Business Context and Reporting Period
This Form 8-K is a current report filed by AG Mortgage Investment Trust, Inc. (trading as MITT) on June 18, 2020. The filing addresses Item 8.01 (Other Events) regarding management's estimates of book value per share for the periods ending April 30, 2020, and May 31, 2020.
Key Financial Metrics
The filing provides estimated book value per share ranges rather than audited financial statements:
- Book Value per Share (April 30, 2020): Estimated range of $1.80 to $1.90.
- Book Value per Share (May 31, 2020): Estimated to be in a range not substantially higher than the April 30, 2020 figure.
- Preferred Stock Liquidation Preferences:
- Series A: $51.8 million
- Series B: $115 million
- Series C: $115 million
The filing text does not provide clear values for revenue, profit, cash flow, operating margins, total debt, or liquidity ratios. These estimates are unaudited and not prepared in accordance with U.S. GAAP.
Material Changes and Estimates
Management indicated that the estimated book value per share as of May 31, 2020, did not show a substantial increase compared to the April 30, 2020 estimate. The estimates rely on assumptions regarding the resolution of deficiencies with financing counterparties, asset valuations, and the restructuring of financing arrangements. The company noted that additional items requiring adjustments may be identified, potentially resulting in material changes to these estimates.
Outlook, Risks, and Contingencies
The filing includes significant forward-looking statements and risk disclosures:
- Accounting Assurance: PricewaterhouseCoopers LLP (PwC) has not audited, reviewed, or performed any procedures on the estimated financial information and expresses no opinion on it.
- COVID-19 Impact: Risks include changes in interest rates, yield curves, prepayment rates, default rates, and recovery rates exacerbated by the pandemic.
- Operational Risks: Potential margin calls due to negative changes in asset fair value, ability to maintain REIT qualification, and availability of financing.
- Regulatory Environment: Impact of legislative actions by the U.S. Treasury, Federal Reserve, and the CARES Act forbearance program.
The company undertakes no obligation to update these estimates or forward-looking statements.
Investor Verification Checklist
- Verify the final audited book value per share in the upcoming Form 10-Q for the period ended June 30, 2020.
- Confirm the status of financing counterparty deficiencies and asset restructuring mentioned in the assumptions.
- Review the most recent Form 10-K and Form 10-Q for detailed liquidity, debt, and asset valuation data not present in this 8-K.
- Monitor for margin calls or changes in the fair value of Agency RMBS, Non-Agency RMBS, and CMBS securities.