|
MARYLAND
|
46-0633510
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Large Accelerated Filer
|
o
|
|
Accelerated Filer
|
x
|
Non-Accelerated Filer
|
o
|
(Do not check if a smaller reporting company)
|
Smaller Reporting Company
|
o
|
|
|
|
Emerging Growth Company
|
o
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common stock, par value $0.01 per share
|
RESI
|
New York Stock Exchange
|
•
|
our ability to implement our business strategy;
|
•
|
our ability to make distributions to our stockholders;
|
•
|
our ability to acquire single-family rental assets for our portfolio, including difficulties in identifying assets to acquire;
|
•
|
the impact of changes to the supply of, value of and the returns on single-family rental assets;
|
•
|
our ability to successfully integrate newly acquired properties into our portfolio of single-family rental properties;
|
•
|
our ability to successfully perform property management services for our single-family rental assets at the standard and/or the cost that we anticipate;
|
•
|
our ability to predict our costs;
|
•
|
our ability to effectively compete with our competitors;
|
•
|
our ability to apply the proceeds from financing activities or asset sales to target single-family rental assets in a timely manner;
|
•
|
our ability to sell non-core assets on favorable terms and on a timely basis or at all;
|
•
|
the failure to identify unforeseen expenses or material liabilities associated with asset acquisitions through the due diligence process prior to such acquisitions;
|
•
|
changes in the market value of our single-family rental properties and real estate owned;
|
•
|
changes in interest rates;
|
•
|
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 our third party vendors to effectively perform their obligations under their respective agreements with us;
|
•
|
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.
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
|
(unaudited)
|
|
|
||||
Assets:
|
|
|
|
||||
Real estate held for use:
|
|
|
|
||||
Land
|
$
|
394,846
|
|
|
$
|
395,532
|
|
Rental residential properties
|
1,667,962
|
|
|
1,667,939
|
|
||
Real estate owned
|
33,801
|
|
|
40,496
|
|
||
Total real estate held for use
|
2,096,609
|
|
|
2,103,967
|
|
||
Less: accumulated depreciation
|
(154,245
|
)
|
|
(137,881
|
)
|
||
Total real estate held for use, net
|
1,942,364
|
|
|
1,966,086
|
|
||
Real estate assets held for sale
|
42,406
|
|
|
146,921
|
|
||
Mortgage loans at fair value
|
4,848
|
|
|
8,072
|
|
||
Cash and cash equivalents
|
43,629
|
|
|
44,186
|
|
||
Restricted cash
|
38,343
|
|
|
36,974
|
|
||
Accounts receivable
|
15,428
|
|
|
11,591
|
|
||
Goodwill
|
13,376
|
|
|
13,376
|
|
||
Prepaid expenses and other assets
|
40,865
|
|
|
43,045
|
|
||
Total assets
|
$
|
2,141,259
|
|
|
$
|
2,270,251
|
|
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Repurchase and loan agreements
|
$
|
1,631,979
|
|
|
$
|
1,722,219
|
|
Accounts payable and accrued liabilities
|
66,250
|
|
|
72,672
|
|
||
Payable to AAMC
|
3,711
|
|
|
3,968
|
|
||
Total liabilities
|
1,701,940
|
|
|
1,798,859
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 8)
|
—
|
|
|
—
|
|
||
|
|
|
|
||||
Equity:
|
|
|
|
||||
Common stock, $0.01 par value, 200,000,000 authorized shares; 53,630,204 shares issued and outstanding as of March 31, 2019 and December 31, 2018
|
536
|
|
|
536
|
|
||
Additional paid-in capital
|
1,185,251
|
|
|
1,184,132
|
|
||
Accumulated deficit
|
(727,193
|
)
|
|
(700,623
|
)
|
||
Accumulated other comprehensive loss
|
(19,275
|
)
|
|
(12,653
|
)
|
||
Total equity
|
439,319
|
|
|
471,392
|
|
||
Total liabilities and equity
|
$
|
2,141,259
|
|
|
$
|
2,270,251
|
|
|
Three months ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Revenues:
|
|
|
|
||||
Rental revenues
|
$
|
52,625
|
|
|
$
|
39,765
|
|
Total revenues
|
52,625
|
|
|
39,765
|
|
||
Expenses:
|
|
|
|
||||
Residential property operating expenses
|
18,437
|
|
|
13,855
|
|
||
Property management expenses
|
3,675
|
|
|
2,937
|
|
||
Depreciation and amortization
|
22,385
|
|
|
19,190
|
|
||
Acquisition and integration costs
|
2,211
|
|
|
33
|
|
||
Impairment
|
1,020
|
|
|
7,575
|
|
||
Mortgage loan servicing costs
|
387
|
|
|
355
|
|
||
Interest expense
|
21,510
|
|
|
16,063
|
|
||
Share-based compensation
|
1,119
|
|
|
(414
|
)
|
||
General and administrative
|
5,766
|
|
|
2,673
|
|
||
Management fees to AAMC
|
3,575
|
|
|
3,790
|
|
||
Total expenses
|
80,085
|
|
|
66,057
|
|
||
Net gain (loss) on real estate and mortgage loans
|
8,777
|
|
|
(1,634
|
)
|
||
Operating loss
|
(18,683
|
)
|
|
(27,926
|
)
|
||
Casualty losses
|
(393
|
)
|
|
—
|
|
||
Insurance recoveries
|
527
|
|
|
—
|
|
||
Other income
|
49
|
|
|
576
|
|
||
Loss before income taxes
|
(18,500
|
)
|
|
(27,350
|
)
|
||
Income tax expense
|
8
|
|
|
—
|
|
||
Net loss
|
$
|
(18,508
|
)
|
|
$
|
(27,350
|
)
|
|
|
|
|
|
|
||
Loss per share of common stock - basic:
|
|
|
|
|
|
||
Loss per basic share
|
$
|
(0.35
|
)
|
|
$
|
(0.51
|
)
|
Weighted average common stock outstanding - basic
|
53,630,204
|
|
|
53,454,063
|
|
||
Loss per share of common stock - diluted:
|
|
|
|
|
|
||
Loss per diluted share
|
$
|
(0.35
|
)
|
|
$
|
(0.51
|
)
|
Weighted average common stock outstanding - diluted
|
53,630,204
|
|
|
53,454,063
|
|
||
|
|
|
|
|
|
||
Dividends declared per common share
|
$
|
0.15
|
|
|
$
|
0.15
|
|
|
Three months ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Net loss
|
$
|
(18,508
|
)
|
|
$
|
(27,350
|
)
|
|
|
|
|
||||
Other comprehensive loss:
|
|
|
|
||||
Change in fair value of interest rate caps
|
(7,609
|
)
|
|
—
|
|
||
Losses from interest rate caps reclassified into earnings from accumulated other comprehensive loss
|
987
|
|
|
—
|
|
||
Net other comprehensive loss
|
(6,622
|
)
|
|
—
|
|
||
|
|
|
|
||||
Comprehensive loss
|
$
|
(25,130
|
)
|
|
$
|
(27,350
|
)
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated Comprehensive Loss
|
|
Total Equity
|
|||||||||||||
|
Number of Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
December 31, 2018
|
53,630,204
|
|
|
$
|
536
|
|
|
$
|
1,184,132
|
|
|
$
|
(700,623
|
)
|
|
$
|
(12,653
|
)
|
|
$
|
471,392
|
|
Adoption of ASC 842 (Note 1)
|
—
|
|
|
—
|
|
|
—
|
|
|
96
|
|
|
—
|
|
|
96
|
|
|||||
Dividends on common stock ($0.15 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,158
|
)
|
|
—
|
|
|
(8,158
|
)
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
1,119
|
|
|
—
|
|
|
—
|
|
|
1,119
|
|
|||||
Change in fair value of cash flow hedging derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,622
|
)
|
|
(6,622
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,508
|
)
|
|
—
|
|
|
(18,508
|
)
|
|||||
March 31, 2019
|
53,630,204
|
|
|
$
|
536
|
|
|
$
|
1,185,251
|
|
|
$
|
(727,193
|
)
|
|
$
|
(19,275
|
)
|
|
$
|
439,319
|
|
|
Common Stock
|
|
Additional Paid-in Capital
|
|
Accumulated Deficit
|
|
Accumulated Comprehensive Loss
|
|
Total Equity
|
|||||||||||||
|
Number of Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
December 31, 2017
|
53,447,950
|
|
|
$
|
534
|
|
|
$
|
1,181,327
|
|
|
$
|
(537,259
|
)
|
|
$
|
—
|
|
|
$
|
644,602
|
|
Common shares issued under share-based compensation plans, net of shares withheld for employee taxes
|
44,187
|
|
|
1
|
|
|
106
|
|
|
—
|
|
|
—
|
|
|
107
|
|
|||||
Dividends on common stock ($0.15 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,071
|
)
|
|
—
|
|
|
(8,071
|
)
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
(414
|
)
|
|
—
|
|
|
—
|
|
|
(414
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(27,350
|
)
|
|
—
|
|
|
(27,350
|
)
|
|||||
March 31, 2018
|
53,492,137
|
|
|
$
|
535
|
|
|
$
|
1,181,019
|
|
|
$
|
(572,680
|
)
|
|
$
|
—
|
|
|
$
|
608,874
|
|
|
Three months ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Operating activities:
|
|
|
|
||||
Net loss
|
$
|
(18,508
|
)
|
|
$
|
(27,350
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Net (gain) loss on real estate and mortgage loans
|
(8,777
|
)
|
|
1,634
|
|
||
Depreciation and amortization
|
22,385
|
|
|
19,190
|
|
||
Impairment
|
1,020
|
|
|
7,575
|
|
||
Share-based compensation
|
1,119
|
|
|
(414
|
)
|
||
Amortization of deferred financing costs
|
1,242
|
|
|
1,357
|
|
||
Casualty losses
|
393
|
|
|
—
|
|
||
Insurance recoveries
|
(527
|
)
|
|
—
|
|
||
Change in fair value of interest rate cap derivatives in profit or loss
|
987
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
2,131
|
|
|
(3,510
|
)
|
||
Deferred leasing costs
|
(682
|
)
|
|
(713
|
)
|
||
Prepaid expenses and other assets
|
438
|
|
|
(551
|
)
|
||
Accounts payable and accrued liabilities
|
(8,951
|
)
|
|
(1,565
|
)
|
||
Payable to AAMC
|
(257
|
)
|
|
(124
|
)
|
||
Net cash used in operating activities
|
(7,987
|
)
|
|
(4,471
|
)
|
||
Investing activities:
|
|
|
|
||||
Investment in real estate
|
(1,830
|
)
|
|
(4,293
|
)
|
||
Investment in renovations
|
(6,615
|
)
|
|
(7,493
|
)
|
||
Payment of real estate tax advances
|
(26
|
)
|
|
(91
|
)
|
||
Proceeds from mortgage loan resolutions and dispositions
|
451
|
|
|
1,671
|
|
||
Receipt of mortgage loan payments
|
77
|
|
|
85
|
|
||
Proceeds from dispositions of real estate
|
114,905
|
|
|
35,799
|
|
||
Proceeds of casualty insurance
|
1,539
|
|
|
—
|
|
||
Net cash provided by investing activities
|
108,501
|
|
|
25,678
|
|
||
Financing activities:
|
|
|
|
||||
Proceeds from exercise of stock options
|
—
|
|
|
107
|
|
||
Dividends on common stock
|
(8,045
|
)
|
|
(8,021
|
)
|
||
Proceeds from repurchase and loan agreements
|
21,788
|
|
|
—
|
|
||
Repayments of repurchase and loan agreements
|
(112,856
|
)
|
|
(17,575
|
)
|
||
Investment in interest rate cap derivative
|
—
|
|
|
(936
|
)
|
||
Principal repayments of finance leases
|
(175
|
)
|
|
—
|
|
||
Payment of financing costs
|
(414
|
)
|
|
(219
|
)
|
||
Net cash used in financing activities
|
(99,702
|
)
|
|
(26,644
|
)
|
||
Net change in cash, cash equivalents and restricted cash
|
812
|
|
|
(5,437
|
)
|
||
Cash, cash equivalents and restricted cash as of beginning of the period
|
81,160
|
|
|
161,488
|
|
||
Cash, cash equivalents and restricted cash as of end of the period
|
$
|
81,972
|
|
|
$
|
156,051
|
|
|
|
|
|
|
|
|
|
||||
Front Yard Residential Corporation
Condensed Consolidated Statements of Cash Flows (continued)
(In thousands)
(Unaudited)
|
|||||||
|
Three months ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for:
|
|
|
|
||||
Interest
|
$
|
19,939
|
|
|
$
|
14,727
|
|
|
|
|
|
||||
Non-cash investing and financing transactions:
|
|
|
|
||||
Transfer of mortgage loans to (from) real estate owned, net
|
$
|
3,376
|
|
|
$
|
(137
|
)
|
Changes in accrued capital expenditures
|
(2,025
|
)
|
|
(748
|
)
|
||
Changes in receivables from mortgage loan resolutions and dispositions, payments and real estate tax advances to borrowers, net
|
586
|
|
|
(523
|
)
|
||
Changes in receivables from real estate owned dispositions
|
10,364
|
|
|
(648
|
)
|
||
Change in other comprehensive loss from cash flow hedges
|
(6,622
|
)
|
|
—
|
|
||
Right-of-use lease assets recognized - operating leases
|
1,365
|
|
|
—
|
|
||
Right-of-use lease assets recognized - finance leases
|
893
|
|
|
—
|
|
||
Operating lease liabilities incurred
|
1,365
|
|
|
—
|
|
||
Finance lease liabilities incurred
|
893
|
|
|
—
|
|
||
Dividends declared but not paid
|
8,158
|
|
|
8,069
|
|
|
Three months ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Change in unrealized gain on mortgage loans due to:
|
|
|
|
||||
Conversion of mortgage loans to REO, net
|
$
|
615
|
|
|
$
|
137
|
|
Change in fair value, net
|
116
|
|
|
63
|
|
||
Reclassification to realized gain or loss
|
(7,859
|
)
|
|
(15,708
|
)
|
||
Total change in unrealized gain on mortgage loans
|
(7,128
|
)
|
|
(15,508
|
)
|
||
Net realized loss on mortgage loans
|
(38
|
)
|
|
(470
|
)
|
||
Net realized gain on sales of real estate
|
15,943
|
|
|
14,344
|
|
||
Net gain (loss) on real estate and mortgage loans
|
$
|
8,777
|
|
|
$
|
(1,634
|
)
|
March 31, 2019
|
Held for Use
|
|
Held for Sale
|
|
Total Portfolio
|
|||
Rental Properties:
|
|
|
|
|
|
|||
Leased
|
13,788
|
|
|
—
|
|
|
13,788
|
|
Listed and ready for rent
|
260
|
|
|
—
|
|
|
260
|
|
Unit turn
|
378
|
|
|
—
|
|
|
378
|
|
Renovation
|
71
|
|
|
—
|
|
|
71
|
|
Total rental properties
|
14,497
|
|
|
|
|
|
||
Previous rentals identified for sale
|
120
|
|
|
193
|
|
|
313
|
|
Legacy REO
|
37
|
|
|
38
|
|
|
75
|
|
|
14,654
|
|
|
231
|
|
|
14,885
|
|
December 31, 2018
|
|
|
|
|
|
|||
Rental Properties:
|
|
|
|
|
|
|||
Leased
|
13,546
|
|
|
423
|
|
|
13,969
|
|
Listed and ready for rent
|
434
|
|
|
8
|
|
|
442
|
|
Unit turn
|
428
|
|
|
18
|
|
|
446
|
|
Renovation
|
136
|
|
|
2
|
|
|
138
|
|
Total rental properties
|
14,544
|
|
|
|
|
|
||
Previous rentals identified for sale
|
158
|
|
|
188
|
|
|
346
|
|
Legacy REO
|
56
|
|
|
48
|
|
|
104
|
|
|
14,758
|
|
|
687
|
|
|
15,445
|
|
|
|
Number of Loans
|
|
Fair Value and Carrying Value
|
|
Unpaid Principal Balance
|
|
Market Value of Underlying Properties (1)
|
|||||||
March 31, 2019
|
|
|
|
|
|
|
|
|
|||||||
Current
|
|
19
|
|
|
$
|
1,725
|
|
|
$
|
2,491
|
|
|
$
|
3,726
|
|
30 days past due
|
|
1
|
|
|
177
|
|
|
195
|
|
|
415
|
|
|||
90 days past due
|
|
15
|
|
|
497
|
|
|
5,910
|
|
|
5,634
|
|
|||
Foreclosure
|
|
31
|
|
|
2,449
|
|
|
7,191
|
|
|
9,380
|
|
|||
Mortgage loans at fair value
|
|
66
|
|
|
$
|
4,848
|
|
|
$
|
15,787
|
|
|
$
|
19,155
|
|
|
|
|
|
|
|
|
|
|
|||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|||||||
Current
|
|
20
|
|
|
$
|
1,827
|
|
|
$
|
2,701
|
|
|
$
|
4,353
|
|
60 days past due
|
|
1
|
|
|
115
|
|
|
148
|
|
|
180
|
|
|||
90 days past due
|
|
17
|
|
|
649
|
|
|
6,019
|
|
|
5,418
|
|
|||
Foreclosure
|
|
36
|
|
|
5,481
|
|
|
12,376
|
|
|
16,097
|
|
|||
Mortgage loans at fair value
|
|
74
|
|
|
$
|
8,072
|
|
|
$
|
21,244
|
|
|
$
|
26,048
|
|
(1)
|
The market value of the underlying properties are estimated based on BPOs.
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
Carrying Value
|
|
Quoted Prices in Active Markets
|
|
Observable Inputs Other Than Level 1 Prices
|
|
Unobservable Inputs
|
||||||||
March 31, 2019
|
|
|
|
|
|
|
|
||||||||
Recurring basis (assets)
|
|
|
|
|
|
|
|
||||||||
Mortgage loans at fair value
|
$
|
4,848
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,848
|
|
Interest rate cap derivatives (1)
|
6,758
|
|
|
—
|
|
|
6,758
|
|
|
—
|
|
||||
Not recognized on condensed consolidated balance sheets at fair value (liabilities)
|
|
|
|
|
|
|
|
||||||||
Repurchase and loan agreements
|
1,631,979
|
|
|
—
|
|
|
1,643,400
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Recurring basis (assets)
|
|
|
|
|
|
|
|
||||||||
Mortgage loans at fair value
|
$
|
8,072
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,072
|
|
Interest rate cap derivatives (1)
|
14,367
|
|
|
—
|
|
|
14,367
|
|
|
—
|
|
||||
Not recognized on consolidated balance sheets at fair value (liabilities)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Repurchase and loan agreements
|
1,722,219
|
|
|
—
|
|
|
1,734,152
|
|
|
—
|
|
(1)
|
Included within prepaid expenses and other assets in the condensed consolidated balance sheets.
|
|
Three months ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Mortgage loans at fair value, beginning balance
|
$
|
8,072
|
|
|
$
|
11,477
|
|
Net gain (loss) on mortgage loans
|
1,240
|
|
|
(115
|
)
|
||
Mortgage loan dispositions, resolutions and payments
|
(1,100
|
)
|
|
(1,223
|
)
|
||
Real estate tax advances to borrowers
|
12
|
|
|
81
|
|
||
Selling costs on loans held for sale
|
—
|
|
|
(83
|
)
|
||
Transfer of mortgage loans to real estate owned, net
|
(3,376
|
)
|
|
137
|
|
||
Mortgage loans at fair value, ending balance
|
$
|
4,848
|
|
|
$
|
10,274
|
|
|
|
|
|
||||
Change in unrealized gain (loss) on mortgage loans at fair value held at the end of the period
|
$
|
2
|
|
|
$
|
(137
|
)
|
Input
|
|
March 31, 2019
|
|
December 31, 2018
|
Equity discount rate
|
|
17.0%
|
|
17.0%
|
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
|
|
-1.04% to 17.24%
|
|
-0.55% to 16.79%
|
Loan resolution probabilities — modification
|
|
0% to 5.9%
|
|
0% to 5.9%
|
Loan resolution probabilities — liquidation
|
|
38.4% to 100%
|
|
38.8% to 100%
|
Loan resolution probabilities — paid in full
|
|
0% to 61.6%
|
|
0% to 61.2%
|
Loan resolution timelines (in years)
|
|
0.1 to 6.1
|
|
0.1 to 6.1
|
Value of underlying properties
|
|
$50,000 to $1,500,000
|
|
$50,000 to $2,500,000
|
|
Maturity Date
|
|
|
Interest Rate
|
|
|
Amount Outstanding
|
|
Maximum Borrowing Capacity
|
|
Amount of Available Funding
|
|
Book Value of Collateral
|
||||||||
March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
CS Repurchase Agreement
|
11/15/2019
|
|
|
1-month LIBOR + 3.00%
|
(1)
|
|
$
|
104,145
|
|
|
$
|
250,000
|
|
|
$
|
145,855
|
|
|
$
|
108,375
|
|
Nomura Loan Agreement
|
4/5/2020
|
(2)
|
|
1-month LIBOR + 3.00%
|
(2)
|
|
29,155
|
|
|
250,000
|
|
|
220,845
|
|
|
45,467
|
|
||||
HOME II Loan Agreement
|
11/9/2019
|
(3)
|
|
1-month LIBOR + 2.10%
|
(4)
|
|
83,270
|
|
|
83,270
|
|
|
—
|
|
|
99,771
|
|
||||
HOME III Loan Agreement
|
11/9/2019
|
(3)
|
|
1-month LIBOR + 2.10%
|
(4)
|
|
89,150
|
|
|
89,150
|
|
|
—
|
|
|
110,851
|
|
||||
HOME IV Loan Agreement (A)
|
12/9/2022
|
|
|
4.00%
|
|
|
114,201
|
|
|
114,201
|
|
|
—
|
|
|
144,451
|
|
||||
HOME IV Loan Agreement (B)
|
12/9/2022
|
|
|
4.00%
|
|
|
114,590
|
|
|
114,590
|
|
|
—
|
|
|
145,487
|
|
||||
Term Loan Agreement
|
4/6/2022
|
|
|
5.00%
|
|
|
99,782
|
|
|
99,782
|
|
|
—
|
|
|
113,009
|
|
||||
FYR SFR Loan Agreement
|
9/1/2028
|
|
|
4.65%
|
|
|
508,700
|
|
|
508,700
|
|
|
—
|
|
|
581,891
|
|
||||
MS Loan Agreement
|
12/7/2023
|
|
|
1-month LIBOR + 1.80%
|
(5)
|
|
504,986
|
|
|
504,986
|
|
|
—
|
|
|
605,038
|
|
||||
|
|
|
|
|
|
|
1,647,979
|
|
|
$
|
2,014,679
|
|
|
$
|
366,700
|
|
|
$
|
1,954,340
|
|
|
Less: unamortized loan discounts
|
|
|
|
|
|
|
(4,579
|
)
|
|
|
|
|
|
|
|||||||
Less: deferred debt issuance costs
|
|
|
|
|
|
|
(11,421
|
)
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
$
|
1,631,979
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
CS Repurchase Agreement
|
11/15/2019
|
|
|
1-month LIBOR + 3.00%
|
|
|
$
|
193,654
|
|
|
$
|
250,000
|
|
|
$
|
56,346
|
|
|
$
|
224,934
|
|
Nomura Loan Agreement
|
4/5/2020
|
|
|
1-month LIBOR + 3.00%
|
|
|
30,497
|
|
|
250,000
|
|
|
219,503
|
|
|
48,388
|
|
||||
HOME II Loan Agreement
|
11/9/2019
|
|
|
1-month LIBOR + 2.10%
|
|
|
83,270
|
|
|
83,270
|
|
|
—
|
|
|
100,461
|
|
||||
HOME III Loan Agreement
|
11/9/2019
|
|
|
1-month LIBOR + 2.10%
|
|
|
89,150
|
|
|
89,150
|
|
|
—
|
|
|
111,542
|
|
||||
HOME IV Loan Agreement (A)
|
12/9/2022
|
|
|
4.00%
|
|
|
114,201
|
|
|
114,201
|
|
|
—
|
|
|
145,461
|
|
||||
HOME IV Loan Agreement (B)
|
12/9/2022
|
|
|
4.00%
|
|
|
114,590
|
|
|
114,590
|
|
|
—
|
|
|
146,479
|
|
||||
Term Loan Agreement
|
4/6/2022
|
|
|
5.00%
|
|
|
100,000
|
|
|
100,000
|
|
|
—
|
|
|
114,401
|
|
||||
FYR SFR Loan Agreement
|
9/1/2028
|
|
|
4.65%
|
|
|
508,700
|
|
|
508,700
|
|
|
—
|
|
|
585,563
|
|
||||
MS Loan Agreement
|
12/7/2023
|
|
|
1-month LIBOR + 1.80%
|
|
|
504,986
|
|
|
504,986
|
|
|
—
|
|
|
609,619
|
|
||||
|
|
|
|
|
|
|
1,739,048
|
|
|
$
|
2,014,897
|
|
|
$
|
275,849
|
|
|
$
|
2,086,848
|
|
|
Less: unamortized loan discounts
|
|
|
|
|
|
|
(4,896
|
)
|
|
|
|
|
|
|
|||||||
Less: deferred debt issuance costs
|
|
|
|
|
|
|
(11,933
|
)
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
$
|
1,722,219
|
|
|
|
|
|
|
|
(1)
|
On April 26, 2019, we amended the CS Repurchase Agreement to, among other things, reduce the interest rate spread over one-month LIBOR to
2.30%
for funding under the facility secured by rental properties.
|
(2)
|
On April 5, 2019, we amended the Nomura Loan Agreement to, among other things, revise the maturity date to April 3, 2020 and reduce the interest rate spread over one-month LIBOR to
2.30%
.
|
(3)
|
Represents initial maturity date. We have the option to extend the maturity date for up to
three
successive
one
-year extensions.
|
(4)
|
The interest rate is capped at
4.40%
under an interest rate cap derivative. See
Note 11
.
|
(5)
|
The interest rate is capped at
4.30%
under an interest rate cap derivative. See
Note 11
.
|
•
|
In connection with the seller financing related to the an acquisition of SFR properties on March 30, 2017, our wholly owned subsidiary, HOME SFR Borrower II, LLC (“HOME Borrower II”), entered into the HOME II Loan Agreement with entities sponsored by Amherst Holdings, LLC (“Amherst”). On November 13, 2017, HOME Borrower II entered into an amended and restated loan agreement, which was acquired by Metropolitan Life Insurance Company (“MetLife”). HOME Borrower II has the option to extend the HOME II Loan Agreement beyond the initial maturity date for
three
successive
one
-year extensions, provided, among other things, that there is no event of default under the HOME II Loan Agreement on each maturity date. The HOME II Loan Agreement is cross-defaulted and cross-collateralized with the HOME III Loan Agreement.
|
•
|
In connection with the seller financing related to an acquisition of SFR properties on June 29, 2017, our wholly owned subsidiary, HOME SFR Borrower III, LLC (“HOME Borrower III”), entered into the HOME III Loan Agreement with entities sponsored by Amherst. On November 13, 2017, HOME Borrower III entered into an amended and restated loan agreement, which was acquired by MetLife. HOME Borrower III has the option to extend the HOME III Loan Agreement beyond the initial maturity date for
three
successive
one
-year extensions, provided, among other things, that there is no event of default under the HOME III Loan Agreement on each maturity date. The HOME III Loan Agreement is also cross-defaulted and cross-collateralized with the HOME II Loan Agreement.
|
•
|
In connection with the seller financing related to an acquisition of SFR properties on November 29, 2017, our wholly owned subsidiary, HOME SFR Borrower IV, LLC (“HOME Borrower IV”), entered into two separate loan agreements with entities sponsored by Amherst (collectively, the “HOME IV Loan Agreements”). The HOME IV Loan Agreements were acquired by MetLife on November 29, 2017.
|
•
|
reporting requirements to the agent or lender,
|
•
|
minimum adjusted tangible net worth requirements,
|
•
|
minimum net asset requirements,
|
•
|
limitations on the indebtedness,
|
•
|
minimum levels of liquidity, including specified levels of unrestricted cash,
|
•
|
limitations on sales and dispositions of properties collateralizing certain of the loan agreements,
|
•
|
various restrictions on the use of cash generated by the operations of properties, and
|
•
|
a minimum fixed charge coverage ratio.
|
2019 (1)
|
$
|
87,275
|
|
2020
|
14,368
|
|
|
2021
|
1,194
|
|
|
2022
|
41
|
|
|
2023
|
—
|
|
|
Thereafter
|
—
|
|
|
|
$
|
102,878
|
|
(1)
|
Excludes the
three months ended March 31, 2019
.
|
(1)
|
Excludes the
three months ended March 31, 2019
.
|
|
Finance Lease Liabilities
|
||
2019 (1)
|
$
|
603
|
|
2020
|
651
|
|
|
2021
|
542
|
|
|
2022
|
115
|
|
|
2023
|
50
|
|
|
Thereafter
|
—
|
|
|
Total lease payments
|
1,961
|
|
|
Less: interest
|
191
|
|
|
Lease liabilities
|
$
|
1,770
|
|
(1)
|
Excludes the
three months ended March 31, 2019
.
|
•
|
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 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%
(or
1.75%
and
2.06%
per quarter), depending on the
10
-year treasury rate. To the extent that we have an aggregate shortfall in its return rate over the previous seven quarters, that aggregate return rate shortfall gets added to the normal quarterly return hurdle for the next quarter before AAMC is entitled to an incentive management fee. 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 homes leased by us for the first time during the applicable quarter.
|
|
Three months ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Base management fees (1)
|
$
|
3,546
|
|
|
$
|
3,727
|
|
Conversion fees (1)
|
29
|
|
|
63
|
|
||
Expense reimbursements (2)
|
328
|
|
|
262
|
|
(1)
|
Included in management fees to AAMC in the condensed consolidated statements of operations.
|
(2)
|
Included in general and administrative expenses in the condensed consolidated statements of operations.
|
Effective Date
|
|
Termination Date
|
|
Strike Rate
|
|
Benchmark Rate
|
|
Notional Amount
|
||
November 2, 2018
|
|
May 9, 2024
|
|
2.50%
|
|
One-month LIBOR
|
|
$
|
505,000
|
|
October 16, 2018
|
|
October 15, 2022
|
|
2.30%
|
|
One-month LIBOR
|
|
83,270
|
|
|
October 16, 2018
|
|
October 15, 2022
|
|
2.30%
|
|
One-month LIBOR
|
|
89,149
|
|
|
|
Asset Derivatives
|
||||||||
|
|
Balance Sheet Location
|
|
Fair Value as of
|
||||||
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
||||
Interest rate caps
|
|
Other assets
|
|
$
|
6,758
|
|
|
$
|
14,367
|
|
Total
|
|
|
|
$
|
6,758
|
|
|
$
|
14,367
|
|
|
|
Amount of Gain (Loss) Recognized in OCI on Derivative (effective portion)
|
|
Location of Gain (Loss) Reclassified from Accumulated OCI into Net Loss
|
|
Amount of Gain (Loss) Reclassified from Accumulated OCI into Net Loss (effective portion)
|
|
Total Amount of Interest Expense Presented in the Condensed Consolidated Statements of Operations
|
||||||||||||||||||
|
|
Three Months ended March 31,
|
|
|
Three Months ended March 31,
|
|
Three Months ended March 31,
|
|||||||||||||||||||
|
|
2019
|
|
2018
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||||||
Derivatives in cash flow hedging relationships
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest rate caps
|
|
$
|
(7,609
|
)
|
|
$
|
—
|
|
|
Interest expense
|
|
$
|
(987
|
)
|
|
$
|
—
|
|
|
$
|
21,510
|
|
|
$
|
16,063
|
|
|
Three months ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Numerator
|
|
|
|
||||
Net loss
|
$
|
(18,508
|
)
|
|
$
|
(27,350
|
)
|
|
|
|
|
||||
Denominator
|
|
|
|
||||
Weighted average common stock outstanding – basic
|
53,630,204
|
|
|
53,454,063
|
|
||
Weighted average common stock outstanding – diluted
|
53,630,204
|
|
|
53,454,063
|
|
||
|
|
|
|
||||
Loss per basic common share
|
$
|
(0.35
|
)
|
|
$
|
(0.51
|
)
|
Loss per diluted common share
|
$
|
(0.35
|
)
|
|
$
|
(0.51
|
)
|
|
Three months ended March 31,
|
||||
|
2019
|
|
2018
|
||
Denominator (in weighted-average shares)
|
|
|
|
||
Stock options
|
47,949
|
|
|
99,974
|
|
Restricted stock
|
321,637
|
|
|
208,754
|
|
•
|
Base Management Fee.
Front Yard will pay a quarterly base management fee (the “Base Management Fee”) to AAMC as follows:
|
◦
|
Initially, commencing on the Effective Date and until the Reset Date (as defined below), the quarterly Base Management Fee will be (i)
$3,584,000
(the “Minimum Base Fee”)
plus
(ii) an additional amount (the “Additional Base Fee”), if any, of
50%
of the amount by which Front Yard's per share Adjusted AFFO (as defined in the Amended AMA) for the quarter exceeds
$0.15
per share (provided that the Base Management Fee for any calendar quarter prior to the Reset Date cannot be less than the Minimum Base Fee or greater than
$5,250,000
). Beginning in 2021, the Base Management Fee may be reduced, but not below the Minimum Base Fee, in the fourth quarter of each year by the amount that Front Yard's AFFO (as defined below) on a per share basis is less than an aggregate of
$0.60
for the applicable calendar year (the “AFFO Adjustment Amount”); and
|
◦
|
Thereafter, commencing in the first quarter after which the quarterly Base Management Fee first reaches
$5,250,000
(the “Reset Date”), the Base Management Fee will be
1/4
of the sum of (i) the applicable Annual Base Fee Floor
plus
(ii) the amount calculated by multiplying the applicable Manager Base Fee Percentage by the amount, if any, that Front Yard's Gross Real Estate Assets (as defined below) exceeds the applicable Gross Real Estate Assets Floor (in each case of the foregoing clauses (i) and (ii), as set forth in the table below),
minus
(iii) solely in the case of the fourth quarter of a calendar year, the AFFO Adjustment Amount (if any); provided, that the Base Management Fee for any calendar quarter shall not be less than the Minimum Base Fee.
|
Gross Real Estate Assets (1)
|
|
Annual Base Fee Floor
|
|
Manager Base Fee Percentage
|
|
Gross Real Estate Assets Floor
|
Up to $2,750,000,000
|
|
$21,000,000
|
|
0.325%
|
|
$2,250,000,000
|
$2,750,000,000 – $3,250,000,000
|
|
$22,625,000
|
|
0.275%
|
|
$2,750,000,000
|
$3,250,000,000 – $4,000,000,000
|
|
$24,000,000
|
|
0.250%
|
|
$3,250,000,000
|
$4,000,000,000 – $5,000,000,000
|
|
$25,875,000
|
|
0.175%
|
|
$4,000,000,000
|
$5,000,000,000 – $6,000,000,000
|
|
$27,625,000
|
|
0.125%
|
|
$5,000,000,000
|
$6,000,000,000 – $7,000,000,000
|
|
$28,875,000
|
|
0.100%
|
|
$6,000,000,000
|
Thereafter
|
|
$29,875,000
|
|
0.050%
|
|
$7,000,000,000
|
(1)
|
Gross Real Estate Assets is generally defined as the aggregate book value of all residential real estate assets owned by Front Yard and its subsidiaries before reserves for depreciation, impairment or other non-cash reserves as computed in accordance with GAAP.
|
•
|
Incentive Fee.
AAMC may earn an annual Incentive Fee to the extent that Front Yard's AFFO exceeds certain performance thresholds. The annual Incentive Fee, if any, shall be an amount equal to
20%
of the amount by which Front Yard's AFFO for the calendar year (after the deduction of Base Management Fees but prior to the deduction of Incentive Fees) exceeds
5%
of Gross Shareholder Equity (as defined below).
|
•
|
For any calendar year in which average Gross Real Estate Assets is less than
$2,250,000,000
, the aggregate fees payable to AAMC shall not exceed
$21,000,000
; or
|
•
|
For any calendar year in which average Gross Real Estate Assets exceeds
$2,250,000,000
, the aggregate fees payable to AAMC shall not exceed the sum of (i) the applicable Aggregate Fee Floor
plus
(ii) the amount calculated by multiplying the applicable Aggregate Fee Percentage by the amount, if any, by which average Gross Real Estate Assets exceed the applicable Gross Real Estate Assets Floor, in each case as set forth in the table below.
|
Gross Real Estate Assets
|
|
Aggregate Fee Floor
|
|
Aggregate Fee Percentage
|
|
Gross Real Estate Assets Floor
|
$2,250,000,000 – $2,750,000,000
|
|
$21,000,000
|
|
0.650%
|
|
$2,250,000,000
|
$2,750,000,000 – $3,250,000,000
|
|
$24,250,000
|
|
0.600%
|
|
$2,750,000,000
|
$3,250,000,000 – $4,000,000,000
|
|
$27,250,000
|
|
0.500%
|
|
$3,250,000,000
|
$4,000,000,000 – $5,000,000,000
|
|
$31,000,000
|
|
0.450%
|
|
$4,000,000,000
|
$5,000,000,000 – $6,000,000,000
|
|
$35,500,000
|
|
0.250%
|
|
$5,000,000,000
|
$6,000,000,000 – $7,000,000,000
|
|
$38,000,000
|
|
0.125%
|
|
$6,000,000,000
|
Thereafter
|
|
$39,250,000
|
|
0.100%
|
|
$7,000,000,000
|
|
Held for Use
|
|
Held for Sale
|
|
Total Portfolio
|
|||||||||
March 31, 2019
|
Stabilized
|
|
Non-Stabilized
|
|
Total
|
|
|
|||||||
Rental properties:
|
|
|
|
|
|
|
|
|
|
|||||
Leased
|
13,788
|
|
|
—
|
|
|
13,788
|
|
|
—
|
|
|
13,788
|
|
Listed and ready for rent
|
241
|
|
|
19
|
|
|
260
|
|
|
—
|
|
|
260
|
|
Unit turn
|
378
|
|
|
—
|
|
|
378
|
|
|
—
|
|
|
378
|
|
Renovation
|
—
|
|
|
71
|
|
|
71
|
|
|
—
|
|
|
71
|
|
Total rental portfolio
|
14,407
|
|
|
90
|
|
|
14,497
|
|
|
|
|
|
||
Previous rentals identified for sale
|
—
|
|
|
120
|
|
|
120
|
|
|
193
|
|
|
313
|
|
Legacy REO
|
—
|
|
|
37
|
|
|
37
|
|
|
38
|
|
|
75
|
|
|
14,407
|
|
|
247
|
|
|
14,654
|
|
|
231
|
|
|
14,885
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|||||
Rental properties:
|
|
|
|
|
|
|
|
|
|
|||||
Leased
|
13,546
|
|
|
—
|
|
|
13,546
|
|
|
423
|
|
|
13,969
|
|
Listed and ready for rent
|
409
|
|
|
25
|
|
|
434
|
|
|
8
|
|
|
442
|
|
Unit turn
|
428
|
|
|
—
|
|
|
428
|
|
|
18
|
|
|
446
|
|
Renovation
|
—
|
|
|
136
|
|
|
136
|
|
|
2
|
|
|
138
|
|
Total rental portfolio
|
14,383
|
|
|
161
|
|
|
14,544
|
|
|
|
|
|
||
Previous rentals identified for sale
|
—
|
|
|
158
|
|
|
158
|
|
|
188
|
|
|
346
|
|
Legacy REO
|
—
|
|
|
56
|
|
|
56
|
|
|
48
|
|
|
104
|
|
|
14,383
|
|
|
375
|
|
|
14,758
|
|
|
687
|
|
|
15,445
|
|
State
|
|
Number of Properties
|
|
Carrying
Value (1) (2)
|
|
Average Age in Years
|
||||
Georgia
|
|
4,353
|
|
|
$
|
477,497
|
|
|
37
|
|
Florida
|
|
2,108
|
|
|
312,134
|
|
|
41
|
|
|
Texas
|
|
1,961
|
|
|
284,617
|
|
|
29
|
|
|
Tennessee
|
|
1,474
|
|
|
207,719
|
|
|
24
|
|
|
North Carolina
|
|
868
|
|
|
117,054
|
|
|
26
|
|
|
Alabama
|
|
722
|
|
|
81,894
|
|
|
42
|
|
|
Indiana
|
|
668
|
|
|
84,279
|
|
|
24
|
|
|
Minnesota
|
|
488
|
|
|
73,629
|
|
|
88
|
|
|
Missouri
|
|
436
|
|
|
63,037
|
|
|
41
|
|
|
Oklahoma
|
|
305
|
|
|
43,798
|
|
|
28
|
|
|
All other rentals
|
|
1,114
|
|
|
165,089
|
|
|
36
|
|
|
Total rental portfolio
|
|
14,497
|
|
|
1,910,747
|
|
|
36
|
|
|
Rental properties held for sale
|
|
120
|
|
|
15,835
|
|
|
54
|
|
|
Previous rentals identified for sale
|
|
193
|
|
|
31,970
|
|
|
48
|
|
|
Legacy REO
|
|
75
|
|
|
26,218
|
|
|
50
|
|
|
Total
|
|
14,885
|
|
|
$
|
1,984,770
|
|
|
36
|
|
(1)
|
The carrying value of an asset held for use is based on historical cost 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)
|
The carrying value of certain properties acquired on November 29, 2017 are included based upon the initial purchase price, certain of which are subject to potential purchase price adjustment provisions as set forth in the purchase and sale agreement. For additional information, refer to the “Liquidity and Capital Resources - Potential Purchase Price Adjustments of Certain Acquired Properties” section below.
|
|
Three months ended March 31,
|
||||
|
2019
|
|
2018
|
||
Beginning count of real estate assets
|
15,445
|
|
|
12,574
|
|
Acquisitions
|
14
|
|
|
35
|
|
Dispositions
|
(576
|
)
|
|
(193
|
)
|
Other additions
|
2
|
|
|
—
|
|
Ending count of real estate assets
|
14,885
|
|
|
12,416
|
|
|
Three months ended March 31,
|
||||
|
2019
|
|
2018
|
||
Mortgage Loans at Fair Value
|
|
|
|
||
Beginning
|
74
|
|
|
111
|
|
Resolutions and dispositions
|
(8
|
)
|
|
(12
|
)
|
Ending
|
66
|
|
|
99
|
|
i.
|
Residential property operating expenses.
Residential property operating expenses are expenses associated with our ownership and operation of residential properties, including expenses such as expenses towards repairs, utility expenses on vacant properties, turnover costs, property taxes, insurance, HOA dues and certain personnel cost for repair and maintenance employees.
|
ii.
|
Property management expenses.
Property management expenses include certain personnel costs of property management employees and other costs incurred in the oversight and management of our portfolio of homes.
|
iii.
|
Depreciation and amortization.
Depreciation and amortization is a non-cash expense associated with the ownership of real estate and generally remains consistent over the life of an asset since we depreciate our properties on a straight-line basis. Depreciation and amortization also includes the amortization of our in-place lease intangible assets and lease commissions, which generally are amortized for periods of one year or less. The level of amortization of in-place lease intangible assets will vary depending upon our acquisition activity.
|
iv.
|
Acquisition and integration costs.
Acquisition and integration costs include expenses associated with acquisitions as well as duplicative or non-recurring costs associated with the internalization of our property management function. We expect the majority of our asset acquisitions will not meet the definition of a business; therefore, we expect that the majority of acquisition costs will be capitalized into the cost basis of such assets.
|
v.
|
Impairment.
Impairment represents the amount by which we estimate the carrying amount of a property will not be recoverable.
|
vi.
|
Mortgage loan servicing costs.
Mortgage loan servicing costs are primarily for servicing fees, foreclosure fees and advances of residential property insurance.
|
vii.
|
Interest expense.
Interest expense consists of the costs to borrow money in connection with our debt financing of our portfolios.
|
viii.
|
Share-based compensation.
Share-based compensation is a non-cash expense related to the restricted stock units and stock options issued pursuant to our authorized share-based compensation plans.
|
ix.
|
General and administrative.
General and administrative expenses consist of the costs related to the general operation and overall administration of our business, including compensation and benefits of certain employees. In addition, general administrative expenses include expense reimbursements to AAMC, which include the compensation and benefits of the General Counsel dedicated to us and certain out-of-pocket expenses incurred by AAMC on our behalf.
|
x.
|
Management fees to AAMC.
Management fees paid to AAMC consist of a base management fee of 2% of our invested capital (as defined in the AMA), a conversion fee for assets that are converted to SFR properties during each quarter and an incentive management fee calculated as 25% of our return on invested capital that exceeds a minimum threshold for each period. For information regarding our management fees to AAMC effective from May 7, 2019, refer to Item 1 - Financial Statements (Unaudited) - Note 15, “Subsequent Events.”
|
|
Three months ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Change in unrealized gain on mortgage loans due to:
|
|
|
|
||||
Conversion of mortgage loans to REO, net
|
$
|
615
|
|
|
$
|
137
|
|
Change in fair value, net
|
116
|
|
|
63
|
|
||
Reclassification to realized gain or loss
|
(7,859
|
)
|
|
(15,708
|
)
|
||
Total change in unrealized gain on mortgage loans
|
(7,128
|
)
|
|
(15,508
|
)
|
||
Net realized loss on mortgage loans
|
(38
|
)
|
|
(470
|
)
|
||
Net realized gain on sales of real estate
|
15,943
|
|
|
14,344
|
|
||
Net gain (loss) on real estate and mortgage loans
|
$
|
8,777
|
|
|
$
|
(1,634
|
)
|
|
Maturity Date
|
|
|
Interest Rate
|
|
|
Amount Outstanding
|
|
Maximum Borrowing Capacity
|
|
Amount of Available Funding
|
|
Book Value of Collateral
|
||||||||
March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
CS Repurchase Agreement
|
11/15/2019
|
|
|
1-month LIBOR + 3.00%
|
(1)
|
|
$
|
104,145
|
|
|
$
|
250,000
|
|
|
$
|
145,855
|
|
|
$
|
108,375
|
|
Nomura Loan Agreement
|
4/5/2020
|
(2)
|
|
1-month LIBOR + 3.00%
|
(2)
|
|
29,155
|
|
|
250,000
|
|
|
220,845
|
|
|
45,467
|
|
||||
HOME II Loan Agreement
|
11/9/2019
|
(3)
|
|
1-month LIBOR + 2.10%
|
(4)
|
|
83,270
|
|
|
83,270
|
|
|
—
|
|
|
99,771
|
|
||||
HOME III Loan Agreement
|
11/9/2019
|
(3)
|
|
1-month LIBOR + 2.10%
|
(4)
|
|
89,150
|
|
|
89,150
|
|
|
—
|
|
|
110,851
|
|
||||
HOME IV Loan Agreement (A)
|
12/9/2022
|
|
|
4.00%
|
|
|
114,201
|
|
|
114,201
|
|
|
—
|
|
|
144,451
|
|
||||
HOME IV Loan Agreement (B)
|
12/9/2022
|
|
|
4.00%
|
|
|
114,590
|
|
|
114,590
|
|
|
—
|
|
|
145,487
|
|
||||
Term Loan Agreement
|
4/6/2022
|
|
|
5.00%
|
|
|
99,782
|
|
|
99,782
|
|
|
—
|
|
|
113,009
|
|
||||
FYR SFR Loan Agreement
|
9/1/2028
|
|
|
4.65%
|
|
|
508,700
|
|
|
508,700
|
|
|
—
|
|
|
581,891
|
|
||||
MS Loan Agreement
|
12/7/2023
|
|
|
1-month LIBOR + 1.80%
|
(5)
|
|
504,986
|
|
|
504,986
|
|
|
—
|
|
|
605,038
|
|
||||
|
|
|
|
|
|
|
1,647,979
|
|
|
$
|
2,014,679
|
|
|
$
|
366,700
|
|
|
$
|
1,954,340
|
|
|
Less: unamortized loan discounts
|
|
|
|
|
|
|
(4,579
|
)
|
|
|
|
|
|
|
|||||||
Less: deferred debt issuance costs
|
|
|
|
|
|
|
(11,421
|
)
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
$
|
1,631,979
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
CS Repurchase Agreement
|
11/15/2019
|
|
|
1-month LIBOR + 3.00%
|
|
|
$
|
193,654
|
|
|
$
|
250,000
|
|
|
$
|
56,346
|
|
|
$
|
224,934
|
|
Nomura Loan Agreement
|
4/5/2020
|
|
|
1-month LIBOR + 3.00%
|
|
|
30,497
|
|
|
250,000
|
|
|
219,503
|
|
|
48,388
|
|
||||
HOME II Loan Agreement
|
11/9/2019
|
|
|
1-month LIBOR + 2.10%
|
|
|
83,270
|
|
|
83,270
|
|
|
—
|
|
|
100,461
|
|
||||
HOME III Loan Agreement
|
11/9/2019
|
|
|
1-month LIBOR + 2.10%
|
|
|
89,150
|
|
|
89,150
|
|
|
—
|
|
|
111,542
|
|
||||
HOME IV Loan Agreement (A)
|
12/9/2022
|
|
|
4.00%
|
|
|
114,201
|
|
|
114,201
|
|
|
—
|
|
|
145,461
|
|
||||
HOME IV Loan Agreement (B)
|
12/9/2022
|
|
|
4.00%
|
|
|
114,590
|
|
|
114,590
|
|
|
—
|
|
|
146,479
|
|
||||
Term Loan Agreement
|
4/6/2022
|
|
|
5.00%
|
|
|
100,000
|
|
|
100,000
|
|
|
—
|
|
|
114,401
|
|
||||
FYR SFR Loan Agreement
|
9/1/2028
|
|
|
4.65%
|
|
|
508,700
|
|
|
508,700
|
|
|
—
|
|
|
585,563
|
|
||||
MS Loan Agreement
|
12/7/2023
|
|
|
1-month LIBOR + 1.80%
|
|
|
504,986
|
|
|
504,986
|
|
|
—
|
|
|
609,619
|
|
||||
|
|
|
|
|
|
|
1,739,048
|
|
|
$
|
2,014,897
|
|
|
$
|
275,849
|
|
|
$
|
2,086,848
|
|
|
Less: unamortized loan discounts
|
|
|
|
|
|
|
(4,896
|
)
|
|
|
|
|
|
|
|||||||
Less: deferred debt issuance costs
|
|
|
|
|
|
|
(11,933
|
)
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
$
|
1,722,219
|
|
|
|
|
|
|
|
(1)
|
On April 26, 2019, we amended the CS Repurchase Agreement to, among other things, reduce the interest rate spread over one-month LIBOR to
2.30%
for funding under the facility secured by rental properties.
|
(2)
|
On April 5, 2019, we amended the Nomura Loan Agreement to, among other things, revise the maturity date to April 3, 2020 and reduce the interest rate spread over one-month LIBOR to
2.30%
.
|
(3)
|
Represents initial maturity date. We have the option to extend the maturity date for up to
three
successive
one
-year extensions.
|
(1)
|
The interest rate is capped at
4.40%
under an interest rate cap derivative.
|
(2)
|
The interest rate is capped at
4.30%
under an interest rate cap derivative.
|
•
|
In connection with the seller financing related to the an acquisition of SFR properties on March 30, 2017, our wholly owned subsidiary, HOME SFR Borrower II, LLC (“HOME Borrower II”), entered into the HOME II Loan Agreement with entities sponsored by Amherst Holdings, LLC (“Amherst”). On November 13, 2017, HOME Borrower II entered into an amended and restated loan agreement, which was acquired by Metropolitan Life Insurance Company (“MetLife”). HOME Borrower II has the option to extend the HOME II Loan Agreement beyond the initial maturity date for
three
successive
one
-year extensions, provided, among other things, that there is no event of default under the HOME II Loan Agreement on each maturity date. The HOME II Loan Agreement is cross-defaulted and cross-collateralized with the HOME III Loan Agreement.
|
•
|
In connection with the seller financing related to an acquisition of SFR properties on June 29, 2017, our wholly owned subsidiary, HOME SFR Borrower III, LLC (“HOME Borrower III”), entered into the HOME III Loan Agreement with entities sponsored by Amherst. On November 13, 2017, HOME Borrower III entered into an amended and restated loan agreement, which was acquired by MetLife. HOME Borrower III has the option to extend the HOME III Loan Agreement beyond the initial maturity date for
three
successive
one
-year extensions, provided, among other things, that there is no event of default under the HOME III Loan Agreement on each maturity date. The HOME III Loan Agreement is also cross-defaulted and cross-collateralized with the HOME II Loan Agreement.
|
•
|
In connection with the seller financing related to an acquisition of SFR properties on November 29, 2017, our wholly owned subsidiary, HOME SFR Borrower IV, LLC (“HOME Borrower IV”), entered into two separate loan agreements with entities sponsored by Amherst (collectively, the “HOME IV Loan Agreements”). The HOME IV Loan Agreements were acquired by MetLife on November 29, 2017.
|
•
|
reporting requirements to the agent or lender,
|
•
|
minimum adjusted tangible net worth requirements,
|
•
|
minimum net asset requirements,
|
•
|
limitations on the indebtedness,
|
•
|
minimum levels of liquidity, including specified levels of unrestricted cash,
|
•
|
limitations on sales and dispositions of properties collateralizing certain of the loan agreements,
|
•
|
various restrictions on the use of cash generated by the operations of properties, and
|
•
|
a minimum fixed charge coverage ratio.
|
|
Three Months Ended
|
||||||||||
|
March 31, 2019
|
|
December 31, 2018
|
|
March 31, 2018
|
||||||
Balance at end of period
|
$
|
1,647,979
|
|
|
$
|
1,739,048
|
|
|
$
|
1,264,853
|
|
Maximum month end balance outstanding during the period
|
1,743,383
|
|
|
1,739,048
|
|
|
1,276,161
|
|
|||
Weighted average quarterly balance
|
1,687,266
|
|
|
1,718,342
|
|
|
1,274,715
|
|
|||
Amount of available funding at end of period
|
366,700
|
|
|
275,849
|
|
|
325,617
|
|
|
Three Months ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Net cash used in operating activities
|
$
|
(7,987
|
)
|
|
$
|
(4,471
|
)
|
Net cash provided by investing activities
|
108,501
|
|
|
25,678
|
|
||
Net cash used in financing activities
|
(99,702
|
)
|
|
(26,644
|
)
|
||
Total cash flows
|
$
|
812
|
|
|
$
|
(5,437
|
)
|
Exhibit Number
|
|
Description
|
|
Separation Agreement, dated as of December 21, 2012, between Front Yard 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 SEC on December 28, 2012).
|
|
|
Membership Interest Purchase and Sale Agreement, dated September 30, 2016, between MSR I, LP and Front Yard Residential, L.P. (incorporated by reference to Exhibit 2.1 of the registrant's Current Report on Form 8-K filed with the SEC on October 3, 2016).
|
|
|
Purchase and Sale Agreement, dated September 30, 2016, between Firebird SFE I, LLC and Front Yard Residential, L.P. (incorporated by reference to Exhibit 2.2 of the registrant's Current Report on Form 8-K filed with the SEC on October 3, 2016).
|
|
|
Purchase Agreement, dated August 8, 2018, by and among FYR SFR Purchaser, LLC, RHA 1 Inc., RHA 2 Inc., RHA 3 Inc., HavenBrook Partners, LLC, Rental Home Associates LLC and each of the unitholders of HavenBrook identified therein (incorporated by reference to Exhibit 2.1 of the Registrant's Current Report on Form 8-K filed with the SEC on August 9, 2018).†
|
|
|
Articles of Restatement of Front Yard Residential Corporation (incorporated by reference to Exhibit 3.3 of the registrant's Current Report on Form 8-K filed with the SEC on April 8, 2013).
|
|
|
By-laws of Front Yard Residential Corporation (incorporated by reference to Exhibit 3.2 of the Registrant's Registration Statement on Form 10 filed with the SEC on December 5, 2012).
|
|
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
|
|
|
|
|
Front Yard Residential Corporation
|
Date:
|
May 8, 2019
|
By:
|
/s/
|
Robin N. Lowe
|
|
|
|
|
Robin N. Lowe
|
|
|
|
|
Chief Financial Officer
|
Date:
|
May 8, 2019
|
By:
|
/s/
|
George G. Ellison
|
|
|
|
|
George G. Ellison
|
|
|
|
|
Chief Executive Officer
|
Date:
|
May 8, 2019
|
By:
|
/s/
|
Robin N. Lowe
|
|
|
|
|
Robin N. Lowe
|
|
|
|
|
Chief Financial Officer
|
Date:
|
May 8, 2019
|
By:
|
/s/
|
George G. Ellison
|
|
|
|
|
George G. Ellison
|
|
|
|
|
Chief Executive Officer
|
Date:
|
May 8, 2019
|
By:
|
/s/
|
Robin N. Lowe
|
|
|
|
|
Robin N. Lowe
|
|
|
|
|
Chief Financial Officer
|