Filing summary
Entity and period: The filing text is for New York Mortgage Trust, Inc. (NASDAQ: NYMT), not ADAMAS TRUST, INC. It is the Form 10-K for the fiscal year ended December 31, 2023; it does not provide standalone fourth-quarter results. Verify that this is the intended filing.
Business context and reporting period
NYMT is an internally managed REIT investing in residential mortgage-related assets, including residential and business-purpose loans, Agency and non-Agency RMBS, multi-family investments, and single-family rentals. The company aims to generate returns from net interest spread and capital gains while making distributions to stockholders.
Management continued a strategic shift away from multi-family joint-venture common equity and toward targeted residential assets. In 2023, it expanded its Agency RMBS holdings and remained selective in credit investments. The company effected a one-for-four reverse stock split in March 2023; per-share figures in the filing reflect the split.
Key financial metrics
| Metric | FY 2023 | FY 2022 |
|---|---|---|
| Interest income | $258.7 million | $258.4 million |
| Interest expense | $192.1 million | $129.4 million |
| Net interest income | $66.5 million | $129.0 million |
| Net loss attributable to common stockholders | $(90.0) million | $(340.6) million |
| Basic loss per common share | $(0.99) | $(3.61) |
| Net interest spread (non-GAAP) | 0.74% | 2.47% |
| Book value per common share | $11.31 | $13.27 |
| Adjusted book value per common share (non-GAAP) | $12.66 | $15.89 |
| Dividends declared per common share | $1.20 | $1.60 |
Net loss improved year over year, primarily reflecting a $97.2 million unrealized gain in 2023 versus a $347.4 million unrealized loss in 2022, and lower real-estate losses. However, higher borrowing costs and financing balances reduced net interest income by $62.4 million. The annual common dividend declined, including a reduction from $0.30 to $0.20 per share for the fourth-quarter 2023 distribution.
Net impairment losses on multi-family real estate were $89.5 million, compared with $2.4 million in 2022. The company also recorded a $16.2 million loss when certain joint-venture investments were reclassified from held for sale to held and used. Fair-value changes can make reported GAAP earnings volatile.
Cash flow, balance sheet, debt and liquidity
- Cash flow: Operating activities provided $30.0 million; investing activities used $1.220 billion; financing activities provided $1.140 billion. Cash, cash equivalents and restricted cash decreased by $50.3 million to $330.6 million, including $143.5 million of restricted cash.
- Balance sheet: Total assets were $7.401 billion and total liabilities were $5.773 billion at year-end. Company stockholders’ equity was $1.580 billion, down from $1.767 billion.
- Financing: Repurchase agreements were $2.471 billion and CDOs were $1.871 billion. The company also had $100 million principal amount of 5.75% senior unsecured notes due April 2026 and $45 million of subordinated debentures. Multi-family property mortgages are generally non-recourse to the company.
- Leverage: Company recourse leverage was 1.6x and portfolio recourse leverage was 1.5x, up from 0.3x for each at year-end 2022. The increase was primarily associated with Agency RMBS financing.
- Available liquidity: Management reported $171.5 million of available cash and cash equivalents, $170.6 million of unencumbered investment securities, and $169.2 million of unencumbered residential loans. It stated that available cash, financing and operating cash flows were expected to meet liquidity needs for at least 12 months, while cautioning that future financing access is not assured.
Material changes, outlook and risks
- Agency RMBS purchases totaled approximately $2.0 billion in 2023; year-end investment securities available for sale were $2.014 billion, compared with $99.6 million in 2022. Residential loans were $3.084 billion, down from $3.525 billion.
- Management expects continued market and asset-price volatility in 2024 amid uncertainty about inflation, interest rates, monetary policy, recession risks and the U.S. election. It intends to emphasize liquid, less credit-sensitive assets such as Agency RMBS, pursue higher portfolio turnover and remain selective in credit investments. No specific earnings or dividend guidance is provided.
- The multi-family disposition strategy remains uncertain: the company sold five properties in 2023, suspended marketing of nine investments, and continued marketing five properties at year-end. Further sale timing and proceeds are not assured. The filing reports one joint-venture senior mortgage, with a $195.6 million balance, one month delinquent; it is non-recourse, and the company says its exposure is limited to its equity investment.
- Credit indicators warrant attention: 8.8% of acquired residential loans were 90 or more days delinquent at year-end, versus 5.4% in 2022. One preferred-equity investment was more than 90 days delinquent, representing 2.2% of the Mezzanine Lending portfolio’s fair value.
- Key risks include interest-rate and spread movements, margin calls and refinancing availability, credit losses and foreclosures, real-estate valuation and liquidity, concentrated geographic exposures, reliance on counterparties and service providers, and maintaining REIT and Investment Company Act status. A modeled instantaneous 100-basis-point rate increase reduced adjusted net interest income by an estimated $25.1 million; results are sensitive to assumptions and portfolio changes.
- In January 2024, the company completed a business-purpose-loan securitization that generated $223.2 million in net proceeds and used $136.6 million to repay residential-loan repurchase financing. Both stock repurchase programs were extended through March 31, 2025. The auditor issued unqualified opinions on the financial statements and internal controls; management also concluded controls were effective.
Investor facts to verify
- Confirm that the intended issuer is New York Mortgage Trust, Inc. (NYMT), rather than ADAMAS TRUST, INC.
- Review the full audited statements and notes, especially the fair-value assumptions for residential loans, the impairment and reclassification losses, and the non-GAAP reconciliations.
- Assess whether the lower net interest spread and reduced common dividend are sustainable, and compare declared dividends with cash generation and REIT distribution requirements.
- Verify borrowing maturities, repurchase-agreement terms, collateral and margin-call exposure, CDO interest-rate step-ups, and liquidity after the subsequent securitization.
- Track residential-loan delinquencies, the delinquent preferred-equity exposure, the multi-family mortgage delinquency, and progress and realized values from planned property sales.