×

Altisource Residential Corporation's Rental Portfolio More Than Doubles as Strategic Transition Accelerates

CHRISTIANSTED, U.S. Virgin Islands, Nov. 09, 2015 (GLOBE NEWSWIRE) -- Altisource Residential Corporation (“Residential” or the “Company”) (NYSE:RESI) today announced financial and operating results for the third quarter of 2015.

Third Quarter 2015 Highlights:

  • Increased rental portfolio to 2,516 homes as of September 30, 2015, including 2,105 rented properties, 156 properties listed for rent and 255 properties under leasehold renovation and unit turn, representing an increase of 156% over the 984 properties in the rental portfolio as of June 30, 2015.
  • Agreed to sell 871 non-performing loans at balance sheet carrying value; unpaid principal balance (“UPB”) of loans to be sold is $346.9 million, or approximately 15% of the total UPB in Residential's loan portfolio; sale is expected to close in the fourth quarter.¹
  • Completed purchase of 1,314 rental homes in Atlanta for an aggregate purchase price of $111.4 million.
  • Declared and paid a $0.55 per share dividend.
  • Repurchased $20.0 million of outstanding common stock under Board-approved repurchase plan.
  • Amended repurchase facility with Wells Fargo to extend the facility to September 2017, increase the funding capacity to $750.0 million and increase REO financing capability to 40% of the facility.
  • Asset management fees reduced to $5.0 million in the third quarter of 2015 from $21.1 million in the third quarter of 2014.

“In the third quarter of 2015, we took crucial steps to continue diversifying Residential's acquisition strategies and substantially grew our single-family rental portfolio. We also believe our recent agreed-upon sale of non-performing loans at carrying value proves our valuation model and supports the value of our remaining loan portfolio,” said Chief Executive Officer George G. Ellison. “Our results reflect the impact of a continued slowdown in the number of non-performing loan resolutions due to servicing transfers and the fact that we are managing a static non-performing loan pool with no new loan acquisitions in 2015. However, we believe we have sufficient existing equity to acquire at least 25,000 homes and will continue to execute on our strategy to be one of the preeminent single-family rental companies in the industry.”

________
¹ Sale is subject to completion of due diligence and final negotiation of definitive purchase agreement. Final purchase price is expected to be in the range of 1-2% of Residential’s balance sheet carrying value for the loans.


Strategic Update

Residential is committed to becoming and maintaining its position as one of the top single-family rental REITs, providing quality, affordable rental homes to working class American families and their communities while also providing a consistent and robust return on equity for its investors. The Company has taken substantial steps to achieve these goals, which are highlighted by the following strategies:

  • The Company believes it can maintain a strong annual dividend as it transitions toward a 100% rental REIT, but more importantly afterwards as well. In the short term, the Company expects that gains on non-performing loan sales will contribute to dividends along with increasing rental income and the existing non-performing loan earnings.

  • The Company expects that it will continue to sell non-performing loans and non-rental REO properties. The first such sale of 871 loans is expected to close in the fourth quarter, and the final agreed-upon sale price of this transaction is expected to be in the range of 1-2% of the balance sheet carrying value of these loans, which the Company believes proves its valuation model and supports the value of its remaining non-performing loan portfolio.

  • The liquidity provided by non-performing loan and non-rental REO sales are expected to be a growth engine that will provide Residential with buying power to increase its rental portfolio to at least 25,000 single-family rental homes in bulk and/or on a one-by-one basis. The Company’s amended repurchase facilities, which provide it with the ability to finance REOs and have significant remaining financing capacity, will provide the Company with additional leverage to build its rental portfolio.

  • The Company and its vendor, Altisource Portfolio Solutions (“Altisource”), strive to be the best-in-class at property management in terms of quality service, geographical reach and cost. The Company believes that Altisource has the capacity and vendor network to provide it with the operational scale and efficiency to manage properties in more than 270 major service areas throughout the United States. Residential believes that Altisource provides property preservation, valuation, property management, renovation, maintenance and brokerage services on a predictable and cost effective basis.

  • The Company is also undertaking grass roots efforts to provide quality, affordable rental homes to working class families while offering them incentives and beneficial programs to improve their credit ratings and provide them with opportunities to improve their living situations. The Company believes the incentives that it can offer to its renters will make its rental properties desirable in the market place which, in turn, can lead to higher occupancy rates and lower turnover, each of which would support an attractive return on equity and result in revenue sustainability.


The Company believes these strategies have commenced in a successful manner and are achievable. If achieved, they can provide a long term, sustainable value proposition for investors.

Third Quarter 2015 Financial Results

Estimated taxable income for the third quarter of 2015 was $10.4 million, as compared to $38.7 million for the third quarter of 2014.

On a GAAP basis, net loss was $5.4 million, or $0.09 per diluted share, for the third quarter of 2015 compared to net income of $37.7 million, or $0.66 per diluted share, for the third quarter of 2014. Net income for the nine months ended September 30, 2015 totaled $20.2 million, or $0.35 per diluted share, compared to net income of $147.4 million, or $2.62 per diluted share, for the nine months ended September 30, 2014.

Webcast and conference call

The Company will host a webcast and conference call on Monday, November 9, 2015, at 8:30 a.m. Eastern Time to discuss its financial results for the third quarter of 2015. The conference call will be webcast live over the internet from the Company’s website at www.altisourceresi.com and can be accessed by clicking on the “Shareholders” link.

About Residential

Residential is focused on providing quality, affordable rental homes to families throughout the United States. Additional information is available at www.altisourceresi.com.

Forward-looking statements

This press release contains forward-looking statements that involve a number of risks and uncertainties. Those forward-looking statements include all statements that are not historical fact, including statements about management’s beliefs and expectations. Forward-looking statements are based on management’s beliefs as well as assumptions made by and information currently available to management. Because such statements are based on expectations as to future economic performance and are not statements of historical fact, actual results may differ materially from those projected. Residential undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to: Residential’s ability to implement its business plan; Residential’s ability to leverage strategic relationships on an efficient and cost-effective basis; its ability to compete; general economic and market conditions; governmental regulations, taxes and policies; availability of adequate and timely sources of liquidity and financing and other risks and uncertainties detailed in the “Forward-Looking Statements,” “Risk Factors” and other sections of Residential’s Annual Report on Form 10-K, its quarterly reports on Form 10-Q and its other filings with the Securities and Exchange Commission.

Altisource Residential Corporation
Consolidated Statements of Operations
(In thousands, except share and per share amounts)
(Unaudited)
Three months
ended September
30, 2015
Three months
ended September
30, 2014
Nine months
ended September
30, 2015
Nine months
ended September
30, 2014
Revenues:
Rental revenues$4,021 $469 $7,561 $719
Net unrealized gain on mortgage loans27,499 88,726 130,842 258,898
Net realized gain on mortgage loans12,874 13,727 47,528 33,867
Net realized gain on mortgage loans held for sale100 302 505 302
Net realized gain on real estate13,914 3,310 36,926 4,544
Interest income115 2,568 595 2,757
Total revenues58,523 109,102 223,957 301,087
Expenses:
Residential property operating expenses16,574 9,247 45,890 13,550
Real estate depreciation and amortization2,050 313 4,392 464
Real estate and mortgage loan selling costs and impairment10,705 5,542 34,235 8,775
Mortgage loan servicing costs13,477 21,226 47,989 49,588
Interest expense14,436 11,699 39,477 24,352
General and administrative3,147 1,819 9,497 5,665
Related party general and administrative4,988 21,530 25,789 51,629
Total expenses65,377 71,376 207,269 154,023
Other income1,518 3,518 383
(Loss) income before income taxes(5,336) 37,726 20,206 147,447
Income tax expense27 50 53 76
Net (loss) income$(5,363) $37,676 $20,153 $147,371
(Loss) earnings per share of common stock – basic:
(Loss) earnings per basic share$(0.09) $0.66 $0.35 $2.63
Weighted average common stock outstanding – basic57,056,625 57,174,150 57,154,734 55,930,010
(Loss) earnings per share of common stock – diluted:
(Loss) earnings per diluted share$(0.09) $0.66 $0.35 $2.62
Weighted average common stock outstanding – diluted57,056,625 57,406,325 57,351,014 56,312,104
Dividends declared per common share$0.55 $0.55 $1.73 $1.48



Altisource Residential Corporation
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
September 30, 2015
(Unaudited)
December 31, 2014
Assets:
Real estate held for use:
Land$49,518 $14,424
Rental residential properties (net of accumulated depreciation of $5,048 and $1,062, respectively)200,136 60,908
Real estate owned567,228 457,045
Total real estate held for use, net816,882 532,377
Real estate assets held for sale133,154 92,230
Mortgage loans at fair value1,380,575 1,959,044
Mortgage loans held for sale254,835 12,535
Cash and cash equivalents83,881 66,166
Restricted cash25,511 13,282
Accounts receivable35,507 10,313
Related party receivables 17,491
Investment in affiliate 18,000
Deferred leasing and financing costs, net9,806 4,251
Prepaid expenses and other assets395 373
Total assets$2,740,546 $2,726,062
Liabilities:
Repurchase and loan and security agreements$929,478 $1,015,000
Other secured borrowings (including $14,991 repurchase agreement with NewSource at December 31, 2014)513,049 339,082
Accounts payable and accrued liabilities63,871 11,678
Related party payables5,126 33,391
Total liabilities1,511,524 1,399,151
Commitments and contingencies
Equity:
Common stock, $.01 par value, 200,000,000 authorized shares; 57,225,246 and 55,990,853 shares issued and outstanding, respectively, as of September 30, 2015 and 57,192,212 shares issued and outstanding as of December 31, 2014572 572
Additional paid-in capital1,227,334 1,227,091
Retained earnings21,099 99,248
Treasury stock, at cost, 1,234,393 shares as of September 30, 2015 and 0 shares as of December 31, 2014(19,983)
Total equity1,229,022 1,326,911
Total liabilities and equity$2,740,546 $2,726,062

Non-GAAP measures - Estimated REIT taxable income

Estimated REIT taxable income is a measure that we use in connection with monitoring our compliance with certain REIT requirements. We believe that estimated REIT taxable income is useful because our dividends are determined directly by our REIT taxable income due to a REIT's requirement to distribute at least 90% of its taxable income in each fiscal year. Estimated REIT taxable income should not be considered as an alternative to net income or net income per share as indicators of our operating performance.

The following table is a reconciliation of U.S. GAAP net income to estimated REIT taxable income ($ in thousands):

Three months ended
September 30, 2015
Nine months ended
September 30, 2015
(Loss) income before income taxes$(5,336) $20,206
Add net loss of taxable REIT subsidiaries5,996 20,062
Adjusted net income660 40,268
Book to tax differences:
Net unrealized gain on mortgage loans10,699 3,648
Net realized gain on mortgage loans(3,002) (7,257)
Net realized gain on re-performing mortgage loans(13) 99
Net realized gain on real estate sold(16,026) (40,000)
Interest income, advances and recoveries(1,031) 13,583
Depreciation and amortization773 873
Valuations and impairments8,118 22,569
Mortgage loan servicing cost9,609 35,070
Acquisition fees and due diligence693 729
Other book/tax differences, net(35) 188
Estimated REIT taxable income$10,445 $69,770


FOR FURTHER INFORMATION CONTACT: Robin N. Lowe Chief Financial Officer T: 1-345-815-9919 E: Robin.Lowe@AltisourceAMC.com

Source:Altisource Residential Corporation