x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2016
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
MARYLAND
|
46-0633510
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
(Title of Each Class)
|
(Name of exchange on which registered)
|
Common stock, par value $0.01 per share
|
New York Stock Exchange
|
Large Accelerated Filer
|
¨
|
|
|
Accelerated Filer
|
x
|
Non-Accelerated Filer
|
¨
|
(Do not check if a smaller reporting company)
|
|
Smaller Reporting Company
|
¨
|
•
|
our ability to implement our business strategy;
|
•
|
our ability to make distributions to our stockholders;
|
•
|
our ability to acquire assets for our portfolio, including difficulties in identifying single-family rental assets and properties to acquire;
|
•
|
our ability to sell residential mortgage assets and non-rental real estate owned properties on favorable terms and on a timely basis or at all;
|
•
|
the impact of changes to the supply of, value of and the returns on single-family rental and mortgage assets;
|
•
|
our ability to acquire single-family rental properties or convert residential mortgage loans to rental properties and generate attractive returns;
|
•
|
our ability to complete proposed transactions in accordance with anticipated terms and on a timely basis or at all;
|
•
|
our ability to successfully integrate newly acquired properties into our portfolio of single-family rentals;
|
•
|
our ability to successfully integrate MSR as an additional property manager for our single-family rentals;
|
•
|
our ability to predict our costs;
|
•
|
our ability to effectively compete with our competitors;
|
•
|
our ability to apply the proceeds from financing activities or residential mortgage loan asset sales to target assets in a timely manner;
|
•
|
changes in the market value of our acquired real estate owned and single-family rental properties;
|
•
|
our ability to successfully modify or otherwise resolve sub-performing and non-performing loans;
|
•
|
changes in interest rates and in the market value of the collateral underlying our sub-performing and non-performing loan portfolios;
|
•
|
our ability to obtain and access financing arrangements on favorable terms or at all;
|
•
|
our ability to maintain adequate liquidity;
|
•
|
our ability to retain our engagement of AAMC;
|
•
|
the failure of ASPS or MSR to effectively perform their obligations under their respective agreements with us;
|
•
|
the failure of our mortgage loan servicers to effectively perform their servicing obligations;
|
•
|
our failure to maintain our qualification as a REIT;
|
•
|
our failure to maintain our exemption from registration under the Investment Company Act;
|
•
|
the impact of adverse real estate, mortgage or housing markets;
|
•
|
the impact of adverse legislative, regulatory or tax changes; and
|
•
|
general economic and market conditions.
|
•
|
Our SFR property and sub-performing and non-performing loan portfolios typically contain properties that are geographically dispersed, requiring a cost-effective nationwide property management system; we believe the use of ASPS positions us to acquire single-family asset portfolios with large geographic dispersion;
|
•
|
ASPS provides us with full lifecycle rental property management services, including due diligence and acquisition support (i.e., title work, inspections and settlement), renovations and repairs, lease marketing, tenant management and customer care;
|
•
|
ASPS's rental marketing strategy is specifically designed to advertise listings across popular industry-focused websites, utilizing their high organic and paid search rankings to generate large volumes of prospective tenants;
|
•
|
ASPS's contracted relationships with nationwide manufacturers and material suppliers enable us to manage the ordering and delivery of flooring, appliances, paint, fixtures and lighting for all renovation and unit turn work (i.e. work associated with turnover from one tenant to the next);
|
•
|
We have direct access to ASPS's inspection and estimating application which is utilized by the third-party general contracting vendors to identify required renovation work and prepare detailed scopes of work to provide a consistent end product. In addition, this application catalogs major HVAC systems, appliances and construction materials, which can enable more accurate forecasting of long term maintenance requirements; and
|
•
|
Ongoing tenant management services are coordinated through an internal “24/7” customer service center.
|
•
|
As of
December 31, 2016
, MSR managed approximately 11,000 homes and has substantial experience in approximately 20 of our current and target markets.
|
•
|
MSR provides us with a cost-effective renovation solution through its internal renovation and maintenance structure as well as its external vendor network. MSR has a team of dedicated personnel to oversee renovations of properties based on the approved bid prepared by an MSR inspector. All work is scheduled through local MSR personnel and MSR-certified contractors utilizing a pre-set market specific price list. MSR has negotiated substantial quantity discounts in each of its markets for products that it regularly uses during the renovation process, such as paint, appliances, HVAC systems, window blinds, carpet and flooring. MSR has also established and enforces best practices and quality consistency, reducing the costs of both materials and labor.
|
•
|
MSR's market analysis capabilities help us to optimize the yields on our SFR portfolio. MSR's in-house leasing agents work closely with its investment team to establish rental rates utilizing proprietary technology and input from its local leasing team. In establishing rental rates, MSR performs a competitive analysis of rents, the size and age of the property and many qualitative factors, such as neighborhood characteristics and access to quality schools, transportation and services.
|
•
|
MSR has an extensive in-house property management infrastructure, with technology systems, corporate process oversight and local personnel in the markets in which it operates. In these markets, property managers who are employees of MSR execute all property management functions. In addition, as part of its ongoing property management, MSR's in-house technicians conduct routine repairs and maintenance as appropriate to maximize long-term rental income and cash flows from all of the properties it manages. In addition, MSR's local property management teams make periodic neighborhood visits to monitor the condition of the homes and to ensure compliance with HOA rules and regulations.
|
•
|
MSR also manages property repairs and maintenance and tenant relations through a centralized call center, which offers a 24/7 emergency line to handle after hours issues, or through its web-based tenant platform. The maintenance call center technicians are trained to perform first level phone diagnosis and instruct self-service for minor issues to avoid on-site maintenance visits where possible. Maintenance vendors or in-house maintenance technicians are dispatched through our central maintenance call center depending on the severity of the repair.
|
•
|
On September 30, 2016, we completed the acquisition of
4,262
SFR properties from two investment funds sponsored by Amherst Holdings, LLC (“Amherst”) for an aggregate purchase price of
$652.3 million
. We refer to the acquisition of these properties as the “HOME SFR Transaction.”
|
•
|
On March 30, 2016, we completed the acquisition of
590
SFR properties located in five states from a third party seller for an aggregate purchase price of approximately
$64.8 million
.
|
•
|
On August 18, 2015, we completed the acquisition of 1,314 single-family rental properties in the Atlanta, Georgia market from a third party seller for an aggregate purchase price of approximately $111.4 million.
|
•
|
During the year ended December 31, 2014, we acquired 237 REO properties as part of our mortgage loan portfolio acquisitions. The aggregate purchase price attributable to these acquired REO properties was $34.1 million.
|
•
|
In addition, for the years ended December 31, 2016, 2015 and 2014, we converted an aggregate of
1,112
, 2,443 and 3,682 mortgage loans to REO properties. We also directly acquired
714
and 98 properties on an individual basis during the years ended December 31, 2016 and 2015, respectively.
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
|||
Rental:
|
|
|
|
|
|
|
|||
Leased
|
|
7,293
|
|
|
2,118
|
|
|
336
|
|
Listed and ready for rent
|
|
703
|
|
|
264
|
|
|
197
|
|
Renovation or unit turn
|
|
607
|
|
|
350
|
|
|
254
|
|
Total rental
|
|
8,603
|
|
|
2,732
|
|
|
787
|
|
Evaluating for rental strategy
|
|
1,336
|
|
|
2,201
|
|
|
2,562
|
|
Held for sale
|
|
594
|
|
|
1,583
|
|
|
611
|
|
|
|
10,533
|
|
|
6,516
|
|
|
3,960
|
|
Property Location
|
|
Property Count
|
|
SFR Count
|
|
Carrying Value (1)
|
|
Weighted Average Age in Years (2)
|
||||
Alabama
|
|
46
|
|
|
23
|
|
|
$
|
6,708
|
|
|
20.9
|
Arizona
|
|
47
|
|
|
25
|
|
|
13,297
|
|
|
22.3
|
|
Arkansas
|
|
24
|
|
|
9
|
|
|
2,329
|
|
|
33.3
|
|
California
|
|
244
|
|
|
112
|
|
|
90,713
|
|
|
37.8
|
|
Colorado
|
|
24
|
|
|
16
|
|
|
5,682
|
|
|
31.1
|
|
Connecticut
|
|
50
|
|
|
10
|
|
|
9,240
|
|
|
57.8
|
|
Delaware
|
|
22
|
|
|
3
|
|
|
4,275
|
|
|
35.4
|
|
Dist. of Columbia
|
|
2
|
|
|
—
|
|
|
712
|
|
|
107.1
|
|
Florida
|
|
1,306
|
|
|
1,013
|
|
|
199,494
|
|
|
27.9
|
|
Georgia
|
|
2,721
|
|
|
2,661
|
|
|
288,953
|
|
|
30.8
|
|
Hawaii
|
|
3
|
|
|
—
|
|
|
589
|
|
|
33.9
|
|
Idaho
|
|
6
|
|
|
2
|
|
|
853
|
|
|
37.5
|
|
Illinois
|
|
308
|
|
|
170
|
|
|
54,248
|
|
|
46.4
|
|
Indiana
|
|
519
|
|
|
464
|
|
|
67,624
|
|
|
20.9
|
|
Iowa
|
|
6
|
|
|
—
|
|
|
447
|
|
|
69.0
|
|
Kansas
|
|
18
|
|
|
16
|
|
|
2,547
|
|
|
39.0
|
|
Kentucky
|
|
41
|
|
|
25
|
|
|
4,857
|
|
|
30.9
|
|
Louisiana
|
|
16
|
|
|
7
|
|
|
2,096
|
|
|
28.4
|
|
Maine
|
|
6
|
|
|
—
|
|
|
760
|
|
|
54.0
|
|
Maryland
|
|
317
|
|
|
88
|
|
|
63,221
|
|
|
35.1
|
|
Massachusetts
|
|
69
|
|
|
13
|
|
|
15,514
|
|
|
78.6
|
|
Michigan
|
|
42
|
|
|
20
|
|
|
6,935
|
|
|
39.6
|
|
Minnesota
|
|
103
|
|
|
89
|
|
|
18,357
|
|
|
65.1
|
|
Mississippi
|
|
87
|
|
|
86
|
|
|
13,231
|
|
|
16.6
|
|
Missouri
|
|
91
|
|
|
75
|
|
|
13,299
|
|
|
23.5
|
|
Montana
|
|
1
|
|
|
—
|
|
|
130
|
|
|
24.0
|
|
Nevada
|
|
19
|
|
|
9
|
|
|
2,938
|
|
|
24.5
|
|
New Hampshire
|
|
4
|
|
|
—
|
|
|
579
|
|
|
96.9
|
|
New Jersey
|
|
188
|
|
|
15
|
|
|
30,721
|
|
|
59.0
|
|
New Mexico
|
|
51
|
|
|
19
|
|
|
6,157
|
|
|
24.5
|
|
New York
|
|
70
|
|
|
10
|
|
|
13,621
|
|
|
67.5
|
|
North Carolina
|
|
575
|
|
|
533
|
|
|
76,629
|
|
|
19.7
|
|
Ohio
|
|
55
|
|
|
26
|
|
|
7,201
|
|
|
35.5
|
|
Oklahoma
|
|
190
|
|
|
182
|
|
|
27,231
|
|
|
25.2
|
Oregon
|
|
21
|
|
|
3
|
|
|
4,950
|
|
|
35.9
|
|
Pennsylvania
|
|
126
|
|
|
49
|
|
|
17,809
|
|
|
58.6
|
|
Rhode Island
|
|
46
|
|
|
16
|
|
|
6,301
|
|
|
78.2
|
|
South Carolina
|
|
94
|
|
|
60
|
|
|
12,059
|
|
|
21.9
|
|
South Dakota
|
|
1
|
|
|
—
|
|
|
95
|
|
|
35.0
|
|
Tennessee
|
|
990
|
|
|
973
|
|
|
146,783
|
|
|
20.0
|
|
Texas
|
|
1,772
|
|
|
1,706
|
|
|
259,854
|
|
|
26.1
|
|
Utah
|
|
29
|
|
|
17
|
|
|
5,025
|
|
|
39.0
|
|
Vermont
|
|
5
|
|
|
—
|
|
|
705
|
|
|
103.5
|
|
Virginia
|
|
56
|
|
|
30
|
|
|
15,192
|
|
|
29.6
|
|
Washington
|
|
90
|
|
|
16
|
|
|
18,132
|
|
|
41.6
|
|
West Virginia
|
|
2
|
|
|
1
|
|
|
286
|
|
|
13.0
|
|
Wisconsin
|
|
30
|
|
|
11
|
|
|
3,668
|
|
|
45.4
|
|
Total real estate assets
|
|
10,533
|
|
|
8,603
|
|
|
$
|
1,542,047
|
|
|
31.1
|
(1)
|
The carrying value of an asset is based on historical cost, which generally consists of the market value at the time of acquisition plus renovation costs, net of any accumulated depreciation and impairment. Assets held for sale are carried at the lower of the carrying amount or estimated fair value less costs to sell.
|
(2)
|
Weighted average age is based on the age of each property weighted by its proportion of the total carrying value for its respective state.
|
Location
|
|
Loan Count
|
|
Carrying Value
|
|
UPB
|
|
Market Value of Underlying Properties (1)
|
|||||||
Alabama
|
|
12
|
|
|
$
|
933
|
|
|
$
|
1,768
|
|
|
$
|
1,547
|
|
Arizona
|
|
13
|
|
|
1,709
|
|
|
2,380
|
|
|
2,401
|
|
|||
Arkansas
|
|
11
|
|
|
460
|
|
|
840
|
|
|
871
|
|
|||
California
|
|
173
|
|
|
71,309
|
|
|
81,712
|
|
|
106,660
|
|
|||
Colorado
|
|
11
|
|
|
1,464
|
|
|
1,565
|
|
|
2,328
|
|
|||
Connecticut
|
|
44
|
|
|
9,691
|
|
|
14,891
|
|
|
14,729
|
|
|||
Delaware
|
|
20
|
|
|
1,747
|
|
|
3,050
|
|
|
2,911
|
|
|||
Dist. of Columbia
|
|
29
|
|
|
3,452
|
|
|
5,343
|
|
|
6,153
|
|
|||
Florida
|
|
558
|
|
|
79,049
|
|
|
126,291
|
|
|
127,580
|
|
|||
Georgia
|
|
69
|
|
|
8,060
|
|
|
10,991
|
|
|
12,373
|
|
|||
Hawaii
|
|
20
|
|
|
5,645
|
|
|
9,518
|
|
|
10,713
|
|
|||
Idaho
|
|
2
|
|
|
253
|
|
|
257
|
|
|
365
|
|
|||
Illinois
|
|
91
|
|
|
11,422
|
|
|
18,770
|
|
|
18,577
|
|
|||
Indiana
|
|
75
|
|
|
5,641
|
|
|
9,553
|
|
|
9,220
|
|
|||
Iowa
|
|
2
|
|
|
109
|
|
|
130
|
|
|
196
|
|
|||
Kansas
|
|
3
|
|
|
79
|
|
|
251
|
|
|
194
|
|
|||
Kentucky
|
|
17
|
|
|
1,148
|
|
|
2,202
|
|
|
1,945
|
|
|||
Louisiana
|
|
11
|
|
|
871
|
|
|
1,415
|
|
|
1,452
|
|
|||
Maine
|
|
11
|
|
|
894
|
|
|
1,936
|
|
|
1,714
|
|
|||
Maryland
|
|
171
|
|
|
24,890
|
|
|
40,863
|
|
|
39,734
|
|
|||
Massachusetts
|
|
108
|
|
|
17,797
|
|
|
26,868
|
|
|
31,116
|
|
|||
Michigan
|
|
6
|
|
|
615
|
|
|
769
|
|
|
1,102
|
|
|||
Minnesota
|
|
9
|
|
|
1,973
|
|
|
2,407
|
|
|
2,987
|
|
|||
Mississippi
|
|
7
|
|
|
773
|
|
|
1,155
|
|
|
1,236
|
|
|||
Missouri
|
|
18
|
|
|
883
|
|
|
1,441
|
|
|
1,590
|
|
|||
Nebraska
|
|
2
|
|
|
117
|
|
|
219
|
|
|
210
|
|
|||
Nevada
|
|
68
|
|
|
8,950
|
|
|
22,687
|
|
|
19,396
|
|
|||
New Hampshire
|
|
2
|
|
|
274
|
|
|
393
|
|
|
432
|
|
|||
New Jersey
|
|
344
|
|
|
43,872
|
|
|
91,968
|
|
|
74,915
|
|
|||
New Mexico
|
|
53
|
|
|
4,335
|
|
|
6,431
|
|
|
7,173
|
|
|||
New York
|
|
380
|
|
|
79,213
|
|
|
115,137
|
|
|
130,462
|
|
|||
North Carolina
|
|
40
|
|
|
4,434
|
|
|
5,929
|
|
|
6,584
|
|
|||
North Dakota
|
|
1
|
|
|
94
|
|
|
123
|
|
|
143
|
|
|||
Ohio
|
|
26
|
|
|
1,830
|
|
|
3,237
|
|
|
3,449
|
|
|||
Oklahoma
|
|
12
|
|
|
1,508
|
|
|
2,235
|
|
|
2,293
|
|
|||
Oregon
|
|
26
|
|
|
5,834
|
|
|
7,974
|
|
|
9,116
|
|
|||
Pennsylvania
|
|
78
|
|
|
7,040
|
|
|
11,738
|
|
|
12,033
|
|
|||
Puerto Rico
|
|
1
|
|
|
86
|
|
|
189
|
|
|
170
|
|
|||
Rhode Island
|
|
18
|
|
|
1,748
|
|
|
3,578
|
|
|
3,434
|
|
|||
South Carolina
|
|
58
|
|
|
5,870
|
|
|
8,337
|
|
|
9,242
|
|
|||
Tennessee
|
|
17
|
|
|
2,844
|
|
|
3,056
|
|
|
4,480
|
|
|||
Texas
|
|
141
|
|
|
16,104
|
|
|
16,598
|
|
|
25,903
|
|
|||
Utah
|
|
7
|
|
|
1,955
|
|
|
2,239
|
|
|
2,747
|
|
Vermont
|
|
2
|
|
|
241
|
|
|
290
|
|
|
367
|
|
|||
Virginia
|
|
16
|
|
|
2,852
|
|
|
4,009
|
|
|
4,406
|
|
|||
Washington
|
|
90
|
|
|
19,168
|
|
|
22,610
|
|
|
27,517
|
|
|||
West Virginia
|
|
1
|
|
|
55
|
|
|
126
|
|
|
100
|
|
|||
Wisconsin
|
|
17
|
|
|
1,153
|
|
|
2,247
|
|
|
2,006
|
|
|||
Total mortgage loans at fair value
|
|
2,891
|
|
|
$
|
460,444
|
|
|
$
|
697,716
|
|
|
$
|
746,272
|
|
(1)
|
Market value of the underlying property is based on broker price opinions (“BPOs”).
|
•
|
Acquisition Strategy Enables us to Build a Portfolio that we Expect will Provide High Yields to Stockholders.
Through AAMC’s personnel and technical expertise, we have developed a valuation model that uses proprietary historical data to evaluate and project the performance of SFR assets and residential mortgage loans. This valuation model has been built with multiple broad economic inputs as well as individual property-level inputs to determine which properties will produce the highest possible yields and how much to pay for these properties to best achieve optimal results. These internally-developed tools help us to evaluate the most attractive SFR portfolios for sale while leveraging our Property Managers' property inspection, management and rental infrastructure and related data flows to identify and acquire higher yielding assets in any geographical location into which we desire to enter or expand. We intend to continue to build upon this infrastructure and employ regional teams that will focus on specified geographical areas and use their developed regional experience to continually build a better, more predictable model meant to achieve
|
•
|
Relationships with our Property Managers and their Nationwide Property Management Infrastructures
. With the support of our Property Managers' nationwide vendor networks, we believe that we are strategically positioned to operate SFR properties across the United States at an attractive cost structure. These vendor networks have been developed over many years, and we believe our Property Managers' infrastructures would be difficult and expensive for certain competitors and/or new market participants to replicate. We believe, therefore, that our existing relationships with ASPS and MSR, along with their respective vendor networks, give us a distinct advantage in bidding on SFR portfolios.
|
•
|
Depth of Management Experience.
We believe the experience and technical expertise of our management team and the personnel from AAMC is one of our key strengths. Our team has a broad and deep knowledge of the real estate and mortgage markets with decades of experience in real estate, mortgage trading, housing, financial services and asset management markets. Their experience in the real estate industry brings a wealth of understanding of the markets in which we operate and can help us build our portfolio in a manner that brings the highest potential returns to stockholders. Management and its supporting teams have expertise and a multitude of contacts that enable us to source SFR assets through access to auctions and sellers of SFR assets and obtain financing to optimize available leverage. Due to our management team's expertise, we have been able to strategically sell non-performing and re-performing loans to create taxable income and sustain a strong dividend while also using the liquidity generated from these sales to increase our SFR portfolio by approximately
215%
in 2016. We believe that AAMC’s asset evaluation process and the experience and judgment of its executive management team in identifying, assessing, valuing and acquiring new SFR assets will help us to appropriately value the portfolios at the time of purchase and operate them profitably as we continue to grow.
|
•
|
Strong Understanding of Mortgage Loan Management
. Our key personnel have extensive experience with managing mortgage loan assets that allows us to capitalize on the servicing capabilities of our third party servicers and ensure cost effective servicing of our residential mortgage loan portfolios. We will continue to work closely with our mortgage loan servicers as we resolve the mortgage loans that remain our portfolio.
|
•
|
the financial soundness of institutions with which we plan to transact business and make recommendations with respect thereto;
|
•
|
our risk exposure limits with respect to the dollar amounts of total exposure with a given institution; and
|
•
|
investment accounts and trading accounts to be opened with banks, broker-dealers and financial institutions.
|
•
|
No investment will be made that would cause us or any of our subsidiaries to fail to qualify as a REIT for U.S. federal income tax purposes;
|
•
|
No investment will be made that would cause us to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”); and
|
•
|
Until appropriate investments can be identified, we may invest available cash in interest-bearing and short-term investments that are consistent with (a) our intention to qualify as a REIT and (b) our exemption from registration as an investment company under the Investment Company Act.
|
•
|
Base Management Fee
. AAMC is entitled to a quarterly Base Management Fee equal to 1.5% of the product of (i) our average invested capital (as defined in the Current AMA) for the quarter
multiplied by
(ii) 0.25 while we have fewer than 2,500 single-family rental properties actually rented (“Rental Properties”). The Base Management Fee percentage increases to 1.75% of average invested capital while we have between 2,500 and 4,499 Rental Properties and increases to 2.0% of average invested capital while we have 4,500 or more Rental Properties;
|
•
|
Incentive Management Fee
. AAMC is entitled to a quarterly Incentive Management Fee equal to 20% of the amount by which our return on invested capital (based on AFFO, defined as our net income attributable to holders of common stock calculated in accordance with GAAP
plus
real estate depreciation expense
minus
recurring capital expenditures on all of our real estate assets owned) exceeds an annual hurdle return rate of between 7.0% and 8.25% (depending on the 10-year treasury rate). The Incentive Management Fee increases to 22.5% while we have between 2,500 and 4,499 Rental Properties and increases to 25% while we have 4,500 or more Rental Properties; and
|
•
|
Conversion Fee
. AAMC is entitled to a quarterly Conversion Fee equal to 1.5% of the market value of assets converted into leased single-family homes by us for the first time during the quarter.
|
•
|
a tightening of credit that has made it more difficult to finance a home purchase, combined with efforts by consumers generally to reduce their exposure to credit;
|
•
|
economic and employment conditions that have increased foreclosure rates; and
|
•
|
reduced real estate values that challenged the traditional notion that homeownership is a stable investment.
|
•
|
joblessness or unemployment rates that adversely affect the local economy;
|
•
|
an oversupply of or a reduced demand for SFR properties for rent;
|
•
|
a decline in employment or lack of employment growth;
|
•
|
the inability or unwillingness of residents to pay rent increases or fulfill their lease obligations;
|
•
|
a decline in rental rate, which may be accentuated since we expect to generally have rent terms of one to two years;
|
•
|
rent control or rent stabilization laws or other laws regulating housing that could prevent us from raising rents to offset increases in operating costs;
|
•
|
changes in interest rates and availability and terms of debt financing; and
|
•
|
economic conditions that could cause an increase in our operating expenses such as increases in property taxes, utilities and routine maintenance.
|
•
|
We would not be allowed a deduction for dividends paid to stockholders in computing our taxable income;
|
•
|
We could be subject to the federal alternative minimum tax to a greater extent and possibly increased state and local taxes; and
|
•
|
Unless we are entitled to relief under certain federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT. In addition, if we fail to qualify as a REIT, we will no longer be required to make distributions.
|
•
|
Actual receipt of an improper benefit or profit in money, property or services; or
|
•
|
Active and deliberate dishonesty that is established by a final judgment and is material to the cause of action.
|
•
|
limitations on capital structure;
|
•
|
restrictions on specified investments;
|
•
|
restrictions on leverage or senior securities;
|
•
|
restrictions on unsecured borrowings;
|
•
|
prohibitions on transactions with affiliates; and
|
•
|
compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses.
|
•
|
variations in our actual or anticipated results of operations, liquidity or financial condition;
|
•
|
the announcement of material transactions or the failure to consummate such transactions;
|
•
|
changes in, or the failure to meet, our financial estimates or those of securities analysts;
|
•
|
the amount and timing of any cash distributions;
|
•
|
actions or announcements by our competitors;
|
•
|
potential conflicts of interest, or the discontinuance of our strategic relationships, with AAMC, ASPS and MSR;
|
•
|
actual or anticipated accounting problems;
|
•
|
adverse market reaction to any increased indebtedness we incur in the future;
|
•
|
regulatory actions;
|
•
|
changes in the market outlook for the real estate, mortgage or housing markets;
|
•
|
technology changes in our business;
|
•
|
changes in interest rates that lead purchasers of our common stock to demand a higher yield;
|
•
|
future equity issuances by us, share resales by our stockholders or the perception that such issuances or resales may occur;
|
•
|
actions by our stockholders;
|
•
|
changes to our investment strategy;
|
•
|
speculation in the press or investment community;
|
•
|
general market, economic and political conditions, including an economic slowdown or dislocation in the global credit markets;
|
•
|
failure to maintain the listing of our common stock on the New York Stock Exchange;
|
•
|
failure to qualify or maintain our qualification as a REIT;
|
•
|
failure to maintain our exemption from registration under the Investment Company Act;
|
•
|
changes in accounting principles;
|
•
|
passage of legislation or other regulatory developments that adversely affect us or our industry; and
|
•
|
departure of AAMC’s, and therefore our, key personnel.
|
|
|
2016
|
|
2015
|
||||||||||||||||||||
Quarter ended
|
|
High
|
|
Low
|
|
Dividend
|
|
High
|
|
Low
|
|
Dividend
|
||||||||||||
March 31
|
|
$
|
12.64
|
|
|
$
|
8.65
|
|
|
$
|
0.30
|
|
|
$
|
21.70
|
|
|
$
|
16.76
|
|
|
$
|
0.08
|
|
June 30
|
|
11.98
|
|
|
8.63
|
|
|
0.15
|
|
|
22.01
|
|
|
16.85
|
|
|
1.10
|
|
||||||
September 30
|
|
11.18
|
|
|
8.50
|
|
|
0.15
|
|
|
17.69
|
|
|
13.92
|
|
|
0.55
|
|
||||||
December 31
|
|
12.12
|
|
|
9.89
|
|
|
0.15
|
|
|
15.79
|
|
|
11.77
|
|
|
0.10
|
|
|
(a) Total Number of Shares Purchased
|
|
(b) Average Price Paid per Share
|
|
(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
(d) Maximum Dollar Value of Shares that may yet be Purchased under Plans or Programs (1)
|
||||||
October 1, 2016 to October 31, 2016
|
—
|
|
|
$
|
—
|
|
|
3,375,145
|
|
|
$
|
56,233
|
|
November 1, 2016 to November 30, 2016
|
228,299
|
|
|
12.07
|
|
|
3,603,444
|
|
|
53,478
|
|
||
December 1, 2016 to December 31, 2016
|
—
|
|
|
—
|
|
|
3,603,444
|
|
|
53,478
|
|
||
For the quarter ended December 31, 2016
|
228,299
|
|
|
$
|
12.07
|
|
|
3,603,444
|
|
|
$
|
53,478
|
|
(1)
|
Since Board approval of repurchases is based on dollar amount, we cannot estimate the number of shares yet to be purchased.
|
|
|
For the period from December 13, 2012 to December 31,
|
|||||||||||||||||
Index
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
2016
|
||||||||||
Altisource Residential Corporation
|
|
$
|
105.60
|
|
|
$
|
203.07
|
|
|
$
|
145.20
|
|
|
$
|
110.80
|
|
$
|
106.67
|
|
S&P 500
|
|
100.47
|
|
|
130.22
|
|
|
145.05
|
|
|
144.00
|
|
157.73
|
|
|||||
Russell 2000
|
|
103.05
|
|
|
141.18
|
|
|
146.17
|
|
|
137.82
|
|
164.66
|
|
|||||
FTSE NAREIT All Equity REITs (1)
|
|
103.15
|
|
|
102.33
|
|
|
126.31
|
|
|
125.07
|
|
131.03
|
|
(1)
|
FTSE NAREIT All Equity REITs performance is reported historically on a monthly basis and therefore the total return has been calculated from November 30, 2012.
|
|
|
Year ended December 31, 2016
|
|
Year ended December 31, 2015
|
|
Year ended December 31, 2014
|
|
Year ended December 31, 2013
|
|
June 7, 2012 (Inception) to December 31, 2012
|
||||||||||
Total revenue
|
|
$
|
56,758
|
|
|
$
|
248,098
|
|
|
$
|
423,298
|
|
|
$
|
72,297
|
|
|
$
|
—
|
|
Net (loss) income
|
|
(228,028
|
)
|
|
(46,005
|
)
|
|
188,853
|
|
|
39,596
|
|
|
(89
|
)
|
|||||
(Loss) earnings per basic share
|
|
(4.18
|
)
|
|
(0.81
|
)
|
|
3.36
|
|
|
1.67
|
|
|
(0.01
|
)
|
|||||
(Loss) earnings per diluted share
|
|
(4.18
|
)
|
|
(0.81
|
)
|
|
3.34
|
|
|
1.61
|
|
|
(0.01
|
)
|
|||||
Dividend per share
|
|
0.75
|
|
|
1.83
|
|
|
2.03
|
|
|
0.35
|
|
|
—
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2013
|
|
December 31, 2012
|
||||||||||
Total assets
|
|
$
|
2,284,847
|
|
|
$
|
2,450,773
|
|
|
$
|
2,721,811
|
|
|
$
|
1,396,347
|
|
|
$
|
100,011
|
|
Repurchase and loan agreements
|
|
1,220,972
|
|
|
763,369
|
|
|
1,013,133
|
|
|
600,089
|
|
|
—
|
|
|||||
Other secured borrowings
|
|
144,099
|
|
|
502,599
|
|
|
336,698
|
|
|
—
|
|
|
—
|
|
•
|
In April 2016, we increased the size of our loan facility with Nomura Corporate Funding Americas, LLC (“Nomura”) from $200 million to $250 million and extended the facility for an additional year to April 2017;
|
•
|
In September 2016, we completed the seller financing arrangement with respect to the HOME SFR Transaction described above, which provided $489.3 million of financing;
|
•
|
In November 2016, we increased the size of our repurchase facility with Credit Suisse (“CS”) from $350.0 million to $600.0 million (subject to scheduled reductions of available financing), improved our financing loan-to-value rates and extended the facility to November 2017; and
|
•
|
In order to optimize our cash flow and leverage, concurrently with the CS amendment in November 2016, we terminated our repurchase agreement with Wells Fargo, National Association (“Wells”).
|
|
|
December 31, 2016
|
|
December 31, 2015
|
|
December 31, 2014
|
|||
Rental:
|
|
|
|
|
|
|
|||
Leased
|
|
7,293
|
|
|
2,118
|
|
|
336
|
|
Listed and ready for rent
|
|
703
|
|
|
264
|
|
|
197
|
|
Renovation or unit turn
|
|
607
|
|
|
350
|
|
|
254
|
|
Total rental
|
|
8,603
|
|
|
2,732
|
|
|
787
|
|
Evaluating for rental strategy
|
|
1,336
|
|
|
2,201
|
|
|
2,562
|
|
Held for sale
|
|
594
|
|
|
1,583
|
|
|
611
|
|
|
|
10,533
|
|
|
6,516
|
|
|
3,960
|
|
Property Location
|
|
Property Count
|
|
SFR Count
|
|
Leased SFR
|
|||
Georgia
|
|
2,721
|
|
|
2,661
|
|
|
2,286
|
|
Texas
|
|
1,772
|
|
|
1,706
|
|
|
1,367
|
|
Florida
|
|
1,306
|
|
|
1,013
|
|
|
829
|
|
Tennessee
|
|
990
|
|
|
973
|
|
|
912
|
|
North Carolina
|
|
575
|
|
|
533
|
|
|
493
|
|
Other
|
|
3,169
|
|
|
1,717
|
|
|
1,406
|
|
Total
|
|
10,533
|
|
|
8,603
|
|
|
7,293
|
|
|
|
Year ended December 31, 2016
|
|
Year ended December 31, 2015
|
|
Year ended December 31, 2014
|
|||
Beginning count of real estate assets
|
|
6,516
|
|
|
3,960
|
|
|
262
|
|
Acquisitions
|
|
5,566
|
|
|
1,412
|
|
|
237
|
|
Dispositions
|
|
(2,668
|
)
|
|
(1,321
|
)
|
|
(221
|
)
|
Mortgage loan conversions to REO, net (1)
|
|
1,112
|
|
|
2,465
|
|
|
3,682
|
|
Other additions
|
|
7
|
|
|
—
|
|
|
—
|
|
Ending count of real estate assets
|
|
10,533
|
|
|
6,516
|
|
|
3,960
|
|
(1)
|
Subsequent to the foreclosure sale, we may be notified that the foreclosure sale was invalidated for certain reasons.
|
|
|
Year ended December 31, 2016
|
|
Year ended December 31, 2015
|
|
Year ended December 31, 2014
|
|||
Mortgage Loans at Fair Value
(1)
|
|
|
|
|
|
|
|||
Beginning count of mortgage loans at fair value
|
|
5,739
|
|
|
10,963
|
|
|
8,054
|
|
Acquisitions
|
|
—
|
|
|
—
|
|
|
7,326
|
|
Resolutions and dispositions
|
|
(475
|
)
|
|
(727
|
)
|
|
(735
|
)
|
Transferred to held for sale, net
|
|
(1,261
|
)
|
|
(2,054
|
)
|
|
—
|
|
Mortgage loan conversions to REO, net (2)
|
|
(1,112
|
)
|
|
(2,443
|
)
|
|
(3,682
|
)
|
Ending count of mortgage loans at fair value
|
|
2,891
|
|
|
5,739
|
|
|
10,963
|
|
(1)
|
Excludes mortgage loans held for sale.
|
(2)
|
Subsequent to the foreclosure sale, we may be notified that the foreclosure sale was invalidated for certain reasons.
|
•
|
Base Management Fee
. AAMC is entitled to a quarterly Base Management Fee equal to 1.5% of the product of (i) our average invested equity capital for the quarter
multiplied by
(ii) 0.25, while we have fewer than 2,500 Rental Properties. The Base Management Fee percentage increases to 1.75% of average invested capital while we have between 2,500 and 4,499 Rental Properties and increases to 2.0% of average invested capital while we have 4,500 or more Rental Properties;
|
•
|
Incentive Management Fee
. AAMC is entitled to a quarterly Incentive Management Fee equal to 20% of the amount by which our return on invested capital (based on AFFO, defined as our net income attributable to holders of common stock calculated in accordance with GAAP
plus
real estate depreciation expense
minus
recurring capital expenditures on all of our real estate assets owned) exceeds an annual hurdle return rate of between 7.0% and 8.25% (depending on the 10-year treasury rate). The Incentive Management Fee increases to 22.5% while we have between 2,500 and 4,499 Rental Properties and increases to 25% while we have 4,500 or more Rental Properties; and
|
•
|
Conversion Fee
. AAMC is entitled to a quarterly Conversion Fee equal to 1.5% of the market value of assets converted into leased single-family homes by us for the first time during the quarter.
|
i.
|
Rental revenues.
Minimum contractual rents from leases are recognized on a straight-line basis over the terms of the leases in residential rental revenues. Therefore, actual amounts billed in accordance with the lease during any given period may be higher or lower than the amount of rental revenue recognized for the period. As we acquire more SFR properties and as we renovate and deem suitable for rent a greater number of our REO properties, we expect a greater portion of our revenues will be rental revenues. We believe the key variables that will affect our rental revenues over the long term will be average occupancy levels and rental rates.
|
ii.
|
Net realized gain (loss) on mortgage loans.
We record net realized gains or losses, including the reclassification of previously accumulated net unrealized gains, upon the liquidation of a loan, which may consist of short sale, third party sale of the underlying property, refinancing or full debt pay-off of the loan. We expect the timeline to liquidate loans will vary significantly by loan, which could result in fluctuations in revenue recognition and operating performance from period to period. Additionally, the proceeds from loan liquidations may vary significantly depending on the resolution methodology. We generally expect to collect proceeds of loan liquidations in cash and, thereafter, have no continuing involvement with the asset.
|
iii.
|
Change in unrealized gains from the conversion of loans to REO.
Upon conversion of loans to REO, we mark the properties to the most recent market value. The difference between the carrying value of the asset at the time of conversion and the most recent market value, based on BPOs, is recorded in our statement of operations as change in unrealized gain on mortgage loans. We expect the timeline to convert acquired loans into REO will vary significantly by loan, which could result in fluctuations in our revenue recognition and our operating performance from period to period. The factors that may affect the timelines to foreclose upon a residential mortgage loan include, without limitation, state foreclosure timelines and deferrals associated therewith; unauthorized parties occupying the property; inadequacy of documents necessary to foreclose; bankruptcy proceedings initiated by borrowers; federal, state or local
|
iv.
|
Change in unrealized gains from the change in fair value of loans.
The fair value of each of our mortgage loans is adjusted in each reporting period as the loan proceeds to a particular resolution (i.e., modification, liquidation or conversion to real estate owned). As a loan approaches resolution, the resolution timeline for that loan decreases, and costs embedded in the discounted cash flow model for loan servicing, foreclosure costs and property insurance are incurred and removed from future expenses. The shorter resolution timelines and reduced future expenses each increase the fair value of the loan. The increase in the value of the loan is recognized in change in unrealized gain on mortgage loans in our consolidated statements of operations. The exact nature of resolution will be dependent on a number of factors that are beyond our control, including borrower willingness to pay, property value, availability of refinancing, interest rates, conditions in the financial markets, the regulatory environment and other factors.
|
v.
|
Net realized gain on real estate.
REO properties that do not meet our investment criteria are sold out of our taxable REIT subsidiary. The realized gain or loss recognized in the financial statements reflects the net amount of realized and unrealized gains on sold REOs from the time of acquisition to sale completion.
|
•
|
First, we recognized an aggregate of $46.0 million in unrealized gains upon conversion of mortgage loans to REO for the
year ended December 31, 2016
compared to $91.3 million for the year ended December 31, 2015. Upon conversion of these mortgage loans to REO, we mark the properties to the most recent market value. During the
year ended December 31, 2016
, we converted a net of
1,112
mortgage loans to REO status compared to a net of 2,465 mortgage loans converted to REO status during the year ended December 31, 2015;
|
•
|
Second, we recognized an aggregate change in unrealized gains of $(8.0) million from the net change in the fair value of loans for the year ended December 31, 2016 compared to an increase in fair value of $122.4 million during the year ended December 31, 2015. The fair value of our mortgage loans is based on the underlying value of the collateral, current market conditions, different resolution scenarios and other factors. The assumptions utilized to determine fair value include, but are not limited to, equity discount rate, debt to asset ratio, cost of funds estimates, projected resolution timelines and costs and changes in annual home pricing index. During the year ended December 31, 2016, the fair value of our mortgage loans was impacted primarily by changes in our assumptions applied in the estimation of fair value; and
|
•
|
Third, we reclassified an aggregate of $233.9 million from unrealized gains on mortgage loans to realized gains on real estate and mortgage loans, reflecting real estate sold and the resolution or sale of NPLs for the year ended December 31, 2016. This compares to an aggregate of $124.9 million reclassified from unrealized gains on mortgage loans to realized gains for the year ended December 31, 2015.
|
•
|
First, we recognized an aggregate of $91.3 million in unrealized gains upon conversion of mortgage loans to REO for the year ended December 31, 2015 compared to $124.9 million for the year ended December 31, 2014. Upon conversion of these mortgage loans to REO, we mark the properties to the most recent market value. During the year ended December 31, 2015, we converted a net of 2,465 mortgage loans to REO status compared to a net of 3,682 mortgage loans converted to REO status during the year ended December 31, 2014;
|
•
|
Second, we recognized an aggregate of $122.4 million in unrealized gains from the net increase in the fair value of loans for the year ended December 31, 2015 compared to $241.9 million in unrealized gains during the year ended December 31, 2014; and
|
•
|
Third, we reclassified an aggregate of $124.9 million from unrealized gains on mortgage loans to realized gains on real estate and mortgage loans, reflecting real estate sold and the disposition of mortgage loans for the year ended December 31, 2015. This compares to an aggregate of $22.6 million (net of $6.6 million of gains reclassified on REO sold) reclassified from unrealized gains on mortgage loans to realized gains for the year ended December 31, 2014.
|
•
|
CS is the lender on the repurchase agreement entered into on March 22, 2013, (the “CS repurchase agreement”) with an initial aggregate maximum borrowing capacity of
$100.0 million
. During 2014, 2015 and 2016, the CS repurchase agreement was amended on several occasions, ultimately increasing the aggregate maximum borrowing capacity to
$600.0 million
as of December 31, 2016 with a maturity date of November 17, 2017. Pursuant to the amended and restated repurchase agreement with CS dated November 18, 2016, the aggregate maximum borrowing capacity of the CS repurchase agreement will decrease incrementally on each of January 31, 2017; February 28, 2017; June 30, 2017 and September 30, 2017 to an aggregate of
$350 million
as of September 30, 2017.
|
•
|
Deutsche Bank (“DB”) was the lender on the repurchase agreement dated September 12, 2013 (the “DB repurchase agreement”). During March 2016, upon expiration of the DB repurchase agreement in accordance with its terms, we repaid the remaining balance of the DB repurchase agreement and transferred the collateral to our other existing facilities.
|
•
|
Wells was the lender under the repurchase agreement dated September 23, 2013 (the “Wells repurchase agreement”). During November 2016, we terminated the Wells repurchase agreement and transferred the collateral to the CS repurchase agreement.
|
•
|
Nomura is the lender under a loan agreement dated April 10, 2015 (the “Nomura loan agreement”) with an initial aggregate maximum funding capacity of
$100.0 million
.The Nomura loan agreement was amended during 2015 and 2016, ultimately increasing the maximum funding capacity to
$250.0 million
on December 31, 2016 with a maturity date of April 6, 2017.
|
•
|
In connection with the seller financing related to the HOME SFR Transaction, on September 30, 2016, we entered into a loan agreement (the “MSR loan agreement”) between HOME Borrower, the sellers (collectively, the “Lenders”) and MSR Lender LLC, as agent. Pursuant to the MSR loan agreement, HOME Borrower borrowed approximately $489.3 million from the Lenders. Effective October 14, 2016, the MSR loan agreement was assigned to MSR Lender, LLC (“MSR Lender”) and, in connection with MSR Lender’s securitization of the MSR Loan, we and MSR Lender amended and restated the MSR loan agreement to match the terms of the bonds in MSR Lender's securitization of the MSR Loan. The aggregate amount of the MSR Loan and the aggregate interest rate of the MSR Loan remained unchanged from the original loan agreement. The MSR Loan is a floating rate loan, composed of eight floating rate components, interest on each of which is computed monthly based on one-month LIBOR plus a fixed component spread. The initial maturity date of the MSR Loan is November 9, 2018 (the “Initial Maturity Date”). HOME Borrower has the option to extend the MSR Loan beyond the Initial Maturity Date for three successive one-year terms to an ultimate maturity date of November 9, 2021, provided, among other things, that there is no event of default under the MSR loan agreement on each maturity date. The MSR Loan is secured by the membership interests of HOME Borrower and the properties and other assets of HOME Borrower.
|
|
Year ended December 31, 2016
|
|
Year ended December 31, 2015
|
|
Year ended December 31, 2014
|
||||||
Balance outstanding at end of period
|
$
|
1,226,972
|
|
|
$
|
767,513
|
|
|
$
|
1,015,000
|
|
Maximum month-end balance outstanding during the period
|
1,233,187
|
|
|
997,161
|
|
|
1,413,357
|
|
|||
Weighted average balance
|
887,392
|
|
|
915,785
|
|
|
976,176
|
|
|||
Amount of available funding at end of period
|
112,287
|
|
|
512,431
|
|
|
210,000
|
|
|
|
Interest Rate
|
|
Amount Outstanding
|
|||
December 31, 2016
|
|
|
|
|
|||
ARLP Securitization Trust, Series 2015-1
|
|
|
|
|
|
||
ARLP 2015-1 Class A Notes due May 25, 2055 (1)
|
|
4.01
|
%
|
|
178,971
|
|
|
ARLP 2015-1 Class M Notes due May 25, 2044
|
|
—
|
%
|
|
60,000
|
|
|
Intercompany eliminations
|
|
|
|
|
|
||
Elimination of ARLP 2015-1 Class A Notes due to ARNS, Inc.
|
|
|
|
(34,000
|
)
|
||
Elimination of ARLP 2015-1 Class M Notes due to ARLP
|
|
|
|
(60,000
|
)
|
||
Less: deferred debt issuance costs
|
|
|
|
(872
|
)
|
||
|
|
|
|
$
|
144,099
|
|
|
December 31, 2015
|
|
|
|
|
|||
ARLP Securitization Trust, Series 2014-1
|
|
|
|
|
|||
ARLP 2014-1 Class A Notes (2)
|
|
3.47
|
%
|
|
$
|
136,404
|
|
ARLP 2014-1 Class M Notes (2)
|
|
4.25
|
%
|
|
32,000
|
|
|
ARLP Securitization Trust, Series 2014-2
|
|
|
|
|
|||
ARLP 2014-2 Class A Notes (2)
|
|
3.63
|
%
|
|
244,935
|
|
|
ARLP 2014-2 Class M Notes (2)
|
|
—
|
%
|
|
234,010
|
|
|
ARLP Securitization Trust, Series 2015-1
|
|
|
|
|
|||
ARLP 2015-1 Class A Notes due May 25, 2055 (1)
|
|
4.01
|
%
|
|
203,429
|
|
|
ARLP 2015-1 Class M Notes due May 25, 2044
|
|
—
|
%
|
|
60,000
|
|
|
Intercompany eliminations
|
|
|
|
|
|||
Elimination of ARLP 2014-1 Class M Notes due to ARNS, Inc.
|
|
|
|
(32,000
|
)
|
||
Elimination of ARLP 2014-2 Class A Notes due to ARNS, Inc.
|
|
|
|
(45,138
|
)
|
||
Elimination of ARLP 2014-2 Class M Notes due to ARLP
|
|
|
|
(234,010
|
)
|
||
Elimination of ARLP 2015-1 Class A Notes due to ARNS, Inc.
|
|
|
|
(34,000
|
)
|
||
Elimination of ARLP 2015-1 Class M Notes due to ARLP
|
|
|
|
(60,000
|
)
|
||
Less: deferred debt issuance costs
|
|
|
|
(3,031
|
)
|
||
|
|
|
|
$
|
502,599
|
|
(1)
|
The expected redemption date for the Class A Notes ranges from June 25, 2018 to June 25, 2019.
|
(2)
|
Repaid during March 2016.
|
|
|
Year ended December 31, 2016
|
|
Year ended December 31, 2015
|
|
Year ended December 31, 2014
|
||||||
Net cash used in operating activities
|
|
$
|
(113,133
|
)
|
|
$
|
(217,710
|
)
|
|
$
|
(173,621
|
)
|
Net cash provided by (used in) investing activities
|
|
565,147
|
|
|
482,664
|
|
|
(974,920
|
)
|
|||
Net cash (used in) provided by financing activities
|
|
(462,440
|
)
|
|
(214,418
|
)
|
|
1,098,719
|
|
|||
Total cash flows
|
|
$
|
(10,426
|
)
|
|
$
|
50,536
|
|
|
$
|
(49,822
|
)
|
|
|
|
Amount Due during the Years ending December 31,
|
|
|
||||||||||||||
|
Total
|
|
2017
|
|
2018 - 2019
|
|
2020 - 2021
|
|
Thereafter
|
||||||||||
Borrowings (1)
|
$
|
1,371,943
|
|
|
$
|
737,712
|
|
|
$
|
489,259
|
|
|
$
|
—
|
|
|
$
|
144,972
|
|
Interest (2)
|
279,405
|
|
|
47,398
|
|
|
28,267
|
|
|
11,511
|
|
|
192,229
|
|
|||||
|
$
|
1,651,348
|
|
|
$
|
785,110
|
|
|
$
|
517,526
|
|
|
$
|
11,511
|
|
|
$
|
337,201
|
|
(1)
|
Does not consider the expected redemption dates for secured notes. The securitized assets are the only source of repayment for the secured notes and are expected to provide funding for these liabilities (see
Note 8
to the consolidated financial statements).
|
(2)
|
Assumes interest rates as of
December 31, 2016
remain in effect for the remaining term of the borrowings. Actual payments could vary.
|
Exhibit Number
|
|
Description
|
2.1
|
|
Separation Agreement, dated as of December 21, 2012, between Altisource Residential Corporation and Altisource Portfolio Solutions S.A. (incorporated by reference to Exhibit 2.1 of the Registrant's Current Report on Form 8-K filed with the Commission on December 28, 2012).
|
2.2
|
|
Membership Interest Purchase and Sale Agreement, dated September 30, 2016, between MSR I, LP and Altisource Residential, L.P. (incorporated by reference to Exhibit 2.1 of the registrant's Current Report on Form 8-K filed on October 3, 2016).
|
2.3
|
|
Purchase and Sale Agreement, dated September 30, 2016, between Firebird SFE I, LLC and Altisource Residential, L.P. (incorporated by reference to Exhibit 2.2 of the registrant's Current Report on Form 8-K filed on October 3, 2016).
|
3.1
|
|
Articles of Restatement of Altisource Residential Corporation (incorporated by reference to Exhibit 3.3 of the registrant's Current Report on Form 8-K filed on April 8, 2013).
|
3.2
|
|
By-laws of Altisource Residential Corporation (incorporated by reference to Exhibit 3.2 of the Registrant's Registration Statement on Form 10 filed with the Commission on December 5, 2012).
|
10.1
|
|
Support Services Agreement, dated as of December 21, 2012, between Altisource Residential Corporation and Altisource Solutions S.à r.l. (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Commission on December 28, 2012).
|
10.2
|
|
Tax Matters Agreement, dated as of December 21, 2012, between Altisource Residential Corporation and Altisource Solutions S.à r.l. (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the Commission on December 28, 2012).
|
10.3
|
|
Master Services Agreement, dated as of December 21, 2012, between Altisource Residential Corporation and Altisource Solutions S.à r.l. (incorporated by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K filed with the Commission on December 28, 2012).
|
10.4
|
|
Trademark License Agreement, dated as of December 21, 2012, between Altisource Residential Corporation and Altisource Solutions S.à r.l. (incorporated by reference to Exhibit 10.6 the Registrant’s Current Report on Form 8-K filed with the Commission on December 28, 2012).
|
10.5 †
|
|
Altisource Residential Corporation Conversion Option Plan (incorporated by reference to Exhibit 10.8 of the Registrant’s Current Report on Form 8-K filed with the Commission on December 28, 2012).
|
10.6
|
|
Altisource Residential Corporation Special Conversion Option Plan (incorporated by reference to Exhibit 10.9 of the Registrant’s Current Report on Form 8-K filed with the Commission on December 28, 2012).
|
10.7
|
|
Master Mortgage Loan Sale Agreement, dated as of February 14, 2013, between Ocwen Loan Servicing LLC and Altisource Residential, L.P. (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Commission on February 21, 2013).
|
10.8
|
|
Confirmation, dated as of February 14, 2013, between Ocwen Loan Servicing, LLC and Altisource Residential, L.P. (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the Commission on February 21, 2013).
|
10.9
|
|
Pricing Letter, dated as of February 14, 2013, between Ocwen Loan Servicing, LLC and Altisource Residential, L.P. (incorporated by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the Commission on February 21, 2013).
|
10.10
|
|
Master Repurchase Agreement and related Annexes, dated as of December 22, 2014, between Credit Suisse Securities (USA) LLC and ARNS, Inc. (incorporated by reference to Exhibit 10.22 of the Registrant’s Annual Report on Form 10-K filed with the Commission on March 2, 2015).
|
10.11
|
|
Guaranty, dated as of December 22, 2014, by Altisource Residential Corporation in favor of Credit Suisse Securities (USA) LLC (incorporated by reference to Exhibit 10.23 of the Registrant’s Annual Report on Form 10-K filed with the Commission on March 2, 2015).
|
10.12
|
|
Flow Servicing Agreement, dated as of January 24, 2015, between Fay Servicing, LLC and Altisource Residential, L.P. (incorporated by reference to Exhibit 10.22 of the Registrant’s Annual Report on Form 10-K filed with the Commission on March 2, 2015).
|
10.13
|
|
Servicing Agreement, dated as of January 29, 2015, between Altisource Residential, L.P. and Servis One, Inc. d/b/a BSI Financial Services (incorporated by reference to Exhibit 10.22 of the Registrant’s Annual Report on Form 10-K filed with the Commission on March 2, 2015).
|
10.14
|
|
Asset Management Agreement, dated March 31, 2015, among Altisource Residential Corporation, Altisource Residential, L.P. and Altisource Asset Management Corporation (incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K filed with the Commission on April 2, 2015).
|
10.15
|
|
Amendment to Asset Management Agreement, dated April 7, 2015, among Altisource Residential Corporation, Altisource Residential, L.P. and Altisource Asset Management Corporation (incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K filed with the Commission on April 13, 2015).
|
10.16
|
|
Guaranty, dated as of April 10, 2015 made by Altisource Residential Corporation in favor of Nomura Corporate Funding Americas, LLC (incorporated by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on May 7, 2015).
|
10.17
|
|
Second Amended and Restated Master Repurchase Agreement and Securities Contract, dated as of September 30, 2015, between Altisource Residential, L.P., ARNS, Inc. and Wells Fargo Bank, National Association related to Mortgage Loans (incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 9, 2015).
|
10.18
|
|
Third Amended and Restated Guaranty Agreement, dated as of September 30, 2015, made by Altisource Residential Corporation in favor of Wells Fargo Bank, National Association related to Mortgage Loans (incorporated by reference to Exhibit 10.2 of the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 9, 2015).
|
10.19
|
|
Master Repurchase Agreement and Securities Contract, dated as of September 30, 2015, between ARLP Repo Seller L, LLC, ARLP Repo Seller S, LLC and Wells Fargo Bank, National Association, related to REO Properties (incorporated by reference to Exhibit 10.3 of the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 9, 2015).
|
10.20
|
|
Limited Guaranty Agreement, dated as of September 30, 2015, made by Altisource Residential Corporation in favor of Wells Fargo Bank, National Association related to REO Properties (incorporated by reference to Exhibit 10.4 of the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 9, 2015).
|
10.21
|
|
Amended and Restated Loan and Security Agreement, dated as of April 7, 2016, among Nomura Corporate Funding Americas, LLC, and ARLP REO I, LLC, on behalf of itself and with respect to QRS Series of ARLP REO I, LLC and TRS Series of ARLP REO I, LLC, ARLP REO II, LLC, on behalf of itself and with respect to QRS Series of ARLP REO II, LLC and TRS Series of ARLP REO II, LLC, ARLP REO III, LLC, on behalf of itself and with respect to QRS Series of ARLP REO III, LLC and TRS Series of ARLP REO III, LLC, ARLP REO IV, LLC, on behalf of itself and with respect to QRS Series of ARLP REO IV, LLC and TRS Series of ARLP REO IV, LLC, ARLP REO V, LLC, on behalf of itself and with respect to QRS Series of ARLP REO V, LLC and TRS Series of ARLP REO V, LLC, ARLP REO VI, LLC, on behalf of itself and with respect to QRS Series of ARLP REO VI, LLC and TRS Series of ARLP REO VI, LLC, ARLP REO VII, LLC, on behalf of itself and with respect to QRS Series of ARLP REO VII, LLC and TRS Series of ARLP REO VII, LLC and ARLP REO 400, LLC, on behalf of itself and with respect to QRS Series of ARLP REO 400, LLC and TRS Series of ARLP REO 400, LLC and ARLP REO 500, LLC, on behalf of itself and with respect to QRS Series of ARLP REO 500, LLC and TRS Series of ARLP REO 500, LLC and each other Delaware limited liability company that is organized in series that may be subsequently added as a party to the Agreement under a Joinder Agreement (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Commission on April 13, 2016).
|
10.22*†
|
|
Altisource Residential Corporation 2016 Equity Incentive Plan.
|
10.23†
|
|
Form of Stock Option Award Agreement under the 2016 Equity Incentive Plan (incorporated by reference to Exhibit 10.6 of the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 7, 2016).
|
10.24†
|
|
Form of Restricted Stock Unit Award Agreement under the 2016 Equity Incentive Plan (incorporated by reference to Exhibit 10.7 of the Registrant’s Quarterly Report on Form 10-Q filed with the Commission on November 7, 2016).
|
10.25
|
|
Agreement between Altisource Residential Corporation and RESI Shareholders Group, dated May 10, 2016 (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Commission on May 11, 2016).
|
10.26
|
|
Property Management Services Agreement, dated September 30, 2016, by and between HOME SFR Borrower, LLC and Main Street Renewal, LLC (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Commission on October 3, 2016).
|
10.27
|
|
Side Letter, dated September 30, 2016, by and between HOME SFR Borrower, LLC and Main Street Renewal, LLC (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the Commission on October 3, 2016).
|
10.28
|
|
Amendment and Waiver Agreement, dated September 30, 2016, by and among Altisource Residential Corporation and Altisource Solutions S.à r.l. (incorporated by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the Commission on October 3, 2016).
|
10.29
|
|
Loan Agreement, dated September 30, 2016, among Home SFR Borrower, LLC, as Borrower, MSR I, L.P., as a Lender, MSR II, L.P., as a Lender, and MSR Lender LLC, as Agent (incorporated by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K filed with the Commission on October 3, 2016).
|
10.30
|
|
Amended and Restated Loan Agreement, dated October 7, 2016, between Home SFR Borrower, LLC, as Borrower, and MSR Lender LLC, as Lender (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Commission on October 14, 2016).
|
10.31
|
|
Third Amended and Restated Master Repurchase Agreement, dated November 18, 2016, by and among Credit Suisse First Boston Mortgage Capital LLC, Credit Suisse AG, acting through its Cayman Islands Branch, Alpine Securitization LTD and other Buyers joined thereto from time to time, Altisource Residential, L.P., ARLP Repo Seller S, LLC, ARLP Repo Seller L, LLC and ARNS, Inc., ARLP Trust, ARLP Trust 3 on behalf of itself and each of its series, ARLP Trust 4, ARLP Trust 5 on behalf of itself and each of its series, ARLP Trust 6 on behalf of itself and each of its series, ARLP Securitization Trust, Series 2014-1 on behalf of itself and each of its series, ARLP Securitization Trust, Series 2014-2 on behalf of itself and each of its series, RESI SFR Sub, LLC and RESI REO Sub, LLC, and the Altisource Residential Corporation (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the Commission on November 23, 2016).
|
10.32
|
|
Third Amended and Restated Guaranty made by Altisource Residential Corporation in favor of Credit Suisse First Boston Mortgage Capital LLC, for the benefit of Credit Suisse AG, acting through its Cayman Islands Branch, Alpine Securitization LTD and other Buyers joined thereto from time to time, dated November 18, 2016 (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the Commission on November 23, 2016).
|
10.33
|
|
Termination Agreement dated as of November 18, 2016 by and among ARLP Repo Seller L, LLC, ARLP Repo Seller S, LLC, Altisource Residential Corporation and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the Commission on November 23, 2016).
|
10.34
|
|
Termination Agreement dated as of November 18, 2016 by and among Altisource Residential, L.P., ARNS, Inc., Altisource Residential Corporation and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K filed with the Commission on November 23, 2016).
|
21 *
|
|
Schedule of Subsidiaries
|
23 *
|
|
Consent of Deloitte & Touche LLP
|
24 *
|
|
Power of Attorney (incorporated by reference to the signature page of this Annual Report on Form 10-K).
|
31.1*
|
|
Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act
|
31.2*
|
|
Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act
|
32.1*
|
|
Certification of CEO Pursuant to Section 906 of the Sarbanes-Oxley Act
|
32.2*
|
|
Certification of CFO Pursuant to Section 906 of the Sarbanes-Oxley Act
|
101.INS*
|
|
XBRL Instance Document
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB*
|
|
XBRL Extension Labels Linkbase
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
Altisource Residential Corporation
|
March 1, 2017
|
By:
|
/s/ George G. Ellison
|
|
|
George G. Ellison
Chief Executive Officer |
March 1, 2017
|
By:
|
/s/ Robin N. Lowe
|
|
|
Robin N. Lowe
Chief Financial Officer |
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ David B. Reiner
|
|
Chairman of the Board of Directors
|
|
March 1, 2017
|
David B. Reiner
|
|
|
|
|
/s/ Michael A. Eruzione
|
|
Director
|
|
March 1, 2017
|
Michael A. Eruzione
|
|
|
|
|
/s/ William P. Wall
|
|
Director
|
|
March 1, 2017
|
William P. Wall
|
|
|
|
|
/s/ Rochelle R. Dobbs
|
|
Director
|
|
March 1, 2017
|
Rochelle R. Dobbs
|
|
|
|
|
/s/ George G. Ellison
|
|
Director and Chief Executive Officer (Principal Executive Officer)
|
|
March 1, 2017
|
George G. Ellison
|
|
|
|
|
/s/ Robin N. Lowe
|
|
Chief Financial Officer (Principal Financial Officer
and Principal Accounting Officer)
|
|
March 1, 2017
|
Robin N. Lowe
|
|
|
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||
Assets:
|
|
|
|
|
||||
Real estate held for use:
|
|
|
|
|
||||
Land
|
|
$
|
220,800
|
|
|
$
|
56,346
|
|
Rental residential properties
|
|
926,320
|
|
|
231,167
|
|
||
Real estate owned
|
|
289,141
|
|
|
455,483
|
|
||
Total real estate held for use
|
|
1,436,261
|
|
|
742,996
|
|
||
Less: accumulated depreciation
|
|
(27,541
|
)
|
|
(7,127
|
)
|
||
Total real estate held for use, net
|
|
1,408,720
|
|
|
735,869
|
|
||
Real estate assets held for sale
|
|
133,327
|
|
|
250,557
|
|
||
Mortgage loans at fair value
|
|
460,444
|
|
|
960,534
|
|
||
Mortgage loans held for sale
|
|
108,036
|
|
|
317,336
|
|
||
Cash and cash equivalents
|
|
106,276
|
|
|
116,702
|
|
||
Restricted cash
|
|
22,947
|
|
|
20,566
|
|
||
Accounts receivable, net
|
|
34,931
|
|
|
45,903
|
|
||
Related party receivables
|
|
—
|
|
|
2,180
|
|
||
Prepaid expenses and other assets
|
|
10,166
|
|
|
1,126
|
|
||
Total assets
|
|
$
|
2,284,847
|
|
|
$
|
2,450,773
|
|
Liabilities:
|
|
|
|
|
||||
Repurchase and loan agreements
|
|
$
|
1,220,972
|
|
|
$
|
763,369
|
|
Other secured borrowings
|
|
144,099
|
|
|
502,599
|
|
||
Accounts payable and accrued liabilities
|
|
51,442
|
|
|
32,448
|
|
||
Related party payables
|
|
5,266
|
|
|
—
|
|
||
Total liabilities
|
|
1,421,779
|
|
|
1,298,416
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
|
||||
Equity:
|
|
|
|
|
||||
Common stock, $0.01 par value, 200,000,000 authorized shares; 53,667,631 and 55,581,005 shares issued and outstanding as of December 31, 2016 and 2015, respectively
|
|
537
|
|
|
556
|
|
||
Additional paid-in capital
|
|
1,182,245
|
|
|
1,202,418
|
|
||
Accumulated deficit
|
|
(319,714
|
)
|
|
(50,617
|
)
|
||
Total equity
|
|
863,068
|
|
|
1,152,357
|
|
||
Total liabilities and equity
|
|
$
|
2,284,847
|
|
|
$
|
2,450,773
|
|
|
Year ended December 31, 2016
|
|
Year ended December 31, 2015
|
|
Year ended December 31, 2014
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Rental revenues
|
$
|
48,563
|
|
|
$
|
13,233
|
|
|
$
|
1,564
|
|
Change in unrealized gain on mortgage loans
|
(195,909
|
)
|
|
88,829
|
|
|
350,822
|
|
|||
Net realized gain on mortgage loans
|
35,760
|
|
|
58,061
|
|
|
55,766
|
|
|||
Net realized gain on mortgage loans held for sale
|
50,230
|
|
|
36,432
|
|
|
2,771
|
|
|||
Net realized gain on real estate
|
117,617
|
|
|
50,932
|
|
|
9,482
|
|
|||
Interest income
|
497
|
|
|
611
|
|
|
2,893
|
|
|||
Total revenues
|
56,758
|
|
|
248,098
|
|
|
423,298
|
|
|||
Expenses:
|
|
|
|
|
|
||||||
Residential property operating expenses
|
70,167
|
|
|
66,266
|
|
|
26,018
|
|
|||
Real estate depreciation and amortization
|
27,027
|
|
|
7,472
|
|
|
1,067
|
|
|||
Acquisition fees and costs
|
9,339
|
|
|
2,292
|
|
|
2,584
|
|
|||
Selling costs and impairment
|
57,913
|
|
|
72,230
|
|
|
21,788
|
|
|||
Mortgage loan servicing costs
|
34,595
|
|
|
62,346
|
|
|
68,181
|
|
|||
Interest expense
|
53,868
|
|
|
53,694
|
|
|
35,812
|
|
|||
Share-based compensation
|
1,287
|
|
|
184
|
|
|
227
|
|
|||
General and administrative
|
10,556
|
|
|
10,105
|
|
|
13,317
|
|
|||
Management fees to AAMC
|
19,175
|
|
|
22,966
|
|
|
67,949
|
|
|||
Total expenses
|
283,927
|
|
|
297,555
|
|
|
236,943
|
|
|||
Other (expense) income
|
(750
|
)
|
|
3,518
|
|
|
2,543
|
|
|||
(Loss) income before income taxes
|
(227,919
|
)
|
|
(45,939
|
)
|
|
188,898
|
|
|||
Income tax expense
|
109
|
|
|
66
|
|
|
45
|
|
|||
Net (loss) income
|
$
|
(228,028
|
)
|
|
$
|
(46,005
|
)
|
|
$
|
188,853
|
|
|
|
|
|
|
|
||||||
(Loss) earnings per share of common stock – basic:
|
|
|
|
|
|
||||||
(Loss) earnings per basic share
|
$
|
(4.18
|
)
|
|
$
|
(0.81
|
)
|
|
$
|
3.36
|
|
Weighted average common stock outstanding – basic
|
54,490,979
|
|
|
56,843,028
|
|
|
56,247,376
|
|
|||
(Loss) earnings per share of common stock – diluted:
|
|
|
|
|
|
||||||
(Loss) earnings per diluted share
|
$
|
(4.18
|
)
|
|
$
|
(0.81
|
)
|
|
$
|
3.34
|
|
Weighted average common stock outstanding – diluted
|
54,490,979
|
|
|
56,843,028
|
|
|
56,588,137
|
|
|||
|
|
|
|
|
|
||||||
Dividends declared per common share
|
$
|
0.75
|
|
|
$
|
1.83
|
|
|
$
|
2.03
|
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Retained Earnings (Accumulated Deficit)
|
|
|
|||||||||||
|
|
Number of Shares
|
|
Amount
|
|
|
|
Total Equity
|
|||||||||||
December 31, 2013
|
|
42,286,669
|
|
|
$
|
423
|
|
|
$
|
758,584
|
|
|
$
|
26,420
|
|
|
$
|
785,427
|
|
Issuance of common stock, including stock option exercises
|
|
14,905,543
|
|
|
149
|
|
|
483,570
|
|
|
—
|
|
|
483,719
|
|
||||
Cost of issuance of common stock
|
|
—
|
|
|
—
|
|
|
(15,290
|
)
|
|
—
|
|
|
(15,290
|
)
|
||||
Dividends on common stock ($2.03 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(116,025
|
)
|
|
(116,025
|
)
|
||||
Share-based compensation
|
|
—
|
|
|
—
|
|
|
227
|
|
|
—
|
|
|
227
|
|
||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
188,853
|
|
|
188,853
|
|
||||
December 31, 2014
|
|
57,192,212
|
|
|
572
|
|
|
1,227,091
|
|
|
99,248
|
|
|
1,326,911
|
|
||||
Issuance of common stock, including stock option exercises
|
|
33,868
|
|
|
—
|
|
|
110
|
|
|
—
|
|
|
110
|
|
||||
Repurchases of common stock
|
|
(1,645,075
|
)
|
|
(16
|
)
|
|
(24,967
|
)
|
|
—
|
|
|
(24,983
|
)
|
||||
Dividends on common stock ($1.83 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(103,860
|
)
|
|
(103,860
|
)
|
||||
Share-based compensation
|
|
—
|
|
|
—
|
|
|
184
|
|
|
—
|
|
|
184
|
|
||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(46,005
|
)
|
|
(46,005
|
)
|
||||
December 31, 2015
|
|
55,581,005
|
|
|
556
|
|
|
1,202,418
|
|
|
(50,617
|
)
|
|
1,152,357
|
|
||||
Issuance of common stock, including stock option exercises
|
|
44,995
|
|
|
1
|
|
|
58
|
|
|
—
|
|
|
59
|
|
||||
Repurchases of common stock
|
|
(1,958,369
|
)
|
|
(20
|
)
|
|
(21,518
|
)
|
|
—
|
|
|
(21,538
|
)
|
||||
Dividends on common stock ($0.75 per share)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(41,069
|
)
|
|
(41,069
|
)
|
||||
Share-based compensation
|
|
—
|
|
|
—
|
|
|
1,287
|
|
|
—
|
|
|
1,287
|
|
||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(228,028
|
)
|
|
(228,028
|
)
|
||||
December 31, 2016
|
|
53,667,631
|
|
|
$
|
537
|
|
|
$
|
1,182,245
|
|
|
$
|
(319,714
|
)
|
|
$
|
863,068
|
|
|
|
Year ended December 31, 2016
|
|
Year ended December 31, 2015
|
|
Year ended December 31, 2014
|
||||||
Operating activities:
|
|
|
|
|
|
|
||||||
Net (loss) income
|
|
$
|
(228,028
|
)
|
|
$
|
(46,005
|
)
|
|
$
|
188,853
|
|
Adjustments to reconcile net (loss) income to net cash used in operating activities:
|
|
|
|
|
|
|
||||||
Change in unrealized gain on mortgage loans
|
|
195,909
|
|
|
(88,829
|
)
|
|
(350,822
|
)
|
|||
Net realized gain on mortgage loans
|
|
(35,760
|
)
|
|
(58,061
|
)
|
|
(55,766
|
)
|
|||
Net realized gain on mortgage loans held for sale
|
|
(50,230
|
)
|
|
(36,432
|
)
|
|
(2,771
|
)
|
|||
Net realized gain on of real estate
|
|
(117,617
|
)
|
|
(50,932
|
)
|
|
(9,482
|
)
|
|||
Real estate depreciation and amortization
|
|
27,027
|
|
|
7,472
|
|
|
1,067
|
|
|||
Selling costs and impairment
|
|
57,913
|
|
|
72,230
|
|
|
21,788
|
|
|||
Accretion of interest on re-performing mortgage loans
|
|
(142
|
)
|
|
(551
|
)
|
|
(2,610
|
)
|
|||
Share-based compensation
|
|
1,287
|
|
|
184
|
|
|
227
|
|
|||
Amortization of deferred financing costs
|
|
12,519
|
|
|
7,348
|
|
|
3,427
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Accounts receivable, net
|
|
1,650
|
|
|
(22,551
|
)
|
|
(3,472
|
)
|
|||
Related party receivables
|
|
2,180
|
|
|
15,311
|
|
|
8,199
|
|
|||
Deferred leasing costs
|
|
(550
|
)
|
|
(88
|
)
|
|
—
|
|
|||
Prepaid expenses and other assets
|
|
(3,980
|
)
|
|
(42
|
)
|
|
(293
|
)
|
|||
Accounts payable and accrued liabilities
|
|
19,423
|
|
|
16,627
|
|
|
522
|
|
|||
Related party payables
|
|
5,266
|
|
|
(33,391
|
)
|
|
27,512
|
|
|||
Net cash used in operating activities
|
|
(113,133
|
)
|
|
(217,710
|
)
|
|
(173,621
|
)
|
|||
Investing activities:
|
|
|
|
|
|
|
||||||
Investment in mortgage loans
|
|
—
|
|
|
—
|
|
|
(1,265,890
|
)
|
|||
Investment in real estate
|
|
(299,556
|
)
|
|
(119,977
|
)
|
|
(34,104
|
)
|
|||
Investment in renovations
|
|
(53,394
|
)
|
|
(27,410
|
)
|
|
(12,721
|
)
|
|||
Real estate tax advances
|
|
(23,479
|
)
|
|
(29,862
|
)
|
|
(33,719
|
)
|
|||
Mortgage loan resolutions and dispositions
|
|
543,099
|
|
|
468,111
|
|
|
334,366
|
|
|||
Mortgage loan payments
|
|
22,870
|
|
|
26,206
|
|
|
20,900
|
|
|||
Disposition of real estate
|
|
378,043
|
|
|
154,880
|
|
|
23,652
|
|
|||
Investment in derivative financial instrument
|
|
(55
|
)
|
|
—
|
|
|
—
|
|
|||
Disposition of preferred stock of affiliate
|
|
—
|
|
|
18,000
|
|
|
—
|
|
|||
Change in restricted cash
|
|
(2,381
|
)
|
|
(7,284
|
)
|
|
(7,404
|
)
|
|||
Net cash provided by (used in) investing activities
|
|
565,147
|
|
|
482,664
|
|
|
(974,920
|
)
|
|||
Financing activities:
|
|
|
|
|
|
|
||||||
Issuance of common stock, including stock option exercises
|
|
83
|
|
|
212
|
|
|
491,388
|
|
|||
Payment of tax withholdings on exercise of stock options
|
|
(24
|
)
|
|
(102
|
)
|
|
(7,669
|
)
|
|||
Cost of issuance of common stock
|
|
—
|
|
|
—
|
|
|
(15,290
|
)
|
|||
Repurchase of common stock
|
|
(21,538
|
)
|
|
(24,983
|
)
|
|
—
|
|
|||
Dividends on common stock
|
|
(38,286
|
)
|
|
(98,334
|
)
|
|
(116,025
|
)
|
|||
Proceeds from issuance of other secured borrowings
|
|
—
|
|
|
220,931
|
|
|
339,426
|
|
|||
Repayments of other secured borrowings
|
|
(361,544
|
)
|
|
(54,823
|
)
|
|
(344
|
)
|
|||
Proceeds from repurchase and loan agreements
|
|
793,392
|
|
|
347,077
|
|
|
1,094,042
|
|
|||
Repayments of repurchase and loan agreements
|
|
(823,192
|
)
|
|
(594,564
|
)
|
|
(681,424
|
)
|
|||
Payment of deferred financing costs
|
|
(11,331
|
)
|
|
(9,832
|
)
|
|
(5,385
|
)
|
|||
Net cash (used in) provided by financing activities
|
|
(462,440
|
)
|
|
(214,418
|
)
|
|
1,098,719
|
|
|||
Net (decrease) increase in cash and cash equivalents
|
|
(10,426
|
)
|
|
50,536
|
|
|
(49,822
|
)
|
|||
Cash and cash equivalents as of beginning of the period
|
|
116,702
|
|
|
66,166
|
|
|
115,988
|
|
|||
Cash and cash equivalents as of end of the period
|
|
$
|
106,276
|
|
|
$
|
116,702
|
|
|
$
|
66,166
|
|
|
|
|
|
|
|
|
Altisource Residential Corporation
Consolidated Statements of Cash Flows (continued)
(In thousands)
|
||||||||||||
|
|
Year ended December 31, 2016
|
|
Year ended December 31, 2015
|
|
Year ended December 31, 2014
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
||||||
Seller financing of assets acquired
|
|
$
|
489,259
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cash paid for interest
|
|
39,838
|
|
|
47,286
|
|
|
31,218
|
|
|||
Income taxes paid
|
|
180
|
|
|
52
|
|
|
11
|
|
|||
Transfer of mortgage loans to real estate owned, net
|
|
206,987
|
|
|
470,221
|
|
|
587,268
|
|
|||
Transfer of mortgage loans at fair value to mortgage loans held for sale
|
|
195,461
|
|
|
535,836
|
|
|
—
|
|
|||
Change in accrued capital expenditures
|
|
(3,212
|
)
|
|
(1,388
|
)
|
|
4,151
|
|
|||
Changes in receivables from mortgage loan dispositions, payments and real estate tax advances to borrowers, net
|
|
(4,945
|
)
|
|
(592
|
)
|
|
10,024
|
|
|||
Changes in receivables from real estate owned dispositions
|
|
(4,377
|
)
|
|
15,252
|
|
|
4,640
|
|
|||
Dividends declared but not paid
|
|
8,341
|
|
|
5,526
|
|
|
—
|
|
|
|
December 31, 2015
|
||||||||||
|
|
As Previously Reported
|
|
Adjustments
|
|
Current Presentation
|
||||||
Assets:
|
|
|
|
|
|
|
||||||
Deferred leasing and financing costs (1)
|
|
$
|
7,886
|
|
|
$
|
(7,886
|
)
|
|
$
|
—
|
|
Prepaid expenses and other assets (1)
|
|
415
|
|
|
711
|
|
|
1,126
|
|
|||
Liabilities:
|
|
|
|
|
|
|
||||||
Repurchase and loan agreements
|
|
767,513
|
|
|
(4,144
|
)
|
|
763,369
|
|
|||
Other secured borrowings
|
|
505,630
|
|
|
(3,031
|
)
|
|
502,599
|
|
(1)
|
Upon adoption of ASU 2015-03, we reclassified our deferred leasing costs to prepaid expenses and other assets.
|
•
|
Level 1
- Quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2
- Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.
|
•
|
Level 3
- Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
|
Estimated fair value of assets acquired:
|
|
|
|
|
||
Land
|
|
|
|
$
|
123,793
|
|
Rental residential properties
|
|
|
|
499,307
|
|
|
Real estate owned
|
|
|
|
19,437
|
|
|
Prepaid expenses and other assets (1)
|
|
|
|
9,809
|
|
|
Total allocation of purchase price
|
|
|
|
$
|
652,346
|
|
|
|
|
|
|
||
Source of funds:
|
|
|
|
|
||
Cash on hand
|
|
|
|
$
|
163,087
|
|
Debt financing (Note 6)
|
|
|
|
489,259
|
|
|
Total purchase price
|
|
|
|
$
|
652,346
|
|
|
|
Year ended December 31, 2016
|
|
Year ended December 31, 2015
|
||||
Unaudited pro forma revenues
|
|
$
|
97,735
|
|
|
$
|
294,534
|
|
Unaudited pro forma net loss
|
|
(230,449
|
)
|
|
(72,071
|
)
|
||
Loss per share of common stock - basic:
|
|
|
|
|
||||
Loss per basic share
|
|
$
|
(4.23
|
)
|
|
$
|
(1.27
|
)
|
Weighted average common stock outstanding - basic
|
|
54,490,979
|
|
|
56,843,028
|
|
||
Loss per share of common stock - diluted:
|
|
|
|
|
||||
Loss per diluted share
|
|
$
|
(4.23
|
)
|
|
$
|
(1.27
|
)
|
Weighted average common stock outstanding - diluted
|
|
54,490,979
|
|
|
56,843,028
|
|
|
|
Year ended December 31, 2016
|
|
Year ended December 31, 2015
|
||||
Revenues from consolidated statement of operations
|
|
$
|
56,758
|
|
|
$
|
248,098
|
|
Add: historical revenues of acquired properties not reflected in consolidated statement of operations
|
|
40,977
|
|
|
46,436
|
|
||
Unaudited pro forma revenues
|
|
$
|
97,735
|
|
|
$
|
294,534
|
|
|
|
|
|
|
||||
Net loss from consolidated statement of operations
|
|
$
|
(228,028
|
)
|
|
$
|
(46,005
|
)
|
Plus: historical net income of acquired properties not reflected in consolidated statement of operations
|
|
25,578
|
|
|
27,966
|
|
||
Less: pro forma depreciation and amortization
|
|
(11,363
|
)
|
|
(30,438
|
)
|
||
Less: pro forma interest expense
|
|
(14,016
|
)
|
|
(18,949
|
)
|
||
Less: pro forma management fees
|
|
(2,620
|
)
|
|
(4,645
|
)
|
||
Unaudited pro forma net loss
|
|
$
|
(230,449
|
)
|
|
$
|
(72,071
|
)
|
2017
|
|
$
|
50,672
|
|
2018
|
|
2,504
|
|
|
2019
|
|
460
|
|
|
2020
|
|
10
|
|
|
2021 and thereafter
|
|
—
|
|
|
|
|
$
|
53,646
|
|
|
|
Number of Loans
|
|
Carrying Value
|
|
Unpaid Principal Balance
|
|
Market Value of Underlying Properties
|
|||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|||||||
Current
|
|
211
|
|
|
$
|
33,992
|
|
|
$
|
45,568
|
|
|
$
|
58,842
|
|
30
|
|
66
|
|
|
7,898
|
|
|
11,836
|
|
|
13,576
|
|
|||
60
|
|
34
|
|
|
4,444
|
|
|
6,364
|
|
|
7,536
|
|
|||
90
|
|
400
|
|
|
48,338
|
|
|
82,705
|
|
|
91,772
|
|
|||
Foreclosure
|
|
2,180
|
|
|
365,772
|
|
|
551,243
|
|
|
574,546
|
|
|||
Mortgage loans at fair value
|
|
2,891
|
|
|
$
|
460,444
|
|
|
$
|
697,716
|
|
|
$
|
746,272
|
|
|
|
|
|
|
|
|
|
|
|||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|||||||
Current
|
|
730
|
|
|
$
|
124,595
|
|
|
$
|
165,645
|
|
|
$
|
177,348
|
|
30
|
|
80
|
|
|
12,003
|
|
|
18,142
|
|
|
21,858
|
|
|||
60
|
|
38
|
|
|
5,688
|
|
|
8,088
|
|
|
8,766
|
|
|||
90
|
|
984
|
|
|
130,784
|
|
|
216,717
|
|
|
196,963
|
|
|||
Foreclosure
|
|
3,907
|
|
|
687,464
|
|
|
946,962
|
|
|
917,671
|
|
|||
Mortgage loans at fair value
|
|
5,739
|
|
|
$
|
960,534
|
|
|
$
|
1,355,554
|
|
|
$
|
1,322,606
|
|
|
|
Number of Loans
|
|
Carrying Value
|
|
Unpaid Principal Balance
|
|
Market Value of Underlying Properties
|
|||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|||||||
Current
|
|
519
|
|
|
$
|
100,558
|
|
|
$
|
114,757
|
|
|
$
|
140,471
|
|
30
|
|
10
|
|
|
1,082
|
|
|
1,911
|
|
|
2,329
|
|
|||
60
|
|
4
|
|
|
286
|
|
|
623
|
|
|
663
|
|
|||
90
|
|
17
|
|
|
1,622
|
|
|
2,291
|
|
|
3,430
|
|
|||
Foreclosure
|
|
33
|
|
|
4,488
|
|
|
6,023
|
|
|
6,675
|
|
|||
Mortgage loans held for sale
|
|
583
|
|
|
$
|
108,036
|
|
|
$
|
125,605
|
|
|
$
|
153,568
|
|
|
|
|
|
|
|
|
|
|
|||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|||||||
Current
|
|
58
|
|
|
$
|
10,864
|
|
|
$
|
13,466
|
|
|
$
|
17,776
|
|
30
|
|
26
|
|
|
7,616
|
|
|
10,013
|
|
|
12,200
|
|
|||
60
|
|
6
|
|
|
668
|
|
|
775
|
|
|
1,063
|
|
|||
90
|
|
328
|
|
|
73,164
|
|
|
101,121
|
|
|
103,395
|
|
|||
Foreclosure
|
|
879
|
|
|
225,024
|
|
|
314,991
|
|
|
330,573
|
|
|||
Mortgage loans held for sale
|
|
1,297
|
|
|
$
|
317,336
|
|
|
$
|
440,366
|
|
|
$
|
465,007
|
|
Accretable Yield
|
|
Year ended December 31, 2016
|
|
Year ended December 31, 2015
|
||||
Balance at the beginning of the period
|
|
$
|
2,146
|
|
|
$
|
7,640
|
|
Payments and other reductions, net
|
|
(247
|
)
|
|
(4,943
|
)
|
||
Accretion
|
|
(142
|
)
|
|
(551
|
)
|
||
Balance at the end of the period
|
|
$
|
1,757
|
|
|
$
|
2,146
|
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
Carrying Value
|
|
Quoted Prices in Active Markets
|
|
Observable Inputs Other Than Level 1 Prices
|
|
Unobservable Inputs
|
||||||||
December 31, 2016
|
|
|
|
|
|
|
|
||||||||
Recurring basis (assets)
|
|
|
|
|
|
|
|
||||||||
Mortgage loans at fair value
|
$
|
460,444
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
460,444
|
|
Nonrecurring basis (assets)
|
|
|
|
|
|
|
|
||||||||
Real estate assets held for sale
|
133,327
|
|
|
—
|
|
|
—
|
|
|
133,327
|
|
||||
Not recognized on consolidated balance sheets at fair value (assets)
|
|
|
|
|
|
|
|
||||||||
Mortgage loans held for sale
|
108,036
|
|
|
—
|
|
|
—
|
|
|
108,036
|
|
||||
Not recognized on consolidated balance sheets at fair value (liabilities)
|
|
|
|
|
|
|
|
||||||||
Repurchase and loan agreements
|
1,220,972
|
|
|
—
|
|
|
1,226,971
|
|
|
—
|
|
||||
Other secured borrowings
|
144,099
|
|
|
—
|
|
|
144,971
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
December 31, 2015
|
|
|
|
|
|
|
|
||||||||
Recurring basis (assets)
|
|
|
|
|
|
|
|
||||||||
Mortgage loans at fair value
|
$
|
960,534
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
960,534
|
|
Nonrecurring basis (assets)
|
|
|
|
|
|
|
|
||||||||
Real estate assets held for sale
|
250,557
|
|
|
—
|
|
|
—
|
|
|
250,557
|
|
||||
Not recognized on consolidated balance sheets at fair value (assets)
|
|
|
|
|
|
|
|
|
|
||||||
Mortgage loans held for sale
|
317,336
|
|
|
—
|
|
|
—
|
|
|
317,336
|
|
||||
Not recognized on consolidated balance sheets at fair value (liabilities)
|
|
|
|
|
|
|
|
||||||||
Repurchase and loan agreements
|
763,369
|
|
|
—
|
|
|
767,513
|
|
|
—
|
|
||||
Other secured borrowings
|
502,599
|
|
|
—
|
|
|
502,268
|
|
|
—
|
|
|
Year ended December 31, 2016
|
|
Year ended December 31, 2015
|
||||
Mortgage loans at fair value
|
|
|
|
||||
Beginning balance
|
$
|
960,534
|
|
|
$
|
1,959,044
|
|
Change in unrealized gain on mortgage loans at fair value
|
(409
|
)
|
|
177,545
|
|
||
Net realized gain on mortgage loans at fair value
|
35,760
|
|
|
58,061
|
|
||
Transfers of mortgage loans at fair value to mortgage loans held for sale, net
|
(195,461
|
)
|
|
(535,836
|
)
|
||
Mortgage loans at fair value dispositions and payments
|
(151,029
|
)
|
|
(257,505
|
)
|
||
Real estate tax advances to borrowers
|
18,013
|
|
|
29,261
|
|
||
Transfer of mortgage loans at fair value to real estate owned, net
|
(206,964
|
)
|
|
(470,036
|
)
|
||
Ending balance
|
$
|
460,444
|
|
|
$
|
960,534
|
|
|
|
|
|
||||
Change in unrealized gain on mortgage loans at fair value held at the end of the period
|
$
|
(46,281
|
)
|
|
$
|
78,453
|
|
Input
|
|
December 31, 2016
|
|
December 31, 2015
|
Equity discount rate
|
|
17.0%
|
|
15.0%
|
Debt to asset ratio
|
|
65.0%
|
|
65.0%
|
Cost of funds
|
|
3.5% over 1 month LIBOR
|
|
3.5% over 1 month LIBOR
|
Annual change in home pricing index
|
|
-11.2% to 15.1%
|
|
0.0% to 10.2%
|
Loan resolution probabilities — modification
|
|
0% to 5.9%
|
|
0% to 44.7%
|
Loan resolution probabilities — rental
|
|
0%
|
|
0% to 100.0%
|
Loan resolution probabilities — liquidation
|
|
31.8% to 100%
|
|
0% to 100.0%
|
Loan resolution probabilities — paid in full
|
|
0% to 66.2%
|
|
0% to 66.0%
|
Loan resolution timelines (in years)
|
|
0.1 to 5.8
|
|
0.1 to 5.6
|
Value of underlying properties
|
|
$3,500 to $4,600,000
|
|
$3,000 to $4,500,000
|
•
|
Credit Suisse (“CS”) is the lender on the repurchase agreement entered into on March 22, 2013, (the “CS repurchase agreement”) with an initial aggregate maximum borrowing capacity of
$100.0 million
. During 2014, 2015 and 2016, the CS repurchase agreement was amended on several occasions, ultimately increasing the aggregate maximum borrowing capacity to
$600.0 million
as of December 31, 2016 with a maturity date of November 17, 2017. Pursuant to the amended and restated repurchase agreement with CS dated November 18, 2016, the aggregate maximum borrowing capacity of the CS repurchase agreement will decrease incrementally on each of January 31, 2017; February 28, 2017; June 30, 2017 and September 30, 2017 to an aggregate of
$350 million
as of September 30, 2017.
|
•
|
Deutsche Bank (“DB”) was the lender on the repurchase agreement dated September 12, 2013 (the “DB repurchase agreement”). During March 2016, upon expiration of the DB repurchase agreement in accordance with its terms, we repaid the remaining balance of the DB repurchase agreement and transferred the collateral to our other existing facilities.
|
•
|
Wells Fargo (“Wells”) was the lender under the repurchase agreement dated September 23, 2013 (the “Wells repurchase agreement”). During November 2016, we terminated the Wells repurchase agreement and transferred the collateral to the CS repurchase agreement.
|
•
|
Nomura Corporate Funding Americas, LLC (“Nomura”) is the lender under a loan agreement dated April 10, 2015 (the “Nomura loan agreement”) with an initial aggregate maximum funding capacity of
$100.0 million
. The Nomura loan agreement was amended during 2015 and 2016, ultimately increasing the maximum funding capacity to
$250.0 million
on December 31, 2016 with a maturity date of April 6, 2017.
|
•
|
In connection with the seller financing related to the HOME SFR Transaction, on September 30, 2016, we entered into a loan agreement (the “MSR loan agreement”) between HOME Borrower, the sellers (collectively, the “Lenders”) and MSR Lender LLC, as agent. Pursuant to the MSR loan agreement, HOME Borrower borrowed approximately
$489.3 million
from the Lenders (the “MSR Loan”). Effective October 14, 2016, the MSR loan agreement was assigned to MSR Lender, LLC (“MSR Lender”) and, in connection with MSR Lender’s securitization of the MSR Loan, we and MSR Lender amended and restated the MSR loan agreement to match the terms of the bonds in MSR Lender's securitization of the MSR Loan. The aggregate amount of the MSR Loan and the aggregate interest rate of the MSR Loan remained unchanged from the original loan agreement. The MSR Loan is a floating rate loan, composed of eight floating rate components, interest on each of which is computed monthly based on one-month LIBOR plus a fixed component spread. The initial maturity date of the MSR Loan is November 9, 2018 (the “Initial Maturity Date”). HOME Borrower has the option to extend the MSR Loan beyond the Initial Maturity Date for
three
successive
one
-year terms to an ultimate maturity date of November 9, 2021, provided, among other things, that there is no event of default under the MSR loan agreement on each maturity date. The MSR Loan is secured by the membership interests of HOME Borrower and the properties and other assets of HOME Borrower.
|
|
|
Maximum Borrowing Capacity
|
|
Book Value of Collateral
|
|
Amount Outstanding
|
|
Amount of Available Funding
|
||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
CS repurchase agreement due November 17, 2017
|
|
$
|
600,000
|
|
|
$
|
902,339
|
|
|
$
|
582,659
|
|
|
$
|
17,341
|
|
Nomura loan agreement due April 6, 2017
|
|
250,000
|
|
|
238,142
|
|
|
155,054
|
|
|
94,946
|
|
||||
MSR loan agreement due November 9, 2018
|
|
489,259
|
|
|
638,799
|
|
|
489,259
|
|
|
—
|
|
||||
Less: deferred debt issuance costs
|
|
—
|
|
|
—
|
|
|
(6,000
|
)
|
|
—
|
|
||||
|
|
$
|
1,339,259
|
|
|
$
|
1,779,280
|
|
|
$
|
1,220,972
|
|
|
$
|
112,287
|
|
December 31, 2015
|
|
|
|
|
|
|
|
|
||||||||
CS repurchase agreement due April 18, 2016
|
|
$
|
275,000
|
|
|
$
|
335,184
|
|
|
$
|
194,346
|
|
|
$
|
80,654
|
|
Wells repurchase agreement due September 27, 2017
|
|
750,000
|
|
|
708,275
|
|
|
371,130
|
|
|
378,870
|
|
||||
DB repurchase agreement due March 11, 2016
|
|
54,944
|
|
|
130,863
|
|
|
54,944
|
|
|
—
|
|
||||
Nomura loan agreement due April 8, 2016
|
|
200,000
|
|
|
204,578
|
|
|
147,093
|
|
|
52,907
|
|
||||
Less: deferred debt issuance costs
|
|
—
|
|
|
—
|
|
|
(4,144
|
)
|
|
—
|
|
||||
|
|
$
|
1,279,944
|
|
|
$
|
1,378,900
|
|
|
$
|
763,369
|
|
|
$
|
512,431
|
|
|
|
Interest Rate
|
|
Amount Outstanding
|
|||
December 31, 2016
|
|
|
|
|
|||
ARLP Securitization Trust, Series 2015-1
|
|
|
|
|
|
||
ARLP 2015-1 Class A Notes due May 25, 2055 (1)
|
|
4.01
|
%
|
|
178,971
|
|
|
ARLP 2015-1 Class M Notes due May 25, 2044
|
|
—
|
%
|
|
60,000
|
|
|
Intercompany eliminations
|
|
|
|
|
|
||
Elimination of ARLP 2015-1 Class A Notes due to ARNS, Inc.
|
|
|
|
(34,000
|
)
|
||
Elimination of ARLP 2015-1 Class M Notes due to ARLP
|
|
|
|
(60,000
|
)
|
||
Less: deferred debt issuance costs
|
|
|
|
(872
|
)
|
||
|
|
|
|
$
|
144,099
|
|
|
December 31, 2015
|
|
|
|
|
|||
ARLP Securitization Trust, Series 2014-1
|
|
|
|
|
|||
ARLP 2014-1 Class A Notes (2)
|
|
3.47
|
%
|
|
$
|
136,404
|
|
ARLP 2014-1 Class M Notes (2)
|
|
4.25
|
%
|
|
32,000
|
|
|
ARLP Securitization Trust, Series 2014-2
|
|
|
|
|
|||
ARLP 2014-2 Class A Notes (2)
|
|
3.63
|
%
|
|
244,935
|
|
|
ARLP 2014-2 Class M Notes (2)
|
|
—
|
%
|
|
234,010
|
|
|
ARLP Securitization Trust, Series 2015-1
|
|
|
|
|
|||
ARLP 2015-1 Class A Notes due May 25, 2055 (1)
|
|
4.01
|
%
|
|
203,429
|
|
|
ARLP 2015-1 Class M Notes due May 25, 2044
|
|
—
|
%
|
|
60,000
|
|
|
Intercompany eliminations
|
|
|
|
|
|||
Elimination of ARLP 2014-1 Class M Notes due to ARNS, Inc.
|
|
|
|
(32,000
|
)
|
||
Elimination of ARLP 2014-2 Class A Notes due to ARNS, Inc.
|
|
|
|
(45,138
|
)
|
||
Elimination of ARLP 2014-2 Class M Notes due to ARLP
|
|
|
|
(234,010
|
)
|
||
Elimination of ARLP 2015-1 Class A Notes due to ARNS, Inc.
|
|
|
|
(34,000
|
)
|
||
Elimination of ARLP 2015-1 Class M Notes due to ARLP
|
|
|
|
(60,000
|
)
|
||
Less: deferred debt issuance costs
|
|
|
|
(3,031
|
)
|
||
|
|
|
|
$
|
502,599
|
|
(1)
|
The expected redemption date for the Class A Notes ranges from June 25, 2018 to June 25, 2019.
|
(2)
|
Repaid during March 2016.
|
•
|
Base Management Fee
. AAMC is entitled to a quarterly Base Management Fee equal to
1.5%
of the product of (i) our average invested capital (as defined in the Current AMA) for the quarter
multiplied by
(ii)
0.25
, while we have fewer than
2,500
SFR properties actually rented (“Rental Properties”). The Base Management Fee percentage increases to
1.75%
of invested capital while we have between
2,500
and
4,499
Rental Properties and increases to
2.0%
of invested capital while we have
4,500
or more Rental Properties;
|
•
|
Incentive Management Fee
. AAMC is entitled to a quarterly Incentive Management Fee equal to
20%
of the amount by which our return on invested capital (based on AFFO defined as our net income attributable to holders of common stock calculated in accordance with GAAP
plus
real estate depreciation expense
minus
recurring capital expenditures on all of our real estate assets owned) exceeds an annual hurdle return rate of between
7.0%
and
8.25%
(depending on the
10
-year treasury rate). The Incentive Management Fee increases to
22.5%
while we have between
2,500
and
4,499
Rental Properties and increases to
25%
while we have
4,500
or more Rental Properties; and
|
•
|
Conversion Fee
. AAMC is entitled to a quarterly conversion fee equal to
1.5%
of the market value of the SFR properties leased by us for the first time during the quarter.
|
(i)
|
2%
of all cash available for distribution by us to our stockholders and to AAMC as incentive management fee, which we referred to as “available cash,” until the aggregate amount per share of available cash for the quarter (based on the average number of shares of our common stock outstanding during the quarter), which we referred to as the “quarterly per share distribution amount,” exceeded
$0.161
, then
|
(ii)
|
15%
of all additional available cash for the quarter until the quarterly per share distribution amount exceeded
$0.193
, then
|
(iii)
|
25%
of all additional available cash for the quarter until the quarterly per share distribution amount exceeded
$0.257
, and thereafter
|
(iv)
|
50%
of all additional available cash for the quarter.
|
|
|
Counterparty
|
|
Year ended December 31, 2016
|
|
Year ended December 31, 2015
|
|
Year ended December 31, 2014
|
||||||
Base management fees (1)
|
|
AAMC
|
|
$
|
17,334
|
|
|
$
|
13,935
|
|
|
$
|
—
|
|
Conversion fees (1)
|
|
AAMC
|
|
1,841
|
|
|
1,037
|
|
|
—
|
|
|||
Management incentive fees (1)
|
|
AAMC
|
|
—
|
|
|
7,994
|
|
|
67,949
|
|
|||
Expense reimbursements (2)
|
|
AAMC
|
|
816
|
|
|
750
|
|
|
6,070
|
|
|||
Dividend income (3) (4)
|
|
NewSource
|
|
—
|
|
|
1,518
|
|
|
2,160
|
|
|||
Interest expense (5)
|
|
NewSource
|
|
—
|
|
|
563
|
|
|
156
|
|
|||
Professional fee sharing for negotiation of Current AMA (4)
|
|
AAMC
|
|
—
|
|
|
2,000
|
|
|
—
|
|
|||
Residential property operating expenses
|
|
Ocwen/ASPS
|
|
—
|
|
|
—
|
|
|
21,612
|
|
|||
Mortgage loan servicing costs
|
|
Ocwen
|
|
—
|
|
|
—
|
|
|
65,363
|
|
|||
Acquisition fees and costs
|
|
ASPS
|
|
—
|
|
|
—
|
|
|
1,039
|
|
|||
General and administrative expenses
|
|
ASPS
|
|
—
|
|
|
—
|
|
|
1,972
|
|
(1)
|
Included in management fees in the consolidated statements of operations.
|
(2)
|
Included in general and administrative expenses in the consolidated statements of operations.
|
(3)
|
Dividends on our preferred stock of NewSource (see
Note 6
).
|
(4)
|
Included in other income (expense) in the consolidated statement of operations.
|
(5)
|
Interest expense related to ARLP 2014-1 Class M Notes issued to NewSource. These Class M Notes were repurchased on September 14, 2015.
|
|
|
Number of Options
|
|
Weighted Average Exercise Price per Share
|
|||
December 31, 2013
|
|
909,759
|
|
|
$
|
1.73
|
|
Exercised
|
|
(666,409
|
)
|
|
1.39
|
|
|
Canceled
|
|
(1,584
|
)
|
|
2.32
|
|
|
December 31, 2014
|
|
241,766
|
|
|
2.69
|
|
|
Exercised
|
|
(26,224
|
)
|
|
4.21
|
|
|
Forfeited or canceled
|
|
(10,574
|
)
|
|
6.30
|
|
|
December 31, 2015
|
|
204,968
|
|
|
2.30
|
|
|
Granted
|
|
695,187
|
|
|
10.04
|
|
|
Exercised
|
|
(34,464
|
)
|
|
1.71
|
|
|
Forfeited or canceled
|
|
(2,714
|
)
|
|
5.47
|
|
|
December 31, 2016
|
|
862,977
|
|
|
$
|
8.55
|
|
|
Year ended December 31, 2016
|
Risk free interest rate (1)
|
1.38%
|
Common stock dividend yield
|
5.98%
|
Expected volatility (2)
|
38.47%
|
(1)
|
Represents the interest rate as of the grant date on US treasury bonds having the same life as the estimated life of the stock option grants.
|
(2)
|
Based on our historical stock price volatility.
|
|
|
Number of Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
December 31, 2013
|
|
12,090
|
|
|
$
|
18.50
|
|
Granted
|
|
8,245
|
|
|
27.28
|
|
|
Vested (1)
|
|
(12,090
|
)
|
|
18.50
|
|
|
December 31, 2014
|
|
8,245
|
|
|
$
|
27.28
|
|
Granted
|
|
9,924
|
|
|
18.14
|
|
|
Vested (1)
|
|
(7,644
|
)
|
|
27.28
|
|
|
Forfeit
|
|
(601
|
)
|
|
27.28
|
|
|
December 31, 2015
|
|
9,924
|
|
|
$
|
18.14
|
|
Granted
|
|
274,760
|
|
|
9.94
|
|
|
Vested (1)
|
|
(10,531
|
)
|
|
17.20
|
|
|
Forfeit
|
|
(7,255
|
)
|
|
9.84
|
|
|
December 31, 2016
|
|
266,898
|
|
|
$
|
9.97
|
|
|
|
December 31, 2016
|
|
Stock options outstanding
|
|
862,977
|
|
Possible future issuances under share-based compensation plans
|
|
2,111,661
|
|
|
|
2,974,638
|
|
|
|
Year ended December 31, 2016
|
|
Year ended December 31, 2015
|
|
Year ended December 31, 2014
|
||||||
Numerator
|
|
|
|
|
|
|
||||||
Net (loss) income
|
|
$
|
(228,028
|
)
|
|
$
|
(46,005
|
)
|
|
$
|
188,853
|
|
|
|
|
|
|
|
|
||||||
Denominator
|
|
|
|
|
|
|
||||||
Weighted average common stock outstanding – basic
|
|
54,490,979
|
|
|
56,843,028
|
|
|
56,247,376
|
|
|||
Stock options using the treasury method
|
|
—
|
|
|
—
|
|
|
335,275
|
|
|||
Restricted stock
|
|
—
|
|
|
—
|
|
|
5,486
|
|
|||
Weighted average common stock outstanding – diluted
|
|
54,490,979
|
|
|
56,843,028
|
|
|
56,588,137
|
|
|||
|
|
|
|
|
|
|
||||||
(Loss) earnings per basic share
|
|
$
|
(4.18
|
)
|
|
$
|
(0.81
|
)
|
|
$
|
3.36
|
|
(Loss) earnings per diluted share
|
|
$
|
(4.18
|
)
|
|
$
|
(0.81
|
)
|
|
$
|
3.34
|
|
|
|
Year ended December 31, 2016
|
|
Year ended December 31, 2015
|
|
Year ended December 31, 2014
|
|||
Denominator (in weighted-average shares)
|
|
|
|
|
|
|
|||
Stock options
|
|
151,756
|
|
|
187,474
|
|
|
—
|
|
Restricted stock
|
|
24,146
|
|
|
3,279
|
|
|
—
|
|
|
|
2016
|
||||||||||||||||||
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
|
Full Year
|
||||||||||
Total revenues
|
|
$
|
40,061
|
|
|
$
|
238
|
|
|
$
|
4,401
|
|
|
$
|
12,058
|
|
|
$
|
56,758
|
|
Net loss
|
|
(45,658
|
)
|
|
(63,528
|
)
|
|
(57,638
|
)
|
|
(61,204
|
)
|
|
(228,028
|
)
|
|||||
Loss per basic share of common stock
|
|
(0.82
|
)
|
|
(1.16
|
)
|
|
(1.06
|
)
|
|
(1.14
|
)
|
|
(4.18
|
)
|
|||||
Loss per diluted share of common stock
|
|
(0.82
|
)
|
|
(1.16
|
)
|
|
(1.06
|
)
|
|
(1.14
|
)
|
|
(4.18
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
2015
|
||||||||||||||||||
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
|
Full Year
|
||||||||||
Total revenues
|
|
$
|
88,915
|
|
|
$
|
76,519
|
|
|
$
|
58,523
|
|
|
$
|
24,141
|
|
|
$
|
248,098
|
|
Net income (loss)
|
|
12,424
|
|
|
13,092
|
|
|
(5,363
|
)
|
|
(66,158
|
)
|
|
(46,005
|
)
|
|||||
Earnings (loss) per basic share of common stock
|
|
0.22
|
|
|
0.23
|
|
|
(0.09
|
)
|
|
(1.18
|
)
|
|
(0.81
|
)
|
|||||
Earnings (loss) per diluted share of common stock
|
|
0.22
|
|
|
0.23
|
|
|
(0.09
|
)
|
|
(1.18
|
)
|
|
(0.81
|
)
|
State
|
No. of Props
|
Type
|
Encum-
brances
|
Initial Cost to Company
|
Capitalized Costs Subsequent to Acquisition
|
Gross Amount at which Carried at Close of Period (2)
|
Accum Depr and Reserves (2)
|
WA Age (1)
|
Date Acquired
|
Life on which Depr is Calc
|
|||||||||||
Alabama
|
46
|
|
SFR
|
$
|
2,717
|
|
$
|
6,613
|
|
$
|
495
|
|
$
|
7,108
|
|
$
|
400
|
|
20.9
|
2014 - 2016
|
3-27.5 years
|
Arizona
|
47
|
|
SFR
|
6,571
|
|
13,133
|
|
854
|
|
13,987
|
|
690
|
|
22.3
|
2013 - 2016
|
3-27.5 years
|
|||||
Arkansas
|
24
|
|
SFR
|
995
|
|
2,567
|
|
294
|
|
2,861
|
|
532
|
|
33.3
|
2013 - 2016
|
3-27.5 years
|
|||||
California
|
244
|
|
SFR
|
47,615
|
|
91,937
|
|
4,381
|
|
96,318
|
|
5,605
|
|
37.8
|
2013 - 2016
|
3-27.5 years
|
|||||
Colorado
|
24
|
|
SFR
|
2,373
|
|
5,504
|
|
498
|
|
6,002
|
|
320
|
|
31.1
|
2014 - 2016
|
3-27.5 years
|
|||||
Connecticut
|
50
|
|
SFR
|
3,647
|
|
9,535
|
|
579
|
|
10,114
|
|
874
|
|
57.8
|
2014 - 2016
|
3-27.5 years
|
|||||
Delaware
|
22
|
|
SFR
|
1,400
|
|
4,378
|
|
156
|
|
4,534
|
|
259
|
|
35.4
|
2014 - 2016
|
3-27.5 years
|
|||||
Dist. of Columbia
|
2
|
|
SFR
|
370
|
|
712
|
|
—
|
|
712
|
|
—
|
|
107.1
|
2016 - 2016
|
|
|||||
Florida
|
1,306
|
|
SFR
|
108,738
|
|
186,061
|
|
21,700
|
|
207,761
|
|
8,267
|
|
27.9
|
2013 - 2016
|
3-27.5 years
|
|||||
Georgia
|
2,721
|
|
SFR
|
190,978
|
|
266,573
|
|
31,652
|
|
298,225
|
|
9,272
|
|
30.8
|
2013 - 2016
|
3-27.5 years
|
|||||
Hawaii
|
3
|
|
SFR
|
407
|
|
639
|
|
—
|
|
639
|
|
50
|
|
33.9
|
2014 - 2016
|
|
|||||
Idaho
|
6
|
|
SFR
|
238
|
|
840
|
|
61
|
|
901
|
|
48
|
|
37.5
|
2014 - 2015
|
3-27.5 years
|
|||||
Illinois
|
308
|
|
SFR
|
26,039
|
|
54,453
|
|
5,087
|
|
59,540
|
|
5,292
|
|
46.4
|
2013 - 2016
|
3-27.5 years
|
|||||
Indiana
|
519
|
|
SFR
|
46,771
|
|
63,832
|
|
5,989
|
|
69,821
|
|
2,197
|
|
20.9
|
2013 - 2016
|
3-27.5 years
|
|||||
Iowa
|
6
|
|
SFR
|
250
|
|
446
|
|
70
|
|
516
|
|
69
|
|
69.0
|
2015 - 2016
|
|
|||||
Kansas
|
18
|
|
SFR
|
1,698
|
|
2,285
|
|
386
|
|
2,671
|
|
124
|
|
39.0
|
2014 - 2016
|
3-27.5 years
|
|||||
Kentucky
|
41
|
|
SFR
|
2,607
|
|
4,536
|
|
437
|
|
4,973
|
|
116
|
|
30.9
|
2013 - 2016
|
3-27.5 years
|
|||||
Louisiana
|
16
|
|
SFR
|
534
|
|
1,898
|
|
282
|
|
2,180
|
|
84
|
|
28.4
|
2013 - 2016
|
3-27.5 years
|
|||||
Maine
|
6
|
|
SFR
|
86
|
|
849
|
|
—
|
|
849
|
|
89
|
|
54.0
|
2014 - 2016
|
|
|||||
Maryland
|
317
|
|
SFR
|
30,814
|
|
63,869
|
|
3,948
|
|
67,817
|
|
4,596
|
|
35.1
|
2013 - 2016
|
3-27.5 years
|
|||||
Massachusetts
|
69
|
|
SFR
|
4,615
|
|
15,534
|
|
1,166
|
|
16,700
|
|
1,186
|
|
78.6
|
2014 - 2016
|
3-27.5 years
|
|||||
Michigan
|
42
|
|
SFR
|
3,849
|
|
6,843
|
|
722
|
|
7,565
|
|
630
|
|
39.6
|
2014 - 2016
|
3-27.5 years
|
|||||
Minnesota
|
103
|
|
SFR
|
13,055
|
|
17,575
|
|
1,168
|
|
18,743
|
|
386
|
|
65.1
|
2014 - 2016
|
3-27.5 years
|
|||||
Mississippi
|
87
|
|
SFR
|
9,642
|
|
12,450
|
|
891
|
|
13,341
|
|
110
|
|
16.6
|
2014 - 2016
|
3-27.5 years
|
|||||
Missouri
|
91
|
|
SFR
|
9,271
|
|
12,534
|
|
1,376
|
|
13,910
|
|
611
|
|
23.5
|
2013 - 2016
|
3-27.5 years
|
|||||
Montana
|
1
|
|
SFR
|
78
|
|
140
|
|
3
|
|
143
|
|
13
|
|
24.0
|
2015 - 2015
|
|
|||||
Nevada
|
19
|
|
SFR
|
1,250
|
|
2,823
|
|
263
|
|
3,086
|
|
148
|
|
24.5
|
2013 - 2016
|
3-27.5 years
|
|||||
New Hampshire
|
4
|
|
SFR
|
210
|
|
661
|
|
—
|
|
661
|
|
82
|
|
96.9
|
2014 - 2015
|
|
|||||
New Jersey
|
188
|
|
SFR
|
11,887
|
|
32,383
|
|
1,233
|
|
33,616
|
|
2,895
|
|
59.0
|
2014 - 2016
|
3-27.5 years
|
|||||
New Mexico
|
51
|
|
SFR
|
3,058
|
|
6,386
|
|
497
|
|
6,883
|
|
726
|
|
24.5
|
2013 - 2016
|
3-27.5 years
|
|||||
New York
|
70
|
|
SFR
|
3,917
|
|
14,430
|
|
634
|
|
15,064
|
|
1,443
|
|
67.5
|
2013 - 2016
|
3-27.5 years
|
|||||
North Carolina
|
575
|
|
SFR
|
50,037
|
|
73,290
|
|
5,673
|
|
78,963
|
|
2,334
|
|
19.7
|
2013 - 2016
|
3-27.5 years
|
|||||
Ohio
|
55
|
|
SFR
|
3,247
|
|
7,069
|
|
954
|
|
8,023
|
|
822
|
|
35.5
|
2013 - 2016
|
3-27.5 years
|
|||||
Oklahoma
|
190
|
|
SFR
|
21,506
|
|
26,025
|
|
1,658
|
|
27,683
|
|
452
|
|
25.2
|
2014 - 2016
|
3-27.5 years
|
|||||
Oregon
|
21
|
|
SFR
|
1,981
|
|
4,931
|
|
93
|
|
5,024
|
|
74
|
|
35.9
|
2014 - 2016
|
3-27.5 years
|
|||||
Pennsylvania
|
126
|
|
SFR
|
7,874
|
|
17,428
|
|
2,176
|
|
19,604
|
|
1,795
|
|
58.6
|
2013 - 2016
|
3-27.5 years
|
|||||
Rhode Island
|
46
|
|
SFR
|
3,480
|
|
5,850
|
|
787
|
|
6,637
|
|
336
|
|
78.2
|
2014 - 2016
|
3-27.5 years
|
|||||
South Carolina
|
94
|
|
SFR
|
6,039
|
|
11,709
|
|
1,332
|
|
13,041
|
|
982
|
|
21.9
|
2013 - 2016
|
3-27.5 years
|
|||||
South Dakota
|
1
|
|
SFR
|
—
|
|
95
|
|
—
|
|
95
|
|
—
|
|
35.0
|
2015 - 2015
|
|
|||||
Tennessee
|
990
|
|
SFR
|
112,079
|
|
138,533
|
|
9,788
|
|
148,321
|
|
1,538
|
|
20.0
|
2014 - 2016
|
3-27.5 years
|
|||||
Texas
|
1,772
|
|
SFR
|
185,329
|
|
247,787
|
|
15,500
|
|
263,287
|
|
3,433
|
|
26.1
|
2013 - 2016
|
3-27.5 years
|
Utah
|
29
|
|
SFR
|
2,849
|
|
5,219
|
|
592
|
|
5,811
|
|
786
|
|
39.0
|
2013 - 2016
|
3-27.5 years
|
|||||
Vermont
|
5
|
|
SFR
|
346
|
|
840
|
|
17
|
|
857
|
|
152
|
|
103.5
|
2014 - 2016
|
|
|||||
Virginia
|
56
|
|
SFR
|
8,890
|
|
15,605
|
|
1,259
|
|
16,864
|
|
1,672
|
|
29.6
|
2013 - 2016
|
3-27.5 years
|
|||||
Washington
|
90
|
|
SFR
|
9,105
|
|
18,102
|
|
615
|
|
18,717
|
|
585
|
|
41.6
|
2013 - 2016
|
3-27.5 years
|
|||||
West Virginia
|
2
|
|
SFR
|
183
|
|
300
|
|
34
|
|
334
|
|
48
|
|
13.0
|
2015 - 2016
|
3-27.5 years
|
|||||
Wisconsin
|
30
|
|
SFR
|
1,547
|
|
3,666
|
|
480
|
|
4,146
|
|
478
|
|
45.4
|
2014 - 2016
|
3-27.5 years
|
|||||
Total (2)
|
10,533
|
|
|
$
|
950,172
|
|
$
|
1,478,868
|
|
125,780
|
|
1,604,648
|
|
62,601
|
|
31.1
|
|
|
(1)
|
Weighted average age is based on the age of the property weighted by gross amount at which carried at close of period.
|
(2)
|
The following table sets forth the activity of real estate assets and accumulated depreciation ($ in thousands):
|
|
|
Year ended December 31, 2016
|
|
Year ended December 31, 2015
|
|
Year ended December 31, 2014
|
||||||
Real estate assets:
|
|
|
|
|
|
|
||||||
Beginning balance
|
|
$
|
1,048,142
|
|
|
$
|
643,974
|
|
|
$
|
37,113
|
|
Acquisitions through foreclosure
|
|
206,987
|
|
|
470,221
|
|
|
587,268
|
|
|||
Other acquisitions
|
|
778,173
|
|
|
118,297
|
|
|
34,104
|
|
|||
Improvements
|
|
50,182
|
|
|
25,802
|
|
|
16,872
|
|
|||
Cost of real estate sold
|
|
(478,836
|
)
|
|
(210,152
|
)
|
|
(31,383
|
)
|
|||
Ending balance (1)
|
|
$
|
1,604,648
|
|
|
$
|
1,048,142
|
|
|
$
|
643,974
|
|
|
|
|
|
|
|
|
||||||
Accumulated depreciation and reserves for selling costs and impairment:
|
|
|
|
|
|
|
||||||
Beginning balance
|
|
$
|
61,716
|
|
|
$
|
19,367
|
|
|
$
|
25
|
|
Depreciation expense
|
|
20,840
|
|
|
6,414
|
|
|
1,067
|
|
|||
Selling cost and impairment
|
|
56,384
|
|
|
70,124
|
|
|
21,788
|
|
|||
Real estate sold
|
|
(76,339
|
)
|
|
(34,189
|
)
|
|
(3,513
|
)
|
|||
Ending balance
|
|
$
|
62,601
|
|
|
$
|
61,716
|
|
|
$
|
19,367
|
|
Description (Face Value of Loan)
|
|
Loan Count
|
|
Interest Rate
|
|
Maturity
|
|
Carrying Amount of Mortgages
(1)
|
|
Principal Amount of Loans Subject to Delinquent Principal or Interest
|
|||||
$0-49,999
|
|
182
|
|
|
2.000% - 12.375%
|
|
08/01/2009 - 01/01/2054
|
|
$
|
6,614
|
|
|
$
|
5,426
|
|
$50,000-99,999
|
|
391
|
|
|
0.000% - 12.350%
|
|
02/01/2011 - 09/01/2054
|
|
22,315
|
|
|
26,988
|
|
||
$100,000-149,999
|
|
526
|
|
|
2.000% - 12.650%
|
|
11/01/2010 - 12/01/2054
|
|
41,747
|
|
|
60,634
|
|
||
$150,000-199,999
|
|
450
|
|
|
2.000% - 12.480%
|
|
08/01/2010 - 05/01/2056
|
|
46,368
|
|
|
72,092
|
|
||
$200,000-249,999
|
|
376
|
|
|
2.000% - 11.650%
|
|
04/01/2024 - 03/01/2053
|
|
49,372
|
|
|
77,119
|
|
||
$250,000+
|
|
966
|
|
|
1.000% - 12.250%
|
|
03/01/2011 - 04/01/2056
|
|
294,028
|
|
|
409,889
|
|
||
Total (2) (3)
|
|
2,891
|
|
|
|
|
|
|
$
|
460,444
|
|
|
$
|
652,148
|
|
(1)
|
The carrying value of an asset is based on our fair value model. The significant unobservable inputs used in the fair value measurement of our mortgage loans are discount rates, forecasts of future home prices, alternate loan resolution probabilities, resolution timelines and the value of underlying properties. Significant changes in any of these inputs in isolation could result in a significant change to the fair value measurement. The substantial majority of the mortgage loans are significantly delinquent and have varying monthly payment requirements. For a more complete description of the fair value measurements and the factors that may significantly affect the carrying value of our assets, please see
Note 7
to our consolidated financial statements.
|
(2)
|
The aggregate cost for federal income tax purposes is
$603.1 million
as of
December 31, 2016
.
|
(3)
|
The following table sets forth the activity of mortgage loans ($ in thousands):
|
|
|
Year ended December 31, 2016
|
|
Year ended December 31, 2015
|
|
Year ended December 31, 2014
|
||||||
Mortgage loans at fair value
|
|
|
|
|
|
|
||||||
Beginning balance
|
|
$
|
960,534
|
|
|
$
|
1,959,044
|
|
|
$
|
1,207,163
|
|
Investment in mortgage loans
|
|
—
|
|
|
—
|
|
|
1,122,408
|
|
|||
Change in unrealized gain on mortgage loans
|
|
(409
|
)
|
|
177,545
|
|
|
350,822
|
|
|||
Cost of mortgage loans sold
|
|
(84,673
|
)
|
|
(174,894
|
)
|
|
(151,624
|
)
|
|||
Mortgage loan payments and escrow recoveries
|
|
(30,596
|
)
|
|
(24,550
|
)
|
|
(19,299
|
)
|
|||
Real estate tax advances to borrowers
|
|
18,013
|
|
|
29,261
|
|
|
36,842
|
|
|||
Transfer of mortgage loans to held for sale, net
|
|
(195,461
|
)
|
|
(535,836
|
)
|
|
—
|
|
|||
Transfer of mortgage loans to real estate owned, net
|
|
(206,964
|
)
|
|
(470,036
|
)
|
|
(587,268
|
)
|
|||
Ending balance
|
|
$
|
460,444
|
|
|
$
|
960,534
|
|
|
$
|
1,959,044
|
|
1.01
|
The purpose of the 2016 Equity Incentive Plan (the “
Plan
”) is to afford an incentive to Eligible Persons to continue as non-employee directors, officers, employees, advisors or consultants, to increase their efforts on behalf of Altisource Residential Corporation (the “
Corporation
”) and to promote the success of the Corporation’s business.
|
2.01
|
Definitions.
In addition to the terms defined elsewhere in the Plan, the following terms as used in the Plan shall have the following meanings when used with initial capital letters:
|
(i)
|
the Participant’s willful and intentional repeated failure or refusal, continuing after notice that specifically identifies the breach(es) complained of, to perform substantially his or her material duties, responsibilities and obligations (other than a failure resulting from grantee’s incapacity due to physical or mental illness or other reasons beyond the control of grantee), and which failure or refusal results in demonstrable direct and material injury to the Corporation;
|
(ii)
|
the Participant’s willful and intentional act or failure to act involving fraud, misrepresentation, theft, embezzlement, dishonesty or moral turpitude (collectively, “Fraud”) which results in demonstrable direct and material injury to the Corporation;
|
(iii)
|
the Participant’s conviction of (or a plea of nolo contendere to) an offense which is a felony in the jurisdiction involved or which is a misdemeanor in the jurisdiction involved but which involves Fraud; and
|
(iv)
|
the Participant’s material breach of a written policy of the applicable Employer Entity or the rules of any governmental or regulatory body applicable to the Corporation.
|
(i)
|
The date that a reorganization, merger, consolidation, recapitalization, or similar transaction (other than a spinoff, exchange offer or similar transaction to or with the Corporation’s shareholders) is consummated, unless: (i) at least 50% of the outstanding voting securities of the surviving or resulting entity (including, without limitation, an entity which as a result of such transaction owns the Corporation either directly or through one or more subsidiaries) (“
Resulting Entity
”) are beneficially owned, directly or indirectly, by the persons who were the beneficial owners of the outstanding voting securities of the Corporation immediately prior to such transaction in substantially the same proportions as their beneficial ownership, immediately prior to such transaction, of the outstanding voting securities of the Corporation and (ii) immediately following such transaction no person or persons acting as a group beneficially owns capital stock of the Resulting Entity possessing thirty-five percent (35%) or more of the total voting power of the stock of the Resulting Entity;
|
(ii)
|
The date that a majority of members of the Corporation’s Board is replaced during any twenty-four (24) month period by directors whose appointment or election is not endorsed by a majority of the members of the Corporation’s Board before the date of the appointment or election; provided that no individual shall be considered to be so endorsed if such individual initially assumed office as a result of either an actual or threatened “
Election Contest
” (as described in Rule 14a-11 promulgated under the Securities Exchange Act of 1934) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a “
Proxy Contest
”) including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest;
|
(iii)
|
The date that any one person, or persons acting as a group, other than an employee benefit plan of the Corporation or one of its Affiliates, or a trust thereof, or any underwriter, acquires (or has or have acquired as of the date of the most recent acquisition by such person or persons) beneficial ownership of stock of the Corporation possessing thirty-five percent (35%) or more of the total voting power of the stock of the Corporation; or
|
(iv)
|
The date that any one person acquires, or persons acting as a group acquire (or has or have acquired as of the date of the most recent acquisition by such person or persons), assets from the Corporation that have a total gross fair market value equal to or more than forty percent (40%) of the total gross fair market value of all of the assets of the Corporation immediately before such acquisition or acquisitions.
|
2.02
|
Construction.
For purposes of the Plan, the following rules of construction shall apply:
|
3.01
|
The Plan shall be administered by the Committee, except with respect to the amendment, modification, suspension or early termination of the Plan, which shall be in the power of the Board. Any action duly taken by the Committee will be valid and effective, whether or not the members of the Committee at the time of such action are later determined not to have satisfied the requirements for membership provided herein. The Committee shall have complete, full and final authority to take the following actions, in each case subject to and consistent with the provisions of the Plan:
|
(i)
|
to designate Participants;
|
(ii)
|
to determine the type or types of Awards to be granted to each Participant;
|
(iii)
|
to determine the number of Awards to be granted, the number of Shares or amount of cash or other property to which an Award will relate, the terms and conditions of any Award (including, but not limited to, any exercise price, grant price or purchase price, any limitation or restriction, any schedule for lapse of limitations, forfeiture restrictions or restrictions on exercisability or transferability, and accelerations or waivers thereof, including in the case of a Change of Control based in each case on such considerations as the Committee shall determine), and all other matters to be determined in connection with an Award;
|
(iv)
|
to determine whether, to what extent and under what circumstances an Award may be settled in, or the exercise price of an Award may be paid in cash, Shares, other Awards or other property, or an Award may be accelerated, vested, canceled, forfeited, exchanged or surrendered;
|
(v)
|
to interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan;
|
(vi)
|
to prescribe the form of each Award Agreement, which need not be identical for each Participant;
|
(vii)
|
to adopt, amend, suspend, waive and rescind such rules and regulations as the Committee may deem necessary or advisable to administer the Plan;
|
(viii)
|
to correct any defect or supply any omission or reconcile any inconsistency or resolve any ambiguity, and to construe and interpret the Plan, the rules and regulations, any Award Agreement or other instrument entered into or Award made under the Plan;
|
(ix)
|
to make all other decisions and determinations as may be required under the terms of the Plan or as the Committee may deem necessary or advisable for the administration of the Plan; and
|
(x)
|
to make such filings and take such actions as may be required from time to time by appropriate state, regulatory and governmental agencies. Any action of the Committee with respect to the Plan shall be final, conclusive and binding on all Persons, including the Corporation, Subsidiaries, Participants and any Person claiming any rights under the Plan from or through any Participants. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. The Committee may delegate to officers, managers and/or agents of the Corporation or any Subsidiary the authority, subject to such terms as the Committee shall determine and applicable legal and regulatory requirements, to perform administrative and other functions under the Plan. Each member of the Committee shall be entitled to, in good faith, rely or act upon any report or other information furnished to him by an officer, manager or other employee of the Corporation or a Subsidiary, the Corporation’s independent certified public accountants, or any executive compensation consultant or other professional retained by the Corporation and/or Committee to assist in the administration of the Plan. Neither the Corporation nor any member of the Committee or the Board shall be liable for any action or determination made in good faith by the Committee or the Board with respect to the Plan or any Award thereunder.
|
4.01
|
The maximum number of Shares which may be issued and in respect of which Awards may be granted under the Plan shall be limited to 3,073,746 shares of Common Stock. Each Share issued under the Plan pursuant to an Award shall reduce the number of available Shares by 1.00.
|
4.02
|
For purposes of this Section 4, the number of Shares to which an Award relates shall be counted against the number of Shares available under the Plan at the time of grant of the Award, unless such number of Shares cannot be determined at that time, in which case the number of Shares actually distributed pursuant to the Award shall be counted against the number of Shares available under the Plan at the time of distribution; provided, however, that Awards related to or retroactively added to, or granted in tandem with, substituted for or converted into, other Awards shall be counted or not counted against the number of Shares reserved and available under the Plan in accordance with procedures adopted by the Committee so as to ensure appropriate counting but avoid double counting.
|
4.03
|
If any Shares to which an Award relates are forfeited or the Award otherwise terminates without payment being made to the Participant in the form of Shares or if payment is made to the Participant in the form of cash, cash equivalents or other property other than Shares, any Shares counted against the number of Shares available under the Plan with respect to such Award shall, to the extent of any such forfeiture or termination or alternative payment, again be available for Awards under the Plan. If the exercise price or grant price of an Award is paid by delivering to the Corporation Shares previously owned by the Participant or if Shares are delivered or withheld for purposes of satisfying a tax withholding obligation, the number of Shares covered by the Award equal to the number of Shares so delivered or withheld shall, however, be counted against the number of Shares granted and shall not again be available for Awards under the Plan. Any Shares distributed pursuant to an Award may consist, in whole or part, of authorized and unissued Shares, including Shares repurchased by the Corporation for purposes of the Plan.
|
4.04
|
Nothing contained in the Plan shall be construed to limit the right of the Committee to grant Awards under the Plan in connection with the acquisition, whether by purchase, merger, consolidation or other corporate transaction, of the business or assets of any corporation or other entity. Without limiting the foregoing, the Committee may grant Awards under the Plan to an employee or other individual service provider of another entity who becomes an Eligible Person by reason of any such corporate transaction in substitution for awards previously granted by such entity to such person (any such Award, a “
Substitute Award
”). The terms and conditions of Substitute Awards may vary from the terms and conditions that would otherwise be required by the Plan solely to the extent the Committee deems necessary for such purpose. Any Substitute Awards shall not (a) reduce the number of shares of Common Stock available for issuance under the Plan, (b)
|
4.05
|
Nothing contained in the Plan shall be construed to limit the right of the Committee to assume and make available for issuance pursuant to Awards under the Plan any shares that would otherwise be available for issuance under any equity incentive plan of any entity acquired by the Corporation in a corporate transaction as described in Section 4.04 (such number of shares as appropriately adjusted in the discretion of the Committee in connection with the corporate transaction), and the assumption of any such shares shall not reduce the number of Shares available for issuance under this Plan except to the extent required by the rules of any stock exchange on which the Shares may then be listed.
|
5.01
|
Awards may be granted, in the discretion of the Committee, to Eligible Persons. In determining the Eligible Persons to whom Awards shall be granted and the type of any Award (including the number of Shares to be covered by such Award), the Board shall take into account such factors as the Board shall deem relevant in connection with accomplishing the purposes of the Plan.
|
6.01
|
General.
Subject to the terms of the Plan and any applicable Award Agreement, Awards may be granted as set forth in this Section 6. In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to the terms of Section 11.01), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including separate escrow provisions and terms requiring forfeiture of Awards in the event of termination of employment or service by the Participant. Except as required by applicable law, Awards may be granted for no consideration other than prior and/or future services.
|
6.02
|
Options.
The Committee is authorized to grant Options to Participants on the following terms and conditions:
|
(i)
|
Exercise Price.
Each Option shall be evidenced by an Award Agreement that shall set forth an exercise price for the Option as determined by the Committee in its sole discretion prior to the grant. In the case of any Option other than an Option issued as a Substitute Award, such exercise price shall be at least equal to the Fair Market Value of the Shares subject to the Option on the date of grant. In the case of an Option issued as a Substitute Award, such exercise price shall be at least equal to the minimum amount required in order to avoid the imposition of additional tax under the Code;
|
(ii)
|
Nonqualified Status
. Each Option granted under the Plan shall be a nonqualified stock option not intended to meet the requirements of Section 422 of the Code.
|
(iii)
|
Vesting; Forfeiture.
Subject to Section 6.08 hereof, each Option shall be subject to such time- and/or performance-based vesting terms and forfeiture terms as the Committee shall determine and set forth in the applicable Award Agreement;
|
(iv)
|
Times and Methods of Exercise.
The applicable Award Agreement shall set forth the time or times at which an Option may be exercised in whole or in part, the methods by which the exercise price may be paid or deemed to be paid, and the form of such payment, including, without limitation, cash, Shares, or other property or any combination thereof, having a Fair Market Value on the date of exercise equal to the exercise price; and unless otherwise determined by the Committee, the Corporation will also cooperate with any person exercising an Option who participates in a cashless exercise program of a broker or other agent under which all or part of the Shares received upon exercise of the Option are sold through the broker or other agent, for the purpose of paying the exercise price of an Option. Notwithstanding the preceding sentence, unless the Committee, in its discretion, shall otherwise determine, the exercise of the Option shall not be deemed to occur, and no Shares will be issued by the Corporation upon exercise of an Option, until the Corporation has received payment in full of the exercise price. The period during which an Option may be exercised shall be extended by the length of any blackout period during which the Corporation suspends the right to exercise or net exercise the Option in order to comply with the requirements of applicable securities or exchange-control laws or Corporation policies, including, without limitation, insider-trading policies.
|
(v)
|
Termination of Service.
Subject to Section 9, an Option may not be exercised unless (1) the Participant is then providing services to the Corporation or one of its Affiliates and (2) the Participant has continuously
|
(vi)
|
Individual Option Limit.
The aggregate number of Shares for which Options may be granted under the Plan to any single Participant in any calendar year shall not exceed 300,000 Shares.
|
6.03
|
Restricted Stock; Restricted Stock Units.
|
(i)
|
Issuance and Restrictions.
Restricted Stock shall be subject to such restrictions on transferability and other restrictions as the Committee may impose (including, without limitation, limitations on the right to vote Restricted Stock or the right to receive dividends thereon), which restrictions may lapse separately or in combination at such times, under such circumstances, in such installments or otherwise, as the Committee shall determine at the time of grant or thereafter;
|
(ii)
|
Forfeiture.
Subject to Section 9, except as otherwise determined by the Committee at the time of grant or thereafter, upon termination of service to the Corporation and its Affiliates during the applicable restriction period, Restricted Stock that is then subject to restrictions shall be forfeited; provided, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Stock will be waived in whole or in part in the event of terminations resulting from specified causes, and the Board may in other cases waive in whole or in part the forfeiture of Restricted Shares; and
|
(iii)
|
Certificates for Shares.
Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine, including, without limitation, issuance of certificates representing Shares, which may be held in escrow. Certificates representing Shares of Restricted Stock shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock.
|
(iv)
|
Individual Restricted Stock Limit.
The aggregate number of Shares of Restricted Stock which may be granted under the Plan to any single Participant in any calendar year shall not exceed 300,000 Shares.
|
(i)
|
Issuance and Restrictions
. RSUs shall be subject to such restrictions on transferability and other restrictions as the Committee shall impose (including, without limitation, whether and in what form a Participant may receive and/or forfeit dividend equivalent rights thereon), which restrictions may lapse separately or in combination at such times, under such circumstances, in such installments or otherwise, as the Committee shall determine at the time of grant or thereafter. The value of each RSU shall be equal to the Fair Market Value of a Share on the applicable date or time period of determination, as specified by the Committee;
|
(ii)
|
Vesting; Settlement
. An RSU (and any related dividend equivalent rights) may be subject to such time- and/or performance-based vesting terms, and shall be payable at such times and in such forms, as the Committee shall determine and set forth in the applicable Award Agreement;
|
(iii)
|
Forfeiture.
Subject to Section 9, except as otherwise determined by the Committee at the time of grant or thereafter, upon termination of service to the Corporation and its Affiliates during the applicable restriction period, the Award of RSUs shall be forfeited; provided, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to the RSU will be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of the RSUs.
|
(iv)
|
Individual RSU Limit.
The aggregate number of Shares subject to awards of RSUs which may be granted under the Plan to any single Participant in any calendar year shall not exceed 300,000 Shares.
|
6.04
|
Stock Appreciation Rights.
The Committee is authorized to grant Stock Appreciation Rights to Participants on the following terms and conditions:
|
(i)
|
Grant Price
. Each SAR shall be evidenced by an Award Agreement that shall set forth the grant price of the SAR as determined by the Committee in its sole discretion prior to the grant; provided, that such grant price shall be at least equal to the Fair Market Value of the shares of Common Stock in respect of which the SAR is granted on the date of grant;
|
(ii)
|
Freestanding or Tandem SAR
. The Award Agreement evidencing the issuance of a SAR shall indicate whether the SAR is granted (a) as a freestanding Award, in which case it shall be exercised on whatever terms and conditions the Committee imposes in its sole discretion, or (b) in tandem with an Option, in which case it shall be exercisable for all or part of the shares of Common Stock subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option; provided, that a tandem SAR may be exercised only with respect to the shares of Common Stock for which its related Option is then exercisable;
|
(iii)
|
Settlement
. The Award Agreement evidencing the issuance of a SAR shall set forth the timing of exercise and settlement of the SAR and whether such settlement shall be in the form of cash, Common Stock or a combination. A SAR shall be settled in respect of a gross amount determined by multiplying (a) the excess of the Fair Market Value on the date of exercise over the grant price by (b) the number of shares of Common Stock with respect to which the SAR is exercised. The period during which a SAR may be exercised shall be extended by the length of any blackout period during which the Corporation suspends the right to exercise or net exercise the SAR in order to comply with the requirements of applicable securities or exchange-control laws or Corporation policies, including, without limitation, insider-trading policies;
|
(iv)
|
Other Terms
. The Award Agreement evidencing the issuance of a SAR shall specify the term of the SAR, any vesting and forfeiture conditions applicable to the SAR (subject to Section 6.08 hereof) and such other restrictions, terms and conditions of the SAR, as the Committee shall determine in its sole discretion;
|
(v)
|
Individual SAR Limit.
The aggregate number of shares of Common Stock in respect of which a SAR may be granted under the Plan to any single Participant in any calendar year shall not exceed 300,000 Shares.
|
6.05
|
Performance Awards.
The Committee is authorized to grant Performance Awards to Participants on the following terms and conditions:
|
(i)
|
Right to Payment.
A Performance Award shall represent a right to receive Shares or cash based on the achievement, or the level of achievement, during a specified Performance Period of one or more Performance Goals established by the Committee at the time of the Award;
|
(ii)
|
Terms of Performance Awards.
At or prior to the time a Performance Award is granted, the Committee shall cause to be set forth in the Award Agreement or otherwise (1) the Performance Goals applicable to the Award and the Performance Period during which the achievement of the Performance Goals shall be measured, (2) the amount which may be earned by the Participant based on the achievement, or the level of achievement, of the Performance Goals or the formula by which such amount shall be determined and (3) such other terms and conditions applicable to the Award as the Committee may, in its discretion, determine to include therein. To the extent dividends or Dividend Equivalent Rights may be earned in respect of Performance Awards, payment of such dividends or Dividend Equivalent Rights shall be contingent on the vesting and earning of such underlying Performance Awards. The Committee may determine whether unusual items or certain specified events or occurrences, including changes in accounting standards or tax laws and the effects of non-operational items or unusual, infrequently occurring or extraordinary items, shall be included or excluded from the calculation;
|
(iii)
|
Performance Goals.
“Performance Goals” shall mean one or more pre-established, objective measures of performance during a specified “Performance Period”, selected by the Committee in its discretion. Performance Goals may be based upon one or more of the following objective performance measures and expressed in either, or a combination of, absolute or relative values: earnings per share, earnings per share growth, return on capital employed, costs, net income, net income growth, operating margin, revenues, revenue growth, revenue from operations, expenses, income from operations as a percent of capital employed, income from operations, funds from operations, net operating income, growth and/or size of the Corporation’s rental portfolio, available financing, liquidity, transactional achievements, development and retention of key talent, cash flow, market share, return on equity, return on assets, earnings (including EBITDA and EBIT), operating
|
(iv)
|
Maximum Individual Performance Award Payments.
In any one calendar year, the maximum amount which may be granted to any single Participant under Performance Awards issued under the Plan shall be limited to 300,000 Shares. In applying this limit, the number of Shares earned by a Participant shall be measured as of the close of the applicable calendar year which ends the Performance Period, regardless of the fact that certification by the Committee and actual payment to the Participant may occur in a subsequent calendar year or years.
|
6.06
|
Other Stock-Based Awards.
The Committee is authorized to grant Awards to Participants in the form of Other Share-Based Awards, as deemed by the Committee to be consistent with the purposes of the Plan. Awards granted pursuant to this paragraph may be granted with vesting, value and/or payment contingent upon the attainment of one or more performance goals. The Committee shall determine the terms and conditions of such Awards at the date of grant or thereafter. Without limiting the generality of this paragraph, Other Share-Based Awards may include grants of Shares that are not subject to any restrictions or a substantial risk of forfeiture. Subject to Section 10, upon termination of service to the Corporation and its Affiliates prior to the vesting of an Other Share-Based Award, or upon failure to satisfy any other conditions precedent to the delivery of Shares or cash to which such Other Share-Based Award relates, all Other Share-Based Awards that are then subject to deferral or restriction shall be forfeited; provided, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to such Other Share-Based Award will be waived in whole or in part in the event of termination resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of such Other Share-Based Award. The aggregate number of Shares subject to Other Share-Based Awards which may be granted under the Plan to any single Participant in any calendar year shall not exceed 300,000 Shares.
|
6.07
|
Further Limitation for Non-Employee Directors.
The aggregate value of all compensation paid or provided to any non-employee director of the Corporation in respect of a single calendar year shall not exceed $350,000. For purposes of determining such aggregate value, compensation in the form of Awards shall be valued at the aggregate grant date fair value (as determined for financial reporting purposes). Notwithstanding the foregoing, this limitation shall not apply in the case of a non-employee director of the Corporation who is also an executive officer of the Corporation or one of its Affiliates.
|
6.08
|
Minimum Vesting for Certain Awards.
Notwithstanding anything herein to the contrary, no Option or SAR granted on or after the effective date of the Plan may vest in less than one year from its date of grant. Notwithstanding the foregoing, up to 5% of the available Shares authorized for issuance under the Plan as of the effective date may vest (in full or in part) in less than one year from their date of grant (the “
5% Basket
”). Any Option or SAR granted under the Plan may vest in full or in part upon death or disability of the Participant, or upon a Change of Control of the Corporation, and such vesting shall not count against the 5% Basket.
|
7.01
|
Stand-Alone, Tandem and Substitute Awards.
Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, or in tandem with, any other Award granted under the Plan or any award granted under any other plan, program or arrangement of the Corporation or any Subsidiary (subject to the terms of Section 11.01) or any business entity acquired or to be acquired by the Corporation or a Subsidiary.
|
7.02
|
Dividend Equivalent Rights.
Any Participant selected by the Board may be granted Dividend Equivalent Rights based on the dividends paid on Shares that are subject to any Award other than Options, to be credited as of dividend payment dates, during the period between the date the Award is granted and the date the Award is exercised, is settled, is paid,
|
7.03
|
Decisions Required to be Made by the Committee.
Other provisions of the Plan and any Award Agreement notwithstanding, if any decision regarding an Award or the exercise of any right by a Participant, at any time such Participant is subject to Section 16 of the Exchange Act, is required to be made or approved by the Committee or the Board in order that a transaction by such Participant will be exempt under Rule 16b-3, then the Committee or the Board shall retain full and exclusive power and authority to make such decision or to approve or disapprove any such decision by the Participant.
|
7.04
|
Term of Awards.
The term of each Award shall be for such period as may be determined by the Committee; provided, however, that in no event shall the term of any Option or Stock Appreciation Right exceed a period of ten years from the date of its grant.
|
7.05
|
Form of Payment of Awards.
Subject to the terms of the Plan and any applicable Award Agreement, payments or substitutions to be made by the Corporation upon the grant, exercise or other payment or distribution of an Award may be made in such forms as the Committee shall determine at the time of grant or thereafter (subject to the terms of Section 11.01), including, without limitation, cash, Shares, or other property or any combination thereof, in each case in accordance with rules and procedures established, or as otherwise determined, by the Committee.
|
7.06
|
Limits on Transfer of Awards; Beneficiaries.
No right or interest of a Participant in any Award shall be pledged, encumbered or hypothecated to or in favor of any Person other than the Corporation, or shall be subject to any lien, obligation or liability of such Participant to any Person other than the Corporation or a Subsidiary except as otherwise established by the Committee at the time of grant or thereafter. No Award and no rights or interests therein shall be assignable or transferable by a Participant otherwise than by will or the laws of descent and distribution, and any Option or Stock Appreciation Right or other right to purchase or acquire Shares granted to a Participant under the Plan shall be exercisable during the Participant’s lifetime only by such Participant. A beneficiary, guardian, legal representative or other Person claiming any rights under the Plan from or through any Participant shall be subject to all the terms and conditions of the Plan and any Award Agreement applicable to such Participant as well as any additional restrictions or limitations deemed necessary or appropriate by the Committee.
|
7.07
|
Registration and Listing Compliance.
No Award shall be paid and no Shares or other securities shall be distributed with respect to any Award in a transaction subject to the registration requirements of the Securities Act or any state securities law or subject to a listing requirement under any listing agreement between the Corporation and any national securities exchange, and no Award shall confer upon any Participant rights to such payment or distribution until such laws and contractual obligations of the Corporation have been complied with in all material respects. Except to the extent required by the terms of an Award Agreement or another contract between the Corporation and the Participant, neither the grant of any Award nor anything else contained herein shall obligate the Corporation to take any action to comply with any requirements of any such securities laws or contractual obligations relating to the registration (or exemption therefrom) or listing of any Shares or other securities, whether or not necessary in order to permit any such payment or distribution.
|
7.08
|
Stock Certificates.
Awards representing Shares under the Plan may be recorded in book entry form until the lapse of restrictions or limitations thereon, or issued in the form of certificates. All certificates for Shares delivered under the terms of the Plan shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under federal or state securities laws, rules and regulations thereunder, and the rules of any national securities exchange or automated quotation system on which Shares are listed or quoted. The Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions or any other restrictions or limitations that may be applicable to Shares. In addition, during any period in which Awards or Shares are subject to restrictions or limitations under the terms of the Plan or any Award Agreement, the Committee may require any Participant to enter into an agreement providing that certificates representing Shares issuable or issued pursuant to an Award shall remain in the physical custody of the Corporation or such other Person as the Committee may designate.
|
7.09
|
Clawback.
If the Corporation is required to prepare an accounting restatement due to the material noncompliance of the Corporation, as a result of misconduct, with any financial reporting requirement under the securities laws, any Participant who knowingly or through gross negligence engaged in the misconduct, or who knowingly or through gross negligence
|
8.01
|
If an extraordinary dividend or other extraordinary distribution shall be declared upon the Common Stock payable in shares of the Common Stock, the number of shares of Common Stock then subject to any outstanding Options, Restricted Stock Units, Stock Appreciation Rights, Performance Awards or Other Stock-Based Awards, the number of shares of Common Stock which may be issued under the Plan but are not then subject to outstanding Options, Restricted Stock Units, Stock Appreciation Rights, Performance Awards or Other Stock-Based Awards, the exercise price of any outstanding Options and grant price of any outstanding Stock Appreciation Rights and the maximum number of shares as to which Awards may be granted and as to which shares may be awarded under the Plan, shall be adjusted as the Committee determines to be appropriate in its sole discretion. Shares of Common Stock so distributed with respect to any Restricted Stock held in escrow shall also be held by the Corporation in escrow and shall be subject to the same restrictions as are applicable to the Restricted Stock on which they were distributed.
|
8.02
|
If the outstanding shares of Common Stock shall be changed into or exchangeable for a different number or kind of shares of stock or other securities of the Corporation or another corporation, or cash or other property, whether through reorganization, reclassification, recapitalization, stock split-up, combination of shares, merger or consolidation, then there shall be substituted for each share of Common Stock subject to any then outstanding Option, Restricted Stock Unit, Stock Appreciation Right, Performance Award or Other Stock-Based Award, and for each share of Common Stock which may be issued under the Plan but which is not then subject to any outstanding Option, Restricted Stock Unit, Stock Appreciation Right, Performance Award or Other Stock-Based Award, the number and kind of shares of stock or other securities (and in the case of outstanding Options, Restricted Stock Units, Stock Appreciation Rights, Performance Awards or Other Stock-Based Awards, the cash or other property) into which each outstanding share of the Common Stock shall be so changed or for which each such share shall be exchangeable; provided, that, notwithstanding the foregoing, in the event that the outstanding shares of Common Stock shall be changed into or exchangeable for cash or other property, the Committee may in its discretion determine that outstanding Awards shall remain outstanding or be substituted for comparable Awards over stock or securities of the acquiring or surviving entity, subject to such adjustments as the Committee determines to be appropriate in its sole discretion. Unless otherwise determined by the Committee in its discretion, any such stock or securities, as well as any cash or other property, into or for which any Restricted Stock held in escrow shall be changed or exchangeable in any such transaction shall also be held by the Corporation in escrow and shall be subject to the same restrictions as are applicable to the Restricted Stock in respect of which such stock, securities, cash or other property was issued or distributed.
|
8.03
|
In case of any adjustment or substitution as provided for in this Section 8, the aggregate option price for all Shares subject to each then outstanding Option, Restricted Stock Unit, Stock Appreciation Right, Performance Award or Other Stock-Based Award, prior to such adjustment or substitution shall be the aggregate option price for all shares of stock or other securities (including any fraction), cash or other property to which such Shares shall have been adjusted or which shall have been substituted for such Shares. Any new option price per share or other unit shall be carried to at least two decimal places (determined with upward rounding).
|
8.04
|
If the outstanding shares of the Common Stock shall be changed in value by reason of any spin-off, split-off or split-up, or dividend in partial liquidation, dividend in property other than cash, or extraordinary distribution to shareholders of the Common Stock, (a) the Committee shall make any adjustments to any then outstanding Option, Restricted Stock Unit, Stock Appreciation Right, Performance Award or Other Stock-Based Award, which it determines are equitably required to prevent dilution or enlargement of the rights of optionees and awardees which would otherwise result from any such transaction, and (b) unless otherwise determined by the Committee in its discretion, any stock, securities, cash or other property distributed with respect to any Restricted Stock held in escrow or for which any Restricted Stock held in escrow shall be exchanged in any such transaction shall also be held by the Corporation in escrow and shall be subject to the same restrictions as are applicable to the Restricted Stock in respect of which such stock, securities, cash or other property was distributed or exchanged.
|
8.05
|
No adjustment or substitution provided for in this Section 8 shall require the Corporation to issue or sell a fraction of a Share or other security. Accordingly, all fractional Shares or other securities which result from any such adjustment or substitution shall be eliminated and not carried forward to any subsequent adjustment or substitution. Owners of Restricted Stock held in escrow shall be treated in the same manner as owners of Common Stock not held in escrow with respect to fractional Shares created by an adjustment or substitution of Shares, except that, unless otherwise determined by the Committee in its discretion, any cash or other property paid in lieu of a fractional Share shall be subject to restrictions similar to those applicable to the Restricted Stock exchanged therefor.
|
8.06
|
In the event of any other change in or conversion of the Common Stock, the Committee may in its discretion adjust the outstanding Awards and other amounts provided in the Plan in order to prevent the dilution or enlargement of rights of Participants.
|
9.01
|
Unless otherwise determined by the Committee, all unvested Awards then held by a Participant who ceases to provide services to the Corporation and its Affiliates, whether through a termination of service or because of reassignment by such Participant’s employer, shall be immediately cancelled and forfeited without consideration. The terms of Award Agreements shall set forth the terms under which an Option, Restricted Stock, Restricted Stock Unit, Stock Appreciation Right or other Share-Based Award may remain exercisable or shall continue to vest following such a termination of service.
|
10.01
|
Notwithstanding anything herein to the contrary, upon the occurrence of a Change of Control, unless otherwise provided in the Award Agreement, the Committee is authorized (but not obligated) to make adjustments in the terms and conditions of outstanding Awards, including without limitation the following (or any combination thereof): (a) continuation or assumption of such outstanding Awards under the Plan by the Corporation (if it is the surviving company or corporation) or by the surviving company or corporation or its parent; (b) substitution by the surviving company or corporation or its parent of awards with substantially the same terms for outstanding Awards (with appropriate adjustments to the type of consideration payable upon settlement of the Awards); (c) accelerated exercisability, vesting and/or payment under outstanding Awards immediately prior to or upon the occurrence of such event or upon a termination of employment or other service following such event; and (d) if all or substantially all of the Corporation’s outstanding Shares transferred in exchange for cash consideration in connection with such Change of Control: (i) upon written notice, provide that any outstanding Options and Stock Appreciation Rights are exercisable during a reasonable period of time immediately prior to the scheduled consummation of the event or such other reasonable period as determined by the Committee (contingent upon the consummation of the event), and at the end of such period, such Awards shall terminate to the extent not so exercised within the relevant period; and (ii) cancellation of all or any portion of outstanding Awards for fair value (in the form of cash, shares, other property or any combination thereof) as determined in the sole discretion of the Committee; provided, that, in the case of Options and Stock Appreciation Rights, the fair value shall equal the excess, if any, of the value of the consideration to be paid in the Change of Control transaction to holders of Shares (or, if no such consideration is paid, Fair Market Value of the Shares subject to such outstanding Awards or portion thereof being canceled) over the aggregate exercise or grant price, as applicable, with respect to such Awards or portion thereof being canceled, or if no such excess, zero.
|
11.01
|
The Board may amend, alter, suspend, discontinue or terminate the Plan without the consent of shareholders or Participants, except that, without the approval of the shareholders of the Corporation, no amendment, alteration, suspension, discontinuation or termination shall be made if shareholder approval is required by any federal or state law or regulation or by the rules of any stock exchange on which the Shares may then be listed, or if the Board in its discretion determines that obtaining such shareholder approval is for any reason advisable; provided, however, that without the written consent of the Participant, no amendment, alteration, suspension, discontinuation or termination of the Plan may materially and adversely affect the rights of such Participant under any Award theretofore granted to him. The Committee may, consistent with the terms of the Plan, waive any conditions or rights under, amend any terms of, or amend, alter, suspend, discontinue or terminate, any Award theretofore granted, prospectively or retrospectively; provided, however, that without the consent of a Participant, no amendment, alteration, suspension, discontinuation or termination of any Award may materially and adversely affect the rights of such Participant under any Award theretofore granted to him; and provided further that, other than pursuant to Section 8, the Committee shall not without the approval of the Corporation’s stockholders (a) lower the exercise price per Share of an Option after it is granted, (b) cancel an Option when the exercise price per Share exceeds
|
12.01
|
No Right to Awards; No Shareholder Rights.
No Participant shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Participants, except as provided in any other compensation, fee or other arrangement. No Award shall confer on any Participant any of the rights of a shareholder of the Corporation unless and until Shares are in fact issued to such Participant in connection with such Award.
|
12.02
|
Withholding.
To the extent required by applicable Federal, state, local or foreign law, the Participant or his successor shall make arrangements satisfactory to the Corporation, in its discretion, for the satisfaction of any withholding tax obligations that arise in connection with an Award. The Corporation shall not be required to issue any Shares or make any other payment under the Plan until such obligations are satisfied. The Corporation is authorized to withhold from any Award granted or any payment due under the Plan, including from a distribution of Shares, amounts of withholding taxes due with respect to an Award, its exercise or any payment thereunder, and to take such other action as the Committee may deem necessary or advisable to enable the Corporation and Participants to satisfy obligations for the payment of such taxes. This authority shall include authority to withhold or receive Shares, Awards or other property and to make cash payments in respect thereof in satisfaction of such tax obligations.
|
12.03
|
No Right to Employment or Continuation of Service.
Nothing contained in the Plan or any Award Agreement shall confer, and no grant of an Award shall be construed as conferring, upon any Participant any right to continue as an officer or non-employee director or continue to provide services to, the Corporation or any parent, subsidiary or Affiliate of the Corporation or the Manager or to be entitled to any remuneration or benefits not set forth in the Plan or such Award Agreement or other agreement or to interfere with or limit in any way the right of the Corporation or any of its Affiliates to terminate such Participant’s service.
|
12.04
|
Unfunded Status of Awards; Creation of Trusts.
The Plan is intended to constitute an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award Agreement shall give any such Participant any rights that are greater than those of a general unsecured creditor of the Corporation; provided, however, that the Committee may authorize the creation of trusts or make other arrangements to meet the Corporation’s obligations under the Plan to deliver Shares or other property pursuant to any Award, which trusts or other arrangements shall be consistent with the “unfunded” status of the Plan unless the Committee otherwise determines.
|
12.05
|
No Limit on Other Compensatory Arrangements.
Nothing contained in the Plan shall prevent the Corporation from adopting other or additional compensation, fee or other arrangements (which may include, without limitation, employment agreements with executives and arrangements which relate to Awards under the Plan), and such arrangements may be either generally applicable or applicable only in specific cases. Notwithstanding anything in the Plan to the contrary, the terms of each Award shall be construed so as to be consistent with such other arrangements in effect at the time of the Award.
|
12.06
|
No Fractional Shares.
No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other Awards or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.
|
12.07
|
Governing Law.
The validity, interpretation, construction and effect of the Plan and any rules and regulations relating to the Plan shall be governed by the laws of Maryland (without regard to the conflicts of laws thereof).
|
12.08
|
Severability.
If any provision of the Plan or any Award is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or Award, it shall be deleted and the remainder of the Plan or Award shall remain in full force and effect; provided, however, that, unless otherwise determined by the Committee, the provision shall not be construed or deemed amended or deleted with respect to any Participant whose rights and obligations under the Plan are not subject to the law of such jurisdiction or the law deemed applicable by the Committee.
|
12.09
|
Regulations and Other Approvals
.
|
(i)
|
The obligation of the Corporation to sell or deliver Shares with respect to any Award granted under the Plan shall be subject to all applicable laws, rules and regulations, including all applicable federal and state securities laws, and the obtaining of all such approvals by governmental agencies as may be deemed necessary or appropriate by the Committee.
|
(ii)
|
Each Award is subject to the requirement that, if at any time the Committee determines, in its absolute discretion, that the listing, registration or qualification of Shares issuable pursuant to the Plan is required by any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the grant of an Award or the issuance of Shares, no such Award shall be granted or payment made or Share issued, in whole or in part, unless listing, registration, qualification, consent or approval has been effected or obtained free of any conditions not acceptable to the Committee.
|
(iii)
|
In the event that the disposition of Shares acquired pursuant to the Plan is not covered by a then-current registration statement under the Securities Act and is not otherwise exempt from such registration, such Shares shall be restricted against transfer to the extent required by the Securities Act or regulations thereunder, and the Committee may require a Participant receiving Shares pursuant to the Plan, as a condition precedent to receipt of such Shares, to represent to the Corporation in writing that the Shares acquired by such Participant is acquired for investment only and not with a view to distribution.
|
(iv)
|
The Committee may require a Participant receiving Shares pursuant to the Plan, as a condition precedent to receipt of such Shares, to enter into a shareholder agreement or “lock-up” agreement in such form as the Committee shall determine is necessary or desirable to further the Corporation’s interests.
|
12.10
|
Section 409A
. It is intended that the payments and benefits under the Plan comply with, or as applicable, constitute a short-term deferral or otherwise be exempt from, the provisions of Section 409A of the Code. The Plan will be administered and interpreted in a manner consistent with this intent, and any provision that would cause the Plan or any Award to fail to satisfy Section 409A of the Code will have no force and effect until amended to comply therewith (which amendment may be retroactive to the extent permitted by Section 409A of the Code). To the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Plan during the six-month period immediately following Participant’s termination of employment shall instead be paid on the first business day after the date that is six months following Participant’s termination of employment (or upon Participant’s death, if earlier). No payment that constitutes deferred compensation under Section 409A of the Code that would otherwise be made under the Plan or an Award Agreement upon a termination of service will be made or provided unless and until such termination is also a “separation from service,” as determined in accordance with Section 409A of the Code.
|
13.01
|
The effective date and date of adoption of the Plan shall be March 15, 2016, the date of adoption of the Plan by the Board, provided that such adoption of the Plan is approved by a majority of the votes cast at a duly held meeting of shareholders at which a quorum representing a majority of the outstanding voting stock of the Corporation is, either in person or by proxy, present and voting. Notwithstanding anything else contained in the Plan or in any Award Agreement, no Option, Stock Appreciation Right or other purchase right granted under the Plan may be exercised, and no Shares may be distributed pursuant to any Award granted under the Plan, prior to such shareholder approval. In the event such shareholder approval is not obtained, all Awards granted under the Plan shall automatically be deemed void and of no effect.
|
Date:
|
March 1, 2017
|
By:
|
/s/
|
George G. Ellison
|
|
|
|
|
George G. Ellison
|
|
|
|
|
Chief Executive Officer
|
Date:
|
March 1, 2017
|
By:
|
/s/
|
Robin N. Lowe
|
|
|
|
|
Robin N. Lowe
|
|
|
|
|
Chief Financial Officer
|
Date:
|
March 1, 2017
|
By:
|
/s/
|
George G. Ellison
|
|
|
|
|
George G. Ellison
|
|
|
|
|
Chief Executive Officer
|
Date:
|
March 1, 2017
|
By:
|
/s/
|
Robin N. Lowe
|
|
|
|
|
Robin N. Lowe
|
|
|
|
|
Chief Financial Officer
|