Altisource Residential Corporation Announces New Asset Management Agreement With Altisource Asset Management Corporation; Dec...
31 Mars 2015 - 10:25PM
Altisource Residential Corporation ("Residential" or the "Company")
(NYSE:RESI) today announced that it has entered into a new Asset
Management Agreement ("AMA") with Altisource Asset Management
Corporation ("AAMC").
Highlights of the new AMA are as follows:
- Results in substantial management fee savings to Residential
compared to the previous asset management agreement, and is
expected to be immediately accretive to the Company's earnings. The
new fee structure will replace the existing fee structure, as
follows:
- An annual base management fee equal to 1.5% of Residential's
invested capital, payable quarterly in arrears, potentially
increasing to a base management fee of up to 2% of invested
capital, based on the number of Residential's rented homes;
- A quarterly incentive management fee equal to 20% of the amount
by which Residental's return on invested capital exceeds a hurdle
return rate of between 7% and 8.25% (based on the 10-year treasury
rate), potentially increasing to an incentive management fee of up
to 25% of such amount, based on the number of Residential's rented
homes; and
- A quarterly conversion fee equal to 1.5% of the market value of
the single-family homes leased by Residential for the first time
during the quarter.
- Provides for an initial term of 15 years with two potential
five-year extensions, subject to the Company's achieving an average
annual return on invested capital of at least 7%, thereby providing
protection for Residential and creating a strong alignment of
interests between Residential and AAMC.
- Provides Residential the flexibility to pay up to 25% of the
incentive management fee to AAMC in shares of common stock, further
aligning both companies' interests.
The Company also announced that its Board of Directors has
declared a quarterly cash dividend of $0.55 per share of
common stock. Residential will pay this quarterly dividend on April
23, 2015 to all stockholders of record as of the close of
business on April 13, 2015.
In addition, the Company announced the appointment
of George G. Ellison as President of the Company,
effective immediately. Ashish Pandey will continue to serve as
the Company's Chief Executive Officer. Mr. Ellison also serves
as the Chief Executive Officer of AAMC. Prior to joining
AAMC, Mr. Ellison had been employed for 19 years at Bank
of America and its predecessor, Nationsbank. Mr.
Ellison held several roles over his career at Bank of America,
most recently being the executive leading the team that managed the
valuation and disposition of Bank of America's legacy mortgage loan
portfolio and a leading member of Bank of America's Special
Initiatives team that worked to resolve Bank of America's
representation and warranty litigation. Prior to his most recent
roles, Mr. Ellison was Global Head of the Structured
Products division within Bank of America's Investment Banking
platform. His responsibilities involved all Structured Products
including RMBS, ABS, ABCP Conduit and CMBS securities, among
others.
David B. Reiner, Chairman of the Board of Residential,
commented, "We are pleased to have negotiated a new asset
management agreement that will provide the Company with substantial
financial and structural benefits. We are also excited that
George has become a part of our management team. George brings
over 30 years of high-level banking and mortgage experience to our
Company. We believe that his leadership qualities and the
relationships he has developed over a successful career will have a
very positive impact on the Company."
Robert A. Stanger & Co., Inc. provided the Board with a
fairness opinion regarding the new AMA.
Webcast and conference call
The Company will host a webcast and conference call on
Wednesday, April 1, 2015, at 10:00 a.m. Eastern Time to discuss the
new AMA and Residential's financial results for the fourth quarter
and full year of 2014. 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 affordable rental homes to
families throughout the United States. It acquires
single-family properties primarily through the purchase of
distressed mortgage loan portfolios. Residential's strategy is to
work with borrowers to modify and refinance loans to keep them in
their homes and convert the majority of unmodified loans into
renovated rental properties. 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 reports on Form 10-K, its quarterly reports on
Form 10-Q and other filings with the Securities and Exchange
Commission.
CONTACT: Robin N. Lowe
Chief Financial Officer
T: 1-345-815-9919
E: Robin.Lowe@AltisourceAMC.com
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