Debt

12 Months Ended

Dec. 31, 2019

Residential Collateralized Debt Obligations

The Company’s Residential CDOs, which are recorded as liabilities on the Company’s consolidated balance sheets, are secured by ARM loans pledged as collateral, which are recorded as assets of the Company. Pledged assets of $44.0 million and $56.8 million are included in distressed and other residential mortgage loans, net in the Company’s consolidated balance sheets as of December 31, 2019 and 2018, respectively. As of December 31, 2019 and 2018, the Company had Residential CDOs outstanding of $40.4 million and $53.0 million, respectively. As of December 31, 2019 and 2018, the current weighted average interest rate on these Residential CDOs was 2.41% and 3.12%, respectively. The Residential CDOs are collateralized by ARM loans with a principal balance of $47.2 million and $60.2 million at December 31, 2019 and 2018, respectively. The Company retained the owner trust certificates, or residual interest, for three securitizations, and, as of December 31, 2019 and 2018, had a net investment in the residential securitization trusts of $4.9 million and $4.8 million, respectively. The Residential CDOs are non-recourse debt for which the Company has no obligation.

Convertible Notes

On January 23, 2017, the Company issued $138.0 million aggregate principal amount of its Convertible Notes in an underwritten public offering. The net proceeds to the Company from the sale of the Convertible Notes, after deducting the underwriter's discounts, commissions and offering expenses, were approximately $127.0 million with the total cost to the Company of approximately 8.24%. Costs related to the issuance of the Convertible Notes which include underwriting, legal, accounting and other fees, are reflected as deferred charges. The underwriter’s discount and deferred charges, net of amortization, are presented as a deduction from the corresponding debt liability on the Company’s accompanying consolidated balance sheets in the amount of $5.0 million and $7.2 million as of December 31, 2019 and 2018, respectively. The underwriter’s discount and deferred charges are amortized as an adjustment to interest expense using the effective interest method.

The Convertible Notes were issued at 96% of the principal amount, bear interest at a rate equal to 6.25% per year, payable semi-annually in arrears on January 15 and July 15 of each year, and are expected to mature on January 15, 2022, unless earlier converted or repurchased. The Company does not have the right to redeem the Convertible Notes prior to maturity and no sinking fund is provided for the Convertible Notes. Holders of the Convertible Notes will be permitted to convert their Convertible Notes into shares of the Company’s common stock at any time prior to the close of business on the business day immediately preceding January 15, 2022. The conversion rate for the Convertible Notes, which is subject to adjustment upon the occurrence of certain specified events, initially equals 142.7144 shares of the Company’s common stock per $1,000 principal amount of Convertible Notes, which is equivalent to a conversion price of approximately $7.01 per share of the Company’s common stock, based on a $1,000 principal amount of the Convertible Notes. The Convertible Notes are senior unsecured obligations of the Company that rank senior in right of payment to the Company’s subordinated debentures and any of its other indebtedness that is expressly subordinated in right of payment to the Convertible Notes.

During the year ended December 31, 2019, none of the Convertible Notes were converted. As of February 28, 2020, the Company has not been notified, and is not aware, of any event of default under the covenants for the Convertible Notes.

Subordinated Debentures

Subordinated debentures are trust preferred securities that are fully guaranteed by the Company with respect to distributions and amounts payable upon liquidation, redemption or repayment. The following table summarizes the key details of the Company’s subordinated debentures as of December 31, 2019 and 2018 (dollar amounts in thousands):



	NYM Preferred Trust I		NYM Preferred Trust II
Principal value of trust preferred securities	$	25,000	$	20,000
Interest rate	Three month LIBOR plus 3.75%, resetting quarterly		Three month LIBOR plus 3.95%, resetting quarterly
Scheduled maturity	March 30, 2035		October 30, 2035

As of February 28, 2020, the Company has not been notified, and is not aware, of any event of default under the covenants for the subordinated debentures.

Mortgages and Notes Payable in Consolidated VIEs

In March 2017, the Company consolidated both Riverchase Landing and The Clusters into its consolidated financial statements (see Note 9). In March 2018, Riverchase Landing completed the sale of its multi-family apartment community and redeemed the Company’s preferred equity investment. The Company de-consolidated Riverchase Landing as of the date of the sale. In February 2019, The Clusters completed the sale of its multi-family apartment community and redeemed the Company’s preferred equity investment. The Company de-consolidated The Clusters as of the date of the sale. The Clusters’ real estate investment was subject to a mortgage payable as of December 31, 2018, and the Company had no obligation for this liability as of December 31, 2018.

The Company also consolidates KRVI into its consolidated financial statements (see Note 9). KRVI’s real estate under development was subject to a note payable as of December 31, 2018 that was paid off on November 20, 2019.

As of December 31, 2019, maturities for debt on the Company's consolidated balance sheet are as follows (dollar amounts in thousands):



Year Ending December 31,	Total
2020	$	—
2021	—
2022	138,000
2023	—
2024	—
Thereafter	85,621
Total	$	223,621