Glass Lewis Joins ISS in Supporting Snow Park’s Case for Change & Recommending Front Yard Stockholders Vote the Blue Proxy ...
14 Mai 2019 - 12:00PM
Business Wire
Leading Proxy Advisory Firms Together
Recommend Stockholders Vote the BLUE
Proxy Card FOR Lazar Nikolic, Leland Abrams and Jeffrey
Pierce
Glass Lewis Believes There is Clear Cause
for Stockholders to Support Board-Level Change At This Time Based
on the Company’s Poor Execution, Substantial Debt and Peer-Worst
Cost Structure
ISS Also Believes Change is Warranted on
Front Yard’s Board Given the Company’s Long-Term Underperformance,
Ineffective Strategy and Weak Corporate Governance
Snow Park Urges Stockholders Seeking
Checks-and-Balances and a Path to NAV Realization to Vote FOR All
Three of Its Highly-Qualified, Independent Nominees on the
BLUE Proxy Card
Snow Park Capital Partners, LP (together with its affiliates,
“Snow Park” or “we”) today announced that Glass, Lewis & Co.,
LLC (“Glass Lewis”), a leading proxy advisory firm, has endorsed
its case for change at Front Yard Residential Corporation (NYSE:
RESI) (“Front Yard” or the “Company”). Glass Lewis recommends that
stockholders vote the BLUE
proxy card FOR the election of Snow Park’s highly-qualified
and independent nominees – Leland Abrams and Lazar Nikolic – to
Front Yard’s Board of Directors (the “Board”) at the Company’s
upcoming annual meeting on May 23, 2019. This comes on the heels of
Institutional Shareholder Services Inc. (“ISS”) already endorsing a
majority of Snow Park’s nominees – including Jeffrey Pierce – and
recommending that stockholders vote the BLUE proxy card.
Stockholders who agree that greater urgency is needed to effect
change at Front Yard should vote the BLUE proxy card to elect all three
of Snow Park’s full slate of nominees. Our nominees – stockholders
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 lacks, in
our view, as evidenced by its track record of approximately $500
million in value destruction since 2015 and recent approval of the
amended external management agreement with Altisource Asset
Management Corporation (“AAMC”). If elected, our nominees will be
laser-focused on bringing independent ownership perspectives to the
boardroom and helping implement a credible business plan for
finally realizing management’s stated Net Asset Value (“NAV”) of
$17.50 per share.1
In its full report, Glass Lewis joined ISS in reaffirming Snow
Park’s criticisms of Front Yard’s poor long-term performance,
numerous strategic lapses, and weak corporate governance. Glass
Lewis concluded that stockholders should vote on the BLUE proxy card:2
- “On the whole, we believe Snow Park
ultimately presents a much more compelling case, as Front Yard
has, in our view, failed to complete its transition to an SFR
focused REIT in a manner that supports meaningful revenue growth,
without also incurring disproportionately substantial debt and
creating a peer-worst cost structure.”
- “The adverse implications of this
effort are readily reflected in Front Yard's demonstrably
laggard trading price, a central consideration which Front Yard
makes no substantive effort to address across its extensive
materials. In lieu thereof, the sitting board has arguably
exacerbated the divide by executing a new five-year contract with
its underperforming manager -- an entity conspicuously lead
and overseen by Front Yard's CEO -- which includes no fee-based
connection to total shareholder returns, but which does determine
to include a new termination provision at the very time AAMC's
value to investors has been publicly called into question.”
- “Against this backdrop, we believe
there is clearly sufficient cause for investors to support
incremental change at the board level at this time.”
Glass Lewis’ report highlights that Front Yard would benefit
from the inclusion of new members with industry exposure and a
focus on preserving and enhancing shareholder returns:
- “Abrams and Nikolic bring relevant
industry experience -- principally residential mortgage backed
securities in the case of Mr. Abrams and exposure to single-family
property investment for Mr. Nikolic -- and, as an extension of
their respective firms' exposure to Front Yard's common shares,
an ownership and shareholder value mentality which seems to be
nearly vacant within the current board group.”
Glass Lewis is aligned with Snow Park in its assessment of Front
Yard’s performance factors:
- “Among other things, we note Front
Yard fails to substantively benchmark or contextualize any of its
reported performance figures across its materials, essentially
leaving shareholders to assume the disclosed operational and
financial metrics -- for instance, those report on slide 17 of
the Company's principal investor deck -- are compelling.”
- “Conspicuously absent from this
discussion -- in many cases despite frequent overarching
references to delivering or protecting shareholder value -- is
any analysis of Front Yard's TSR or even a modest rebuttal to Snow
Park's repeated, pointed critiques of Front Yard's
returns.”
- “A standard review of this summary
metric indicates what we expect is the likely reason for the
omission of TSR from management's case: Front Yard is clearly a
heavy laggard relative to its closest peers.”
As previously disclosed, ISS concluded that stockholders should
vote on the BLUE proxy
card and laid out in its report a number of Front Yard’s
long-term performance issues, strategic lapses, and governance
weaknesses:3
- “The dissident has presented a
compelling case that board change is warranted. Since [George]
Ellison's succession as CEO, the board has overseen value
destruction driven by RESI's transition to a fully single-family
rental-focused REIT, a process in which it has been unable to gain
sufficient scale, has taken on too much debt, and has been unable
to derive a sufficient return on acquisitions. These factors,
along with a governance structure that is disconnected from the
interests of shareholders, justifies the addition of at least two
dissident nominees.”
- “ISS measured TSR from Ellison's
succession as CEO in mid-2015 (which will also approximate
initiation of the strategy shift for purposes of this analysis)
through March 29, 2019 (the unaffected date), as well as over the
trailing one, three, and five years. ISS compared the returns to
the FTSE NAREIT All Equity REITs Index and to those of peers (AMH
and INVH – identified by both RESI and the dissident as RESI's
closest public peers) […] RESI delivered negative returns and
underperformed the comparators over all four measurement
periods.”
- “That RESI has contended with four
activist situations over the period is emblematic of the disconnect
between the board and the investor base. It is clear from this
alone that the actions of the board have been misaligned with
the priorities of shareholders.”
Jeffrey Pierce, Founder and Managing Partner of Snow Park,
commented:
“We are very pleased that Glass Lewis has joined ISS in
supporting Snow Park’s case for change and are recommending Front
Yard stockholders vote on the BLUE proxy card. Between the two
leading proxy advisory firms, all three of our highly-qualified and
independent nominees have now received recommendations —
reinforcing Snow Park’s view that they possess the right experience
and expertise to help unlock the tremendous untapped value that
remains embedded in the Company’s underperforming shares. If
elected, our nominees will bring ownership perspectives to the
boardroom and stand for increased accountability, improved
strategic thinking and execution, and stockholder-friendly
governance policies. We will also install checks and balances to
ensure stockholders’ interests always come first. If elected, our
nominees look forward to working cooperatively with the remaining
incumbent directors to help drive these achievable and practical
improvements.
As stockholders assess the findings of both Glass Lewis and ISS,
we believe it is important to focus on the irrefutable facts
related to Front Yard’s years of value destruction, poor strategic
execution, unsustainable debt and excessively high costs. By
objectively evaluating the past and present, we believe
stockholders will conclude that the future envisioned by our slate
is a far superior one that can be realized with the right
Board.”
We urge Front Yard stockholders to vote FOR
all three of Snow Park’s highly-qualified, independent nominees –
stockholders Leland Abrams, Lazar Nikolic and Jeffrey Pierce – 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
card.
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’s February 2019
earnings call transcript.2 Permission to quote Glass Lewis was
neither sought nor obtained. Emphases added.3 Permission to quote
ISS was neither sought nor obtained. Emphases added.
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For Investors:Saratoga Proxy Consulting LLCJohn Ferguson / Joe
Mills, 212-257-1311jferguson@saratogaproxy.com /
jmills@saratogaproxy.com
For Media:ProfileGreg Marose / Charlotte Kiaie,
347-343-2999gmarose@profileadvisors.com /
ckiaie@profileadvisors.com
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