New York Mortgage Trust’s Strategic Growth Amid Challenges

New York Mortgage Trust ((NYMT)) has held its Q2 earnings call. Read on for the main highlights of the call.

The recent earnings call of New York Mortgage Trust (NYMT) painted a picture of strategic growth and resilience, despite facing some financial hurdles. The company showcased a robust performance with significant portfolio expansion and a stable dividend payout. However, these achievements were tempered by challenges such as net losses from derivatives, a decrease in book value, and increased operating expenses.

Exceeding Earnings Available for Distribution (EAD)

NYMT reported a commendable performance with its Earnings Available for Distribution (EAD) surpassing the current common dividend by $0.02. This achievement highlights the company’s effective execution of its long-term capital allocation strategy, reflecting its ability to generate value for shareholders.

Significant Portfolio Growth

The company experienced substantial portfolio growth, acquiring an additional $915 million in assets. This acquisition contributed to a 10% quarter-over-quarter increase in EAD per share, bringing total acquisitions for the first half of 2025 to over $2.8 billion. This growth underscores NYMT’s strategic focus on expanding its asset base.

Constructive Acquisition

NYMT announced the full acquisition of Constructive, a leading originator of business purpose loans. This acquisition is expected to deliver an annual equity return of approximately 15% and strategically expand NYMT’s footprint into residential business purpose lending, marking a significant milestone in its growth trajectory.

Agency RMBS Expansion

The company increased its equity concentration in Agency RMBS from 34% to 38% of total equity, capitalizing on a favorable market environment. This strategic move aligns with NYMT’s core focus on Agency RMBS and business purpose loans.

Stable Dividend

NYMT maintained a quarterly dividend of $0.20 per share for the seventh consecutive quarter. This stability is supported by strategic repositioning and consistent recurring income generation, providing confidence to investors in the company’s financial health.

Net Losses and Book Value Decline

The earnings call revealed $24.6 million in net unrealized gains offset by $36.3 million in unrealized losses on derivative instruments. This resulted in a decrease in GAAP book value and adjusted book value per share by 2.8% and 1.6%, respectively, highlighting the financial challenges faced by the company.

Increased Operating Expenses

NYMT reported a net loss from real estate of $3 million, attributed to higher operating expenses, primarily due to increased insurance and property tax expenses. This rise in costs poses a challenge to the company’s profitability.

Multifamily Sector Exit

The company completed its exit from remaining joint venture equity positions in multifamily properties, marking the end of a strategic divestiture process. This move aligns with NYMT’s focus on streamlining its portfolio and concentrating on core business areas.

G&A Expense Increase from Constructive Acquisition

The acquisition of Constructive is expected to increase the General & Administrative (G&A) expense ratio from 3.4% to approximately 6.2% to 6.4%. This anticipated rise in expenses reflects the integration costs associated with the acquisition.

Forward-Looking Guidance

Looking ahead, NYMT is poised for continued growth, with strong financial performance in the second quarter of 2025. The company deployed nearly $800 million into single-family opportunities, aligning with its core strategies. The acquisition of Constructive is expected to be immediately accretive to EAD, enhancing liquidity and enabling further expansion in Agency RMBS holdings. Despite a decrease in GAAP and adjusted book value per share, NYMT maintained a stable dividend, underscoring its commitment to shareholder returns.

In conclusion, New York Mortgage Trust’s earnings call reflected a balanced narrative of strategic growth and operational challenges. While the company achieved significant portfolio expansion and maintained a stable dividend, it also faced financial hurdles such as net losses from derivatives and increased operating expenses. Overall, NYMT’s strategic initiatives and forward-looking guidance suggest a positive outlook, with potential for continued growth and value creation for shareholders.