Commitments and Contingencies

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

The Company regularly enters into agreements to acquire additional mortgage loans and mortgage-related assets, subject to continuing diligence on such assets and other customary closing conditions. There can be no assurance that the Company will acquire any or all of the mortgage loans or other assets identified in any acquisition agreement as of the date of these consolidated financial statements, and it is possible that the terms of such acquisitions may change.

At March 31, 2024, the Company had no commitments to acquire additional mortgage loans.

During the three months ended June 30, 2020, the Company issued an aggregate of $125.0 million, net of offering costs, of preferred stock in two series and warrants to institutional accredited investors in a series of private placements. The Company issued 2,307,400 shares of 7.25% Series A Fixed-to-Floating Rate Preferred Stock and 2,892,600 shares of 5.00% Series B Fixed-to-Floating Rate Preferred Stock, and two series of five-year warrants to purchase an aggregate of 6,500,000 shares of the Company's common stock at an exercise price of $10.00 per share. The preferred shares had a liquidation preference of $25.00 per share. Each series of warrants included a put option that allowed the holder to sell the warrants to the Company at a specified put price on or after July 6, 2023. U.S. GAAP requires the Company to account for the outstanding warrants as if the put option will be exercised by the holders.

During the year ended December 31, 2022, the Company repurchased and retired 1,882,451 shares of its series A preferred stock and 1,757,010 shares of its series B preferred stock in a series of repurchase transactions. The series A and series B preferred stock were repurchased for an aggregate of $88.7 million at an average price of $24.37 per share, representing a discount of approximately 2.5% to the face value of $25.00 per share. The repurchase of the preferred stock caused the recognition of $8.2 million of preferred stock discount during the year ended December 31, 2022. There were no repurchases of preferred stock during the three months ended March 31, 2024 and 2023. Also during the year ended December 31, 2022, the Company repurchased and retired 4,549,328 of the outstanding warrants for $35.0 million. No warrants were repurchased during the three months ended March 31, 2024 and 2023.

On February 26, 2024, the Company entered into a $70.0 million term loan with NIC RMBS, an affiliate of Rithm. The term loan is accompanied by the Company’s agreement to issue a certain number of warrants to Rithm or one of its affiliates to purchase Company common stock, which warrants will be detachable. The Company recorded the fair value of the warrants issued to Rithm under the Credit Agreement. The fair value of $2.7 million was recorded in Accrued expenses and other liabilities with an offset to deferred issuance costs in Prepaid expenses and other assets. As of March 31, 2024, the Company recorded a mark to market gain of $0.7 million on the warrants and $0.7 million of amortization on the deferred issuance costs. As of March 31, 2024, the warrants had a carrying value of $2.1 million. Additionally, subject to receipt of approval of a majority of the Company’s stockholders and the satisfaction of certain other closing conditions, Rithm or one of its affiliates has agreed to purchase $14.0 million of the Company's common stock at a price of $4.87 per share (which represents the trailing five-day average closing price of the Common Stock on the NYSE as of the date of the Securities Purchase Agreement), the proceeds of which would be used to pay down the amount outstanding under the term loan. In connection with the foregoing transaction and subject to receipt of approval of a majority of the Company's stockholders, the Company has agreed to terminate its existing management contract with the Manager in exchange for approximately $15.5 million of the Company's common stock and enter into a new management agreement with RCM GA Manager, LLC, a Rithm affiliate, which would become the Company's new external manager. In connection therewith, the Company delivered a termination notice to the Manager on February 26, 2024.

During the three months ended March 31, 2024, the Company exchanged the remaining 424,949 shares of its outstanding 7.25% Series A Fixed-to-Floating Rate Preferred Stock and 1,135,590 shares of its outstanding 5.00% Series B Fixed-to-Floating Rate Preferred Stock and the associated warrants for newly issued shares of its common stock. Of the 12,046,218 shares, 9,464,524 shares of its common stock were issued during the three months ended March 31, 2024 and the remaining 2,581,694 shares of its common stock will only be issued following the approval of a majority of the Company's stockholders during its 2024 annual and special meeting of stockholders. The Company recorded a $12.6 million liability to account for the shares payable to the preferred holders. No preferred stock or warrants were exchanged during the three months ended March 31, 2023. The remaining warrant liability on the consolidated balance sheet at March 31, 2024 was $2.1 million. The following table sets forth the details of the Company's warrant liability ($ in thousands):


	Three months ended March 31,
	2024		2023
Beginning balance	$	16,644	$	12,153
Issuance of 2024 warrants	2,734		—
Fair value adjustment of 2020 warrants	2,033		—
Fair value adjustment of 2024 warrants	(680)		1,622
Redemption of 2020 warrants	(18,677)		—
Ending balance	$	2,054	$	13,775

Litigation, Claims and Assessments

From time to time, the Company may be involved in various claims and legal actions arising in the ordinary course of business. As of March 31, 2024, the Company was not a party to, and its properties were not subject to, any pending or threatened legal proceedings that individually or in the aggregate, are expected to have a material impact on its financial condition, results of operations or cash flows.