of aggregate outstanding financing obligations, or take ownership of the securities securing the financing.
- Market Volatility: Risks include changes in interest rates, asset market values, credit spreads, and prepayment rates exacerbated by the COVID-19 pandemic.
- Forward-Looking Uncertainty: The Company cannot predict if forbearance agreements will be reached or the specific terms thereof.
Investor Verification Checklist
- Verify the status of ongoing forbearance negotiations with financing counterparties.
- Monitor for any formal notices of default or acceleration of debt obligations.
- Confirm the impact of the dividend suspension on the Company's REIT qualification and tax status.
- Review the Company's asset portfolio valuation to assess collateral adequacy against outstanding repurchase agreements.
- Check for subsequent filings regarding the resolution of margin calls or changes in liquidity strategy.