Front Yard Residential Announces Termination of Merger Agreement with Amherst and Provides Business Update
CHRISTIANSTED,
In connection with the termination of the merger agreement, Amherst has agreed to pay a
“While we are disappointed that the transaction with Amherst will not close, we believe that we have reached an outcome that will allow the Company to focus on delivering long-term shareholder value while putting it in a strong financial position going forward,” said
- Rental revenues increased to
$54.3 million for the first quarter of 2020, up 4.3% over the fourth quarter of 2019. - The first quarter of 2020 was Front Yard's best ever operational quarter with Core Funds from Operations (“FFO”) of
$0.12 per diluted share, an improvement of$0.07 per diluted share over the fourth quarter 2019.1 March 31, 2020 was Front Yard's best ever stabilized leased percentage of 97.0%, up 200 basis points from 95.0% as ofDecember 31, 2019 .- April rent collections exceeded 99% of Front Yard’s trailing 12-month average and stabilized leased percentage increased to 97.7% at
April 30, 2020 .
________________
1 Core FFO is a non-GAAP measure. Refer to the Reconciliation of Non-GAAP Financial Measures section for further information and reconciliation to GAAP net loss.
“We are pleased to have reached an agreement with Front Yard on an alternate transaction that builds on our long relationship with the Front Yard team,” said
First Quarter 2020 Financial Results
GAAP net loss for the first quarter of 2020 was
About Front Yard
Front Yard is an industry leader in providing quality, affordable rental homes to America’s families. Our homes offer exceptional value in a variety of suburban communities that have easy accessibility to metropolitan areas. Front Yard's tenants enjoy the space and comfort that is unique to single-family housing, at reasonable prices. Our mission is to provide our tenants with houses they are proud to call home. Additional information is available at www.frontyardresidential.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding management’s beliefs, estimates, projections, anticipations and assumptions with respect to, among other things, the Company’s financial results, future operations, business plans and investment strategies as well as industry and market conditions. These statements may be identified by words such as “anticipate,” “intend,” “expect,” “may,” “could,” “should,” “would,” “plan,” “estimate,” “target,” “seek,” “believe” and other expressions or words of similar meaning. We caution that forward-looking statements are qualified by the existence of certain risks and uncertainties that could cause actual results and events to differ materially from what is contemplated by the forward-looking statements. These risks and uncertainties include: our ability to successfully implement our strategic initiatives and achieve their anticipated impact; our ability to implement our business strategy; risks and uncertainties related to the COVID-19 pandemic, including as related to adverse economic conditions on real estate-related assets and financing conditions; our ability to make distributions to stockholders; our ability to integrate newly acquired rental assets into the portfolio; the ability to successfully perform property management services at the level and/or the cost that we anticipate; the failure to identify unforeseen expenses or material liabilities associated with acquisitions through the due diligence process prior to such acquisitions; difficulties in identifying single-family properties to acquire; the impact of changes to the supply of, value of and the returns on single-family rental properties; our ability to acquire single-family rental properties generating attractive returns; our ability to sell non-core assets on favorable terms or at all; our ability to predict costs; our ability to effectively compete with competitors; changes in interest rates; changes in the market value of single-family properties; our ability to obtain and access financing arrangements on favorable terms or at all; our ability to deploy the net proceeds from financings or asset sales to acquire assets in a timely manner or at all; our ability to maintain adequate liquidity and meet the requirements under its financing arrangements; our ability to retain the exclusive engagement of Altisource Asset Management Corporation; the failure of our third party vendors to effectively perform their obligations under their respective agreements with us; our failure to qualify or maintain qualification as a REIT; our failure to maintain our exemption from registration under the Investment Company Act of 1940, as amended; the results of our strategic alternatives review and risks related thereto; the impact of adverse real estate, mortgage or housing markets; the impact of adverse legislative, regulatory or tax changes and other risks and uncertainties detailed in the “Risk Factors” and other sections described from time to time in the Company's current and future filings with the
Forward-looking statements speak only as of the date hereof and, except as required by law, we undertake no obligation to update or revise these forward-looking statements. For additional information regarding these and other risks faced by us, refer to our public filings with the
Condensed Consolidated Statements of Operations
(In thousands, except share and per share amounts)
(Unaudited)
Three months ended |
|||||||
2020 | 2019 | ||||||
Revenues: | |||||||
Rental revenues | $ | 54,328 | $ | 52,625 | |||
Total revenues | 54,328 | 52,625 | |||||
Expenses: | |||||||
Residential property operating expenses | 18,861 | 18,437 | |||||
Property management expenses | 4,171 | 3,675 | |||||
Depreciation and amortization | 20,366 | 22,385 | |||||
Acquisition and integration costs | 69 | 2,211 | |||||
Impairment | 235 | 1,020 | |||||
Mortgage loan servicing costs | — | 387 | |||||
Interest expense | 19,496 | 21,510 | |||||
Share-based compensation | 1,487 | 1,119 | |||||
General and administrative | 7,591 | 5,766 | |||||
Management fees to AAMC | 3,584 | 3,575 | |||||
Total expenses | 75,860 | 80,085 | |||||
Net gain on real estate and mortgage loans | 1,533 | 8,777 | |||||
Operating loss | (19,999 | ) | (18,683 | ) | |||
Casualty losses | (287 | ) | (393 | ) | |||
Insurance recoveries | 63 | 527 | |||||
Other income | 8 | 49 | |||||
Loss before income taxes | (20,215 | ) | (18,500 | ) | |||
Income tax expense | — | 8 | |||||
Net loss | $ | (20,215 | ) | $ | (18,508 | ) | |
Loss per share of common stock - basic: | |||||||
Loss per basic share | $ | (0.37 | ) | $ | (0.35 | ) | |
Weighted average common stock outstanding - basic | 53,943,434 | 53,630,204 | |||||
Loss per share of common stock - diluted: | |||||||
Loss per diluted share | $ | (0.37 | ) | $ | (0.35 | ) | |
Weighted average common stock outstanding - diluted | 53,943,434 | 53,630,204 | |||||
Dividends declared per common share | $ | 0.15 | $ | 0.15 |
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
(unaudited) | |||||||
Assets: | |||||||
Real estate held for use: | |||||||
Land | $ | 398,643 | $ | 398,840 | |||
Rental residential properties | 1,713,406 | 1,707,043 | |||||
Real estate owned | 12,147 | 16,328 | |||||
Total real estate held for use | 2,124,196 | 2,122,211 | |||||
Less: accumulated depreciation | (224,985 | ) | (206,464 | ) | |||
Total real estate held for use, net | 1,899,211 | 1,915,747 | |||||
Real estate assets held for sale | 8,298 | 14,395 | |||||
Cash and cash equivalents | 32,299 | 43,727 | |||||
Restricted cash | 31,796 | 34,282 | |||||
Accounts receivable | 7,025 | 9,235 | |||||
13,376 | 13,376 | ||||||
Prepaid expenses and other assets | 21,485 | 22,360 | |||||
Total assets | $ | 2,013,490 | $ | 2,053,122 | |||
Liabilities: | |||||||
Repurchase and loan agreements | $ | 1,637,466 | $ | 1,644,230 | |||
Accounts payable and accrued liabilities | 60,766 | 64,619 | |||||
Payable to AAMC | 4,140 | 5,014 | |||||
Total liabilities | 1,702,372 | 1,713,863 | |||||
Commitments and contingencies | — | — | |||||
Equity: | |||||||
Common stock, |
541 | 539 | |||||
Additional paid-in capital | 1,190,018 | 1,189,236 | |||||
Accumulated deficit | (859,080 | ) | (830,602 | ) | |||
Accumulated other comprehensive loss | (20,361 | ) | (19,914 | ) | |||
Total equity | 311,118 | 339,259 | |||||
Total liabilities and equity | $ | 2,013,490 | $ | 2,053,122 |
Regulation G Requirement: Reconciliation of Non-GAAP Financial Measures
(In thousands, except share and per share amounts)
(Unaudited)
In evaluating Front Yard’s financial performance, management reviews Funds from Operations (“FFO”) and Core Funds from Operations (“Core FFO”), which exclude certain items from Front Yard’s results under
The following provides related definitions of, and a reconciliation of Front Yard’s
FFO and Core FFO: FFO is a supplemental performance measure of an equity real estate investment trust (“REIT”) used by industry analysts and investors in order to facilitate meaningful comparisons between periods and among peer companies. FFO is defined by the
We believe that FFO is a meaningful supplemental measure of our overall operating performance because historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time, as reflected through depreciation. Because real estate values have historically risen or fallen with market conditions, management considers FFO an appropriate supplemental performance measure as it excludes historical cost depreciation, impairment charges and gains or losses related to sales of previously depreciated homes from GAAP net income. By excluding depreciation, impairment and gains or losses on sales of real estate, FFO provides a measure of our returns on our investments in real estate assets. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of the homes that result from use or market conditions nor the level of capital expenditures to maintain the operating performance of the homes, all of which have real economic effect and could materially affect our results from operations, the utility of FFO as a measure of our performance is limited.
Our Core FFO begins with FFO and is adjusted for share-based compensation; acquisition and integration costs; non-cash interest expense related to deferred debt issuance costs, amortization of loan discounts and mark-to-market adjustments on interest rate derivatives; and other non-comparable items, as applicable. We believe that Core FFO, when used in conjunction with the results of operations under GAAP, is a meaningful supplemental measure of our operating performance for the same reasons as FFO and is further helpful as it provides a consistent measurement of our performance across reporting periods by removing the impact of certain items that are not comparable from period to period. Because Core FFO, similar to FFO, captures neither the changes in the value of the homes nor the level of capital expenditures to maintain them, the utility of Core FFO as a measure of our performance is limited.
Although management believes that FFO and Core FFO increase our comparability with other companies, these measures may not be comparable to the FFO or Core FFO of other companies because other companies may adopt a definition of FFO other than the NAREIT definition, may apply a different method of determining Core FFO or may utilize metrics other than or in addition to Core FFO.
The following table provides a reconciliation of net loss as determined in accordance with
Three months ended |
||||
GAAP net loss | $ | (20,215 | ) | |
Adjustments to determine FFO: | ||||
Depreciation and amortization | 20,366 | |||
Impairment | 235 | |||
Net gain on real estate and mortgage loans | (1,533 | ) | ||
FFO | (1,147 | ) | ||
Adjustments to determine Core FFO: | ||||
Acquisition and integration costs | 69 | |||
Non-cash interest expense | 2,743 | |||
Share-based compensation | 1,487 | |||
Other adjustments | 3,447 | |||
Core FFO | $ | 6,599 | ||
Weighted average common stock outstanding - basic and diluted | 53,943,434 | |||
FFO per share - basic and diluted | $ | (0.02 | ) | |
Core FFO per share - basic and diluted | $ | 0.12 | ||
FOR FURTHER INFORMATION CONTACT: |
Investor Relations |
T: 1-704-558-3068 |
E: IR@fyrhomes.com |
Source: Front Yard Residential Corporation