Believes Front Yard’s Board Only Has Strong
Focus and Passion When It Comes to Attacking Stockholders, Such as
Snow Park, Who Simply Seek Enhanced Oversight and a Strategy to
Unlock NAV
Reminds Stockholders the Incumbent Board Has
Delivered Nothing But Value Destruction Over the Past Four Years
and Does Not Feel the Current Directors Have Provided Hope That The
Next Four Years Will Be Better
Notes that Front Yard’s May 10th
Press Release Again Attempts to Obfuscate its Own Failings and
Despite Dismal Returns, the Company is Still Yet to Produce a
Credible Business Plan to Realize NAV
Reminds Stockholders That in Contrast to
Front Yard, the Snow Park Slate Has a Vision to Unlock the
Tremendous Real Estate Value Trapped Within the Company’s
Shares
Stockholders Have a Clear Choice:
Follow the Path That Has Led to Industry-Worst Total Returns OR
Vote the BLUE Proxy Card to Elect the
Full Snow Park Slate, Which Offers True Independence and Will Push
the Company to Finally Realize Management’s Stated NAV of $17.50
Per Share
Snow Park Capital Partners, LP (together with its affiliates,
“Snow Park” or “we”) today responded to the latest attempt by Front
Yard Residential Corporation (NYSE: RESI) (“Front Yard” or the
“Company”) to mislead stockholders about the value-destructive
amendments made to the Company’s external management agreement with
Altisource Asset Management Corporation (“AAMC”). For more
information on Snow Park’s assessment of the agreement and voting
resources, please visit www.RenewRESI.com today.
Snow Park, which together with the other participants in its
solicitation beneficially owns approximately 2.1% of Front Yard’s
outstanding shares, urges all stockholders to vote the BLUE proxy card today. Our nominees
– Leland Abrams, Lazar Nikolic and Jeffrey Pierce – possess strong
real estate pedigrees, robust mortgage and financial services
experience, and deep knowledge of effective corporate governance
practices in the Real Estate Investment Trust (“REIT”) sector. Our
nominees also understand the fundamentals and operating realities
of the single-family residential market due to their respective
experiences analyzing, investing in, and overseeing the management
of individual properties across various markets. These are the
types of qualifications that Front Yard’s current Board of
Directors (the “Board”) lacks, in our view, as evidenced by its
approval of the amended AAMC agreement. If elected, our nominees
will be laser-focused on bringing independent ownership
perspectives to the boardroom and driving a plan to finally realize
Net Asset Value (“NAV”).
Jeffrey Pierce, Founder and Managing Partner of Snow Park,
commented:
“We believe Front Yard’s defensive, rash response to our
assessment of the Company’s amended agreement with AAMC
misrepresents key facts and continues to reinforce our view that
the incumbent Board lacks either the ability or desire to implement
a strategy for finally realizing management’s stated NAV of $17.50
per share.1 We also feel it is notable that Front Yard’s latest
missive makes no attempt to refute Snow Park’s view that serious
unchecked conflicts exist in Front Yard’s boardroom – ones that
have undeniably contributed to losses in excess of $500 million for
stockholders since 2015. We also contend it is very telling that
Front Yard does not have an answer for a sobering fact that Snow
Park continues to highlight: management’s growth-at-all-costs
strategy, which is perpetuated by the amended agreement with AAMC,
has already led to significant structural issues that include one
of the most highly-leveraged balance sheets of any publicly-traded
REIT, persistently high fixed expenses and poor corporate
governance policies that keep stockholders muted. The amended
agreement continues to incentivize high leverage through asset
growth while failing to take total shareholder returns into account
as a performance metric.
Further, despite all of Front Yard’s costly failures, the
current six-member Board – which includes George Ellison, Chairman
and CEO of AAMC, as well as his former colleagues from Bank of
America – concluded this week that AAMC deserves a five-year
extension, more growth-at-all-costs incentives and sweetened
financial considerations in the event the agreement is terminated.
We believe this development represents another setback for the
Company’s long-suffering stockholders. We also feel it is offensive
to stockholders to highlight a one-day share price move – likely
driven by a combination of factors – as “success” after four years
of value destruction.
The truth is that Snow Park hoped its efforts to finally add
qualified stockholder representation to the boardroom would at
least have prompted the incumbent Board to produce a credible
business plan to disrupt the dismal status quo, but instead the
directors have unfortunately chosen to fight checks and balances
and spend their time attacking independent stockholders. To this
day, the incumbent Board has still not acknowledged the mistakes of
the past four years that have led to a roughly 50% decline in
undepreciated book value per share as well as an approximately 50%
decline in stockholder wealth.
We urge stockholders to see through Front
Yard’s effort to distract from the failures of the past four years,
which have already left the Company in a perilous financial
position and destroyed both stockholder value and NAV. It
should now be clearer than ever that it is time to add independent
ownership perspectives, real REIT and single-family market
experience, and a strategic vision to the boardroom.”
Stockholders Deserve a
Real Plan to Realize NAV: The Snow Park Slate Has a Vision for
Helping the Company Finally Unlock the Tremendous Real Estate Value
Trapped Within its Shares
As previously disclosed, our nominees have a plan – in contrast
to the incumbent Board – to evaluate viable paths to realizing
management’s stated NAV of $17.50 per share2 – which represents a
sizable premium relative to Front Yard’s presently underperforming
shares. These paths include:
1. Full Sale of the Company – Given that there has
been a tremendous amount of private capital flowing into real
estate investment vehicles in recent years, we believe now is the
time for Front Yard to consider exploring a sale to a company with
the operating efficiencies and scale to realize the full value of
the portfolio. Despite this week’s development, we still believe
this option offers stockholders significant benefits, including
realizing a sizable premium on Front Yard’s underperforming shares.
Management has only offered growth – despite Front Yard’s valuation
gap and no identifiable capital sources – as a strategy.
2. Asset Sales to De-Lever and Grow Distributions
– The significant amount of private capital that has flowed into
real estate investment vehicles provides a tailwind for Front Yard
to explore an orderly sale process for parcels within its
portfolio. We believe this option – although secondary to an
outright sale – still offers stockholders significant benefits over
time, including decreasing Front Yard’s valuation gap and returning
capital to stockholders. To the contrary, management and the
incumbent Board continue to blindly speak about growth despite the
destructive results that its leveraged-fueled acquisition spree has
led to over the past four years.
3. Cost-Cutting Initiatives to Pursue Profitability at
16,000 Home Level – If necessary, Front Yard can drastically
reduce costs across the board to try to demonstrate to stockholders
that 16,000 homes can be operated profitably. Executing at this
scale could possibly enable the Company to issue more equity at
reasonable levels and increase scale. Simply put, the Company has
leveraged nearly every asset it has – it is not realistic to expect
stockholders to fund growth if management cannot maintain a
reasonable fixed cost structure.
We urge Front Yard stockholders to vote FOR
all three of Snow Park’s highly-qualified, independent nominees on
the BLUE Proxy Card and to return
it in your postage-paid envelope provided. If you have
already voted Front Yard’s proxy card, you can change your vote by
providing a later dated BLUE proxy.
Should you have any questions or need
assistance with voting, please contact Saratoga Proxy Consulting
LLC at (888) 368-0379 or (212) 257-1311 or by email
at info@saratogaproxy.com.
PROTECT YOUR INVESTMENT. PLEASE
SIGN, DATE, AND MAIL THE BLUE PROXY CARD TODAY!
VISIT WWW.RENEWRESI.COM
TODAY.
About Snow Park
Snow Park Capital Partners, LP is a privately-held investment
manager that specializes in investing in publicly-traded real
estate securities across the capital structure. Based in New York
City and founded by Jeffrey Pierce, the firm focuses on producing
strong risk-adjusted returns for a diverse investor base of public
institutions, private entities and qualified individual
clients.
1 A NAV of $17.50 was set forth in Front Yard Residential
Corp.’s February 2019 earnings call transcript.
2 A NAV of $17.50 was set forth in Front Yard Residential
Corp.’s February 2019 earnings call transcript.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190510005485/en/
For Investors:Saratoga Proxy Consulting LLCJohn Ferguson / Joe
Mills, 212-257-1311jferguson@saratogaproxy.com /
jmills@saratogaproxy.comFor Media:ProfileGreg Marose / Ashley
Areopagita, 347-343-2999gmarose@profileadvisors.com /
aareopagita@profileadvisors.com
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