Filing identity and reporting period
Important entity mismatch: The supplied filing is New York Mortgage Trust, Inc. (NASDAQ: NYMT), not Adamas Trust, Inc. It is a Form 10-K for the fiscal year ended December 31, 2022; the text does not provide standalone fourth-quarter results.
Business context
NYMT is a mortgage REIT investing primarily in credit-sensitive single-family and multifamily residential assets, including residential and business-purpose loans, mortgage securities, multifamily preferred equity and mezzanine lending, and rental properties. In September 2022, it announced plans to opportunistically sell multifamily joint-venture equity interests and redeploy capital toward targeted credit assets.
Financial performance and position
| Metric | FY 2022 / Dec. 31, 2022 | Prior comparable period |
|---|---|---|
| Interest income | $258.4 million | $206.9 million in 2021 |
| Interest expense | $129.4 million | $79.3 million in 2021 |
| Net interest income | $129.0 million | $127.6 million in 2021 |
| Net interest spread (non-GAAP) | 2.47% | 2.35% in 2021 |
| Net loss attributable to common stockholders | $340.6 million; $0.90 loss per share | $144.2 million income; $0.38 per share in 2021 |
| Net unrealized losses | $321.1 million | $95.6 million unrealized gains in 2021 |
| Operating cash flow | $91.8 million | $138.9 million in 2021 |
| Total assets / total liabilities | $6.24 billion / $4.38 billion | $5.66 billion / $3.23 billion at Dec. 31, 2021 |
| GAAP / adjusted book value per common share | $3.32 / $3.97 | $4.70 / $4.72 at Dec. 31, 2021 |
| Common dividends declared per share | $0.40 | $0.40 in 2021 |
Net loss widened primarily because rising rates and credit-spread widening drove fair-value losses, particularly on residential loans and Consolidated SLST. Interest income rose with a larger average interest-earning asset base, but higher financing costs largely offset the benefit. The reported net interest spread is a company-defined non-GAAP measure.
Cash and cash equivalents were $244.7 million; restricted cash was $136.2 million. Cash, cash equivalents and restricted cash increased $43.1 million during the year. Cash flows were $91.8 million from operations, negative $508.8 million from investing, and positive $460.1 million from financing.
Year-end debt included $737.0 million of repurchase agreements, $2.10 billion of collateralized debt obligations (CDOs), $97.4 million carrying value of senior unsecured notes, $45.0 million of subordinated debentures, and $394.7 million of mortgages payable on real estate. The balance sheet also included $883.8 million of liabilities in disposal groups held for sale. Much of the CDO and property mortgage debt is non-recourse; company recourse leverage was approximately 0.3x equity. These consolidated debt balances should not be read as wholly parent-company recourse obligations.
Material changes, outlook and risks
- Net unrealized losses swung from 2021 gains as rate increases and wider credit spreads reduced asset values. The Federal Reserve raised its target rate by 425 basis points during 2022.
- NYMT completed four residential-loan securitizations, receiving approximately $970 million net proceeds, principally used to repay residential-loan financing. Management reported that 13% of outstanding financing was exposed to mark-to-market margin-call risk at year-end, versus 93% at Dec. 31, 2019.
- Management said it would prioritize liquidity, balance-sheet strength and book-value protection; pursue selective, shorter-duration or discount-priced assets; and favor longer-term or non-mark-to-market financing. It expected continued market volatility in 2023 and cited recession risk, but gave no specific earnings or dividend guidance.
- Multifamily joint-venture equity interests totaled approximately $388.8 million at year-end. Certain investments were classified as held for sale; management cautioned that timing and sale prices are uncertain. A $2.4 million impairment was recorded on a property in the disposal group.
- Key risks include interest-rate and spread movements, borrower defaults and delinquencies, collateral valuation uncertainty, financing renewals and margin calls, asset illiquidity, geographic/property concentration, operating-partner and servicing performance, and maintaining REIT and Investment Company Act status. Fair-value estimates for loans and certain securities rely on significant unobservable inputs.
- Management stated it believed available liquidity and financing would meet requirements for at least 12 months. This is subject to market conditions and access to financing. The company reported compliance with financing covenants at year-end and through the filing date; the auditor issued an unqualified opinion on the financial statements and internal controls.
- After year-end, the board approved a one-for-four reverse common-stock split, expected to take effect March 9, 2023, extended the $200 million repurchase authorization through March 31, 2024, and the company repurchased $60.3 million par value of residential-loan CDOs for approximately $58.7 million in February 2023.
Important facts for investors to verify
- Confirm the issuer: this filing is for New York Mortgage Trust, not Adamas Trust.
- Review the audited statements and notes for the drivers and valuation assumptions behind the $321.1 million unrealized loss, the held-for-sale classification, and the reported book-value decline.
- Assess recourse versus non-recourse debt, financing maturities, margin-call exposure, unrestricted liquidity, and the difference between cash and restricted cash.
- Track actual multifamily asset sales, proceeds, impairments, and the redeployment of capital against management’s repositioning plan.
- Check subsequent filings for dividend decisions, reverse-split implementation, CDO repurchases, and any updates to liquidity or financing access.