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Altisource Asset Management Corporation Reports Fourth Quarter and Full Year 2015 Results

CHRISTIANSTED, U.S. Virgin Islands, Feb. 29, 2016 (GLOBE NEWSWIRE) -- Altisource Asset Management Corporation (“AAMC” or the “Company”) (NYSE:AAMC) today announced financial and operating results for the fourth quarter and full year of 2015.

Fourth Quarter 2015 Highlights

  • Increased rental portfolio of Altisource Residential Corporation (“Residential”) to 2,732 homes, including 2,118 rented properties, 264 listed and ready for rent and 350 properties under leasehold renovation and unit turn.
  • Reduced Residential's non-performing mortgage loan (“NPL”) portfolio to 5,739 loans.1
  • Increased Residential’s estimated taxable income to $37.8 million, or $0.68 per share, from $10.4 million, or $0.18 per share in the third quarter of 2015.
  • Managed the increase in Residential’s rental revenue to $5.7 million, representing a 41% increase over the third quarter of 2015.
  • Facilitated Residential’s completion of the sale of 772 loans within approximately 1% of its balance sheet carrying value; unpaid principal balance (“UPB”) of the sold loans was $309.6 million, or approximately 15% of the total UPB in Residential’s loan portfolio.
  • Negotiated Residential’s agreement to purchase a portfolio of 627 rental homes; expected to close in the first quarter of 2016.2
  • Expanded Residential’s One-by-One purchase program with 156 homes acquired or under contract in the fourth quarter in 9 MSAs.
  • Completed repurchases of $2.7 million of AAMC common stock, bringing total AAMC stock repurchases under the Board-approved repurchase plan to $249.1 million.

Full Year 2015 Highlights

  • Achieved estimated taxable income for Residential of $107.6 million and dividends with respect to 2015 taxable income of $1.90 per share, including the $0.15 per share special dividend announced by Residential today.
  • Increased Residential’s rental portfolio to 2,732 homes as of December 31, 2015, representing an increase of 247% over the 787 properties in the rental portfolio as of December 31, 2014.
  • Executed a new Asset Management Agreement with Residential that positions AAMC for sustainable growth. Total management fees paid to AAMC were $23.7 million in 2015.
  • Facilitated Residential’s servicing transfer of 6,818 loans with an aggregate UPB of $1.7 billion to two new mortgage servicers.
  • Following completed and pending NPL sales, substantially all of Residential’s unsecuritized loans will have been moved to new servicers.
  • Negotiated the addition, amendment and extension of Residential’s repurchase and lending facilities and completed Residential's third NPL securitization, increasing Residential's financing capacity to $1.8 billion at December 31, 2015 versus $1.6 billion at December 31, 2014.

Recent Developments

  • Negotiated Residential’s agreement to sell a portfolio of 1,266 NPLs within approximately 1% of balance sheet carrying value; UPB of the loans to be sold is $434.3 million, or approximately 24% of the year-end total UPB in Residential’s loan portfolio; the sale is expected to close in the first quarter of 2016.3

“In 2015, we substantially diversified Residential’s acquisition strategies in light of evolving economic conditions and higher pricing in the NPL marketplace, negotiating and completing many key capital markets and financing transactions for Residential throughout the year,” stated Chief Executive Officer George G. Ellison. “Although our asset management fees were lower in 2015 under the new Asset Management Agreement with Residential, we continue to believe the amended fee structure promotes the long-term stability of our client, further aligns our incentives with Residential’s mission, which is to become one of the preeminent single-family rental companies in the industry and, most importantly, better positions Residential and AAMC to provide long-term value to their respective shareholders. We believe that Residential’s ability to achieve its mission will be an important factor in AAMC’s future growth.”
_________________
1 The 5,739 NPLs excludes 1,297 loans held for sale at December 31, 2015.
2 Definitive purchase agreement was executed in February 2016. Sale is subject to completion of due diligence and expected to close in the first quarter of 2016.
3 Sale is subject to completion of due diligence and final negotiation of definitive purchase agreement. Final purchase price is subject to final confirmation

Fourth Quarter and Full Year 2015 Financial Results

Net loss attributable to stockholders for the fourth quarter of 2015 totaled $8.9 million, or $4.12 per diluted share, compared to net income attributable to stockholders of $21.9 million, or $7.92 per diluted share, for the fourth quarter of 2014. Net loss attributable to stockholders for the year ended December 31, 2015 totaled $3.3 million, or $1.59 per diluted share, compared to net income attributable to stockholders of $59.7 million, or $21.07 per diluted share, for the year ended December 31, 2014.

Webcast and Conference Call

The Company expects to host a webcast and conference call on Monday, February 29, 2016, at 10:00 a.m. Eastern Time to discuss its financial results for the fourth quarter and full year of 2015. The conference call will be webcast live over the internet from the Company’s website at www.altisourceamc.com and can be accessed by clicking on the “Shareholders” link.

About AAMC

AAMC is an asset management company that provides portfolio management and corporate governance services to investment vehicles. Additional information is available at www.altisourceamc.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: AAMC’s ability to implement its business plan; AAMC's ability to leverage strategic relationships on an efficient and cost-effective basis; AAMC's and Residential's ability to compete; Residential’s ability to implement its business plan; general economic and market conditions; governmental regulations, taxes and policies; AAMC's ability to generate adequate and timely sources of liquidity and financing for Residential; Residential’s ability to sell residential mortgage assets on favorable terms; AAMC's ability to identify and acquire assets for Residential’s portfolio; Altisource Portfolio Solutions’ ability to effectively perform its obligations under various agreements with Residential; and other risks and uncertainties detailed in the “Forward-Looking Statements,” “Risk Factors” and other sections of AAMC’s Annual Reports on Form 10-K (including the Form 10-K filed today), its quarterly reports on Form 10-Q and its other filings with the Securities and Exchange Commission.

Altisource Asset Management Corporation
Consolidated Statements of Operations
(In thousands, except share and per share amounts)
Three months ended December 31, 2015 Three months ended December 31, 2014 Year ended December 31, 2015 Year ended December 31, 2014
Revenues:
Rental revenues$5,672 $845 $13,233 $1,564
Net unrealized gain on mortgage loans(42,013) 91,924 88,829 350,822
Net realized gain on mortgage loans10,533 21,899 58,061 55,766
Net realized gain on mortgage loans held for sale35,927 2,469 36,432 2,771
Net realized gain on real estate14,006 4,938 50,932 9,482
Interest income17 136 612 2,893
Total revenues24,142 122,211 248,099 423,298
Expenses:
Residential property operating expenses20,376 12,468 66,266 26,018
Real estate depreciation and amortization3,080 603 7,472 1,067
Acquisition fees and costs1,298 293 2,292 1,545
Related party acquisition fees and costs 314 1,039
Real estate and mortgage loan selling costs and impairment37,995 13,013 72,230 21,788
Mortgage loan servicing costs14,357 18,593 62,346 68,181
Interest expense14,217 11,295 53,131 35,647
General and administrative7,425 4,020 32,896 18,346
Related party general and administrative 574 4,446
Total expenses98,748 61,173 296,633 178,077
Other income 3,035 5,407
(Loss) income before income taxes(74,606) 64,073 (48,534) 250,628
Income tax expense114 668 354 2,096
Net (loss) income(74,720) 63,405 (48,888) 248,532
Net (income) loss attributable to noncontrolling interest in consolidated affiliate65,779 (41,482) 45,598 (188,853)
Net (loss) income attributable to common stockholders$(8,941) $21,923 $(3,290) $59,679
(Loss) earnings per share of common stock – basic:
(Loss) earnings per basic share$(4.12) $9.99 $(1.59) $26.31
Weighted average common stock outstanding – basic2,180,167 2,189,318 2,202,815 2,261,968
(Loss) earnings per share of common stock – diluted:
(Loss) earnings per diluted share$(4.12) $7.92 $(1.59) $21.07
Weighted average common stock outstanding – diluted2,180,167 2,768,300 2,202,815 2,832,188


Altisource Asset Management Corporation
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
December 31, 2015 December 31, 2014
Assets:
Real estate held for use:
Land (from consolidated VIE)$56,346 $14,424
Rental residential properties (net of accumulated depreciation of $7,127 and $1,062, respectively - from consolidated VIE)224,040 60,908
Real estate owned (from consolidated VIE)455,483 457,045
Total real estate held for use, net735,869 532,377
Real estate assets held for sale (from consolidated VIE)250,557 92,230
Mortgage loans at fair value (from consolidated VIE)960,534 1,959,044
Mortgage loans held for sale (from consolidated VIE)317,336 12,535
Cash and cash equivalents (including from consolidated VIE $116,702 and $66,166, respectively)184,544 116,782
Restricted cash (from consolidated VIE)20,566 13,282
Accounts receivable, net (including from consolidated VIE $45,903 and $10,313, respectively)46,026 11,068
Related party receivables (from consolidated VIE) 17,491
Deferred leasing and financing costs, net (from consolidated VIE)7,886 4,251
Prepaid expenses and other assets (including from consolidated VIE $414 and $373, respectively)2,458 1,638
Total assets$2,525,776 $2,760,698
Liabilities:
Repurchase agreements (from consolidated VIE)$767,513 $1,015,000
Other secured borrowings (from consolidated VIE)505,630 324,082
Accounts payable and accrued liabilities (including from consolidated VIE $32,448 and $11,678, respectively)38,722 16,726
Related party payables (including from consolidated VIE $0 and $4,879, respectively) 6,169
Total liabilities1,311,865 1,361,977
Commitments and contingencies
Redeemable preferred stock:
Preferred stock, $0.01 par value, 250,000 shares issued and outstanding as of December 31, 2015 and 2014; redemption value $250,000249,133 248,927
Equity:
Common stock, $.01 par value, 5,000,000 authorized shares; 2,556,828 and 2,048,223 shares issued and outstanding, respectively, as of December 31, 2015 and 2,452,101 and 2,188,136 shares issued and outstanding, respectively as of December 31, 201426 25
Additional paid-in capital23,419 14,152
Retained earnings (accumulated deficit)50,678 54,174
Treasury stock, at cost, 508,605 shares as of December 31, 2015 and 263,965 as of December 31, 2014(254,984) (245,468)
Total stockholders' equity (deficit)(180,861) (177,117)
Noncontrolling interest in consolidated affiliate1,145,639 1,326,911
Total equity964,778 1,149,794
Total liabilities and equity$2,525,776 $2,760,698

The following tables set forth consolidating financial information which should be considered in addition to, and not as a substitute for, our consolidated financial statements presented in accordance with U.S. GAAP:

Altisource Asset Management Corporation
Consolidating Statement of Operations
Three months ended December 31, 2015
(In thousands, unaudited)
Residential (GAAP) NewSource
Stand-alone (Non-GAAP)
AAMC Stand-alone
(Non-GAAP)
Consolidating Entries AAMC Consolidated (GAAP)
Revenues:
Rental revenues$5,672 $ $ $ $5,672
Net unrealized loss on mortgage loans(42,013) (42,013)
Net realized gain on mortgage loans10,533 10,533
Net realized gain on mortgage loans held for sale35,927 35,927
Net realized gain on real estate14,006 14,006
Interest income16 1 17
Conversion fee 309 (309)
Base management fee 4,524 (4,524)
Incentive management fee (6,906) 6,906
Total revenues24,141 1 (2,073) 2,073 24,142
Expenses:
Residential property operating expenses20,376 20,376
Real estate depreciation and amortization3,080 3,080
Acquisition fees and costs1,298 1,298
Real estate and mortgage loan selling costs and impairment37,995 37,995
Mortgage loan servicing costs14,357 14,357
Interest expense14,217 14,217
General and administrative1,036 41 6,348 7,425
Related party general and administrative, net of reimbursements(2,073) 2,073
Total expenses90,286 41 6,348 2,073 98,748
Other income 33 (33)
Loss before income taxes(66,145) (40) (8,388) (33) (74,606)
Income tax expense13 101 114
Net loss(66,158) (40) (8,489) (33) (74,720)
Net loss attributable to noncontrolling interest in consolidated affiliate 65,779 65,779
Net loss attributable to common stockholders$(66,158) $(40) $(8,489) $65,746 $(8,941)


Altisource Asset Management Corporation
Consolidating Statement of Operations
Year ended December 31, 2015
(In thousands, unaudited)
Residential (GAAP) NewSource
Stand-alone (Non-GAAP)
AAMC Stand-alone
(Non-GAAP)
Consolidating Entries AAMC Consolidated (GAAP)
Revenues:
Rental revenues$13,233 $ $ $ $13,233
Net unrealized gain on mortgage loans88,829 88,829
Net realized gain on mortgage loans58,061 58,061
Net realized gain on mortgage loans held for sale36,432 36,432
Net realized gain on real estate50,932 50,932
Interest income611 564 (563) 612
Conversion fee 1,037 (1,037)
Base management fee 14,565 (14,565)
Incentive management fee 7,994 (7,994)
Expense reimbursements 750 (750)
Total revenues248,098 564 24,346 (24,909) 248,099
Expenses:
Residential property operating expenses66,266 66,266
Real estate depreciation and amortization7,472 7,472
Acquisition fees and costs2,292 2,292
Real estate and mortgage loan selling costs and impairment72,230 72,230
Mortgage loan servicing costs62,346 62,346
Interest expense53,694 (563) 53,131
General and administrative9,539 199 23,158 32,896
Related party general and administrative23,716 630 2,000 (26,346)
Total expenses297,555 829 25,158 (26,909) 296,633
Other income3,518 211 (3,729)
Loss before income taxes(45,939) (265) (601) (1,729) (48,534)
Income tax expense66 288 354
Net loss(46,005) (265) (889) (1,729) (48,888)
Net loss attributable to noncontrolling interest in consolidated affiliate 45,598 45,598
Net loss attributable to common stockholders$(46,005) $(265) $(889) $43,869 $(3,290)


Altisource Asset Management Corporation
Consolidating Statement of Operations
Three months ended December 31, 2014
(In thousands, unaudited)
Residential (GAAP) NewSource
Stand-alone (Non-GAAP)
AAMC Stand-alone
(Non-GAAP)
Consolidating Entries AAMC Consolidated (GAAP)
Revenues:
Rental revenues$845 $ $ $ $845
Net unrealized gain on mortgage loans91,924 91,924
Net realized gain on mortgage loans21,899 21,899
Net realized gain on mortgage loans held for sale2,469 2,469
Net realized gain on real estate4,938 4,938
Interest income136 156 (156) 136
Base management fee 210 210
Incentive management fee 23,820 (23,820)
Expense reimbursements 1,221 (1,431) (210)
Total revenues122,211 156 25,251 (25,407) 122,211
Expenses:
Residential property operating expenses12,468 12,468
Real estate depreciation and amortization603 603
Acquisition fees and costs293 293
Related party acquisition fees and costs314 314
Real estate and mortgage loan selling costs and impairment13,013 13,013
Mortgage loan servicing costs18,593 18,593
Interest expense11,460 (165) 11,295
General and administrative1,089 3,787 (856) 4,020
Related party general and administrative25,087 210 528 (25,251) 574
Total expenses82,920 3,997 (328) (25,416) 61,173
Other income2,160 3,030 5 (2,160) 3,035
Loss before income taxes41,451 (811) 25,584 (2,151) 64,073
Income tax expense(31) 699 668
Net loss41,482 (811) 24,885 (2,151) 63,405
Net loss attributable to noncontrolling interest in consolidated affiliate (41,482) (41,482)
Net loss attributable to common stockholders$41,482 $(811) $24,885 $(43,633) $21,923


Altisource Asset Management Corporation
Consolidating Statement of Operations
Year ended December 31, 2014
(In thousands, unaudited)
Residential (GAAP) NewSource
Stand-alone (Non-GAAP)
AAMC Stand-alone
(Non-GAAP)
Consolidating Entries AAMC Consolidated (GAAP)
Revenues:
Rental revenues$1,564 $ $ $ $1,564
Net unrealized gain on mortgage loans350,822 350,822
Net realized gain on mortgage loans55,766 55,766
Net realized gain on mortgage loans held for sale2,771 2,771
Net realized gain on real estate9,482 9,482
Interest income2,893 156 (156) 2,893
Base management fee 941 (941)
Incentive management fee 67,949 (67,949)
Expense reimbursements 6,070 (6,070)
Total revenues423,298 156 74,960 (75,116) 423,298
Expenses:
Residential property operating expenses26,018 26,018
Real estate depreciation and amortization1,067 1,067
Acquisition fees and costs1,545 1,545
Related party acquisition fees and costs1,039 1,039
Real estate selling costs and impairment21,788 21,788
Mortgage loan servicing costs68,181 68,181
Interest expense35,812 (165) 35,647
General and administrative5,502 4,168 8,676 18,346
Related party general and administrative75,991 941 2,474 (73,921) 5,485
Total expenses236,943 5,109 11,150 (75,125) 178,077
Other income2,543 5,015 9 (2,160) 5,407
Income before income taxes188,898 62 63,819 (3,092) 250,628
Income tax expense45 2,051 2,096
Net income188,853 62 61,768 (3,092) 248,532
Net income attributable to noncontrolling interest in consolidated affiliate (188,853) (188,853)
Net income attributable to common stockholders$188,853 $62 $61,768 $(191,004) $59,679


Altisource Asset Management Corporation
Consolidating Balance Sheet
December 31, 2015
(In thousands, unaudited)
Residential (GAAP) NewSource
stand-alone
(non-GAAP)
AAMC
Stand-alone

(Non-GAAP)
Consolidating Entries AAMC
Consolidated
(GAAP)
Assets:
Real estate held for use:
Land$56,346 $ $ $ $56,346
Rental residential properties, net224,040 224,040
Real estate owned455,483 455,483
Total real estate held for use, net735,869 735,869
Real estate assets held for sale250,557 250,557
Mortgage loans at fair value960,534 960,534
Mortgage loans held for sale317,336 317,336
Cash and cash equivalents116,702 4,583 63,259 184,544
Restricted cash20,566 20,566
Accounts receivable45,903 123 46,026
Related party receivables2,180 (2,180)
Investment in affiliate 12,007 (12,007)
Deferred leasing and financing costs, net7,886 7,886
Prepaid expenses and other assets415 5 2,028 10 2,458
Total assets$2,457,948 $4,588 $77,417 $(14,177) $2,525,776
Liabilities:
Repurchase agreements$767,513 $ $ $ $767,513
Other secured borrowings505,630 505,630
Accounts payable and accrued liabilities32,448 1,546 4,728 38,722
Related party payables 2,180 (2,180)
Total liabilities1,305,591 1,546 6,908 (2,180) 1,311,865
Commitments and contingencies
Preferred stock 249,133 249,133
Equity:
Common stock572 26 (572) 26
Additional paid-in capital1,227,385 7,000 21,089 (1,232,055) 23,419
(Accumulated deficit) retained earnings(50,617) (3,958) 55,245 50,008 50,678
Treasury stock(24,983) (254,984) 24,983 (254,984)
Total stockholders' equity1,152,357 3,042 (178,624) (1,157,636) (180,861)
Noncontrolling interest in consolidated affiliate 1,145,639 1,145,639
Total equity1,152,357 3,042 (178,624) (11,997) 964,778
Total liabilities and equity$2,457,948 $4,588 $77,417 $(14,177) $2,525,776


Altisource Asset Management Corporation
Consolidating Balance Sheet
December 31, 2014
(In thousands, unaudited)
Residential (GAAP) NewSource
stand-alone
(non-GAAP)
AAMC
Stand-alone

(Non-GAAP)
Consolidating Entries AAMC
Consolidated
(GAAP)
Assets:
Real estate held for use:
Land$14,424 $ $ $ $14,424
Rental residential properties, net60,908 60,908
Real estate owned457,045 457,045
Total real estate held for use, net532,377 532,377
Real estate assets held for sale92,230 92,230
Mortgage loans at fair value1,959,044 1,959,044
Mortgage loans held for sale12,535 12,535
Cash and cash equivalents66,166 6,026 44,590 116,782
Restricted cash13,282 13,282
Accounts receivable10,313 919 1 (165) 11,068
Related party receivables17,491 14,991 28,512 (43,503) 17,491
Investment in affiliate18,000 2,000 (20,000)
Deferred leasing and financing costs, net4,251 4,251
Prepaid expenses and other assets373 3 1,262 1,638
Total assets$2,726,062 $21,939 $76,365 $(63,668) $2,760,698
Liabilities:
Repurchase agreements$1,015,000 $ $ $ $1,015,000
Other secured borrowings339,082 (15,000) 324,082
Accounts payable and accrued liabilities11,678 3,173 2,040 (165) 16,726
Related party payables33,391 941 349 (28,512) 6,169
Total liabilities1,399,151 4,114 2,389 (43,677) 1,361,977
Commitments and contingencies
Preferred stock 248,927 248,927
Equity:
Common stock572 25 (572) 25
Additional paid-in capital1,227,091 20,000 14,152 (1,247,091) 14,152
Retained earnings (accumulated deficit)99,248 (2,175) 56,340 (99,239) 54,174
Treasury stock (245,468) (245,468)
Total stockholders' equity1,326,911 17,825 (174,951) (1,346,902) (177,117)
Noncontrolling interest in consolidated affiliate 1,326,911 1,326,911
Total equity1,326,911 17,825 (174,951) (19,991) 1,149,794
Total liabilities and equity$2,726,062 $21,939 $76,365 $(63,668) $2,760,698


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

Source:Altisource Asset Management Corporation