mREIT Great Ajax Sells More Baby Bonds – Update

Great Ajax (NYSE:AJX) is selling more $25 convertible notes which have a maturity date in 2024.  This is a ‘reopening’ of a previous issue and is not a new issue.  The company had sold 3.5 million shares in April, 2017 and then sold another 820,000 in August, 2017.

These notes (NYSE:AJXA) have a 7.25% coupon and have performed relatively well since their initial issuance in April, 2017 and are currently trading in the $25.16 area.  A chart on the issue can be seen here.

NOTE–AJX is somewhat of a specialty mREIT in that they buy ‘reperformng’ loans at a discount.  What this means is these were loans 90 days or more past due and which the borrower began payments once again.  While the company has had decent performance it is not something one wants to hold when unemployment begins to rise as I believe those previously in default on loans are more likely to default again (just my anecdotal observation-I have no data to support this thought).

The prospectus for the reopening can be seen here.

These notes are unrated and we consider them junk.

UPDATE–The company is offering around 640,000 shares (notes) at 24.69.

Term sheet is here.

 

7 thoughts on “mREIT Great Ajax Sells More Baby Bonds – Update”

  1. This is an interesting issue, as the company has purchased many of the loans at a discount and I have owned a few shares in the past. However, leverage on the company is fairly high and I think most of the people on this board remember the last time the housing market tanked. I may purchase a few shares if they head closer to $24, but would likely sell them at the first sign of strain in the housing market.

  2. ALLY-A is in the $25.60s. Do ya feel lucky? I did buying there just now for a 1000 shares. This has made me money every trade…One time Im going to get gobsmacked with a call notice, but it would be hardly painful since the next payment is accruing already. Unfortunatley I had to jettison most of my BANFP to pull it off. Only up about 20 cents on that trade for past month. But hey, compared to many issues that was a winner, lol. These are fun trades for me. Not risking alot and have the past call live adjustable as a backstop. Admittedly, not a charter member of the ALLY fan club though.

    1. Yes Russ–got it corrected. By the way I have 90% of the ‘list’ you sent me a couple months ago on the lists now–still a few to go.

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