Front Yard Residential Responds to Snow Park’s Ill-Informed Characterization of Amended Asset Management Agreement
Snow Park’s Analysis is Deeply Flawed and Demonstrates a Fundamental Lack of Understanding of Front Yard’s Business and Single-Family Rental Sector
Amended AMA, Well-Received by Market, was Designed to Maximize Flexibility and Generate
Long-Term Stockholder Value
Urges Stockholders to Vote the WHITE Proxy Card “FOR ALL” of Front Yard’s Director Nominees Who Are Highly Qualified and Committed to Enhancing Long-term Value for Stockholders
Front Yard believes that Snow Park lacks a fundamental understanding of our business and how external management agreements are structured, as well as the broader single-family rental (“SFR”) sector.
Below are the facts:
1)The Amended AMA maximizes Front Yard’s flexibility and ensures the Company has the ability to pursue disciplined growth for the long-term.
Snow Park appears to have misinterpreted the Amended AMA entirely. The Amended AMA provides Front Yard with an improved fee structure that incentivizes both performance and disciplined growth. In fact, it is designed to build long-term stockholder value by enabling Front Yard to increase scale and take advantage of the exceptional opportunity in the affordable SFR sector while prioritizing near-term profitability targets. It also ensures that G&A expenses as a percentage of real estate assets fall as we grow. Specifically, the Amended AMA:
Does NOT increase fees paid to AAMC until Front Yard reaches
its stated target of
$0.15per share of quarterly Adjusted Funds From Operations (“AFFO”);
- Decreases the management fees as a percentage of gross real estate assets as Front Yard grows to bring Front Yard’s G&A in line with larger industry peers;
Provides that no Incentive Fee is payable to AAMC until Front Yard
$0.60per share of annual AFFO;
- Employs an “Aggregate Fee Cap” to further ensure that G&A remains in line with market;
- Further aligns interests with stockholders by incentivizing the manager to grow cash flow;
- Provides the option to terminate the Amended AMA at any time for a reasonable, market-based termination fee; and
- Reduces cost of raising new capital.
2)The market reacted highly favorably to the news of the Amended AMA.
The announcement of the Amended AMA has been well received by the
market, our stockholders and the analysts that understand our business
best. Front Yard’s stock price is up approximately 10% since the
announcement of the Amended AMA on
3)Amended AMA was structured to create long-term stockholder value.
Renegotiating the asset management agreement with AAMC has been a key strategic priority for Front Yard’s Board of Directors (the “Board”). The Amended AMA represents the culmination of more than seven months of deliberations between AAMC and a committee of Front Yard’s independent directors. The committee of independent directors met over 30 times and was advised by leading independent financial and legal advisors.
The Board took into account a number of different metrics, including TSR, in renegotiating the fee structure and determined that gross real estate assets and gross return on shareholder equity were consistent with industry norms and would align AAMC’s interests with those of Front Yard’s stockholders.
4)Snow Park is highly conflicted and not a “true owner” of Front Yard given its significant stake in AAMC and substantial short position in Front Yard.
Snow Park’s interests are not aligned with Front Yard’s stockholders. Despite claiming ownership of 606,622 shares of Front Yard, Snow Park admits in its proxy statement that it also “has a short interest in 450,000 shares,” meaning that Snow Park’s economic exposure is substantially less than 1%. When compared to Snow Park’s over 5% interest in AAMC, it is clear that Snow Park’s interests are not aligned with those of Front Yard’s stockholders. Snow Park acknowledges its possible conflict of interest in its proxy statement, which states: “Snow Park does not presently believe that its ownership of AAMC securities creates a conflict of interest; however, it acknowledges that in the future conflicts of interest could arise due to potential competing economic interests between AAMC and Front Yard.”
Front Yard urges stockholders to protect their investment by voting the WHITE proxy card “FOR ALL” of the Company’s highly-qualified director nominees. Front Yard’s definitive proxy materials and other important information related to the Company’s 2019 Annual Meeting of Stockholders can be found on the “Investors” section of the Company’s website at www.frontyardresidential.com, and on the SEC’s website at www.sec.gov.
If you have questions or need assistance in voting your shares
on the WHITE proxy card, please call our proxy solicitor:
INNISFREE M&A INCORPORATED
Stockholders may call toll-free at 1 (888) 750-5834
Banks and Brokers may call collect at 1 (212) 750-5833
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.
The information in 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, industry and market conditions and the
future composition of the Company’s Board. 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. Factors that could cause our actual results
to differ materially from these forward-looking statements may include,
without limitation, our ability to implement our business strategy; our
ability to make distributions to stockholders; our ability to acquire
SFR 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 SFR assets; our ability to successfully integrate newly
acquired properties into our portfolio of SFR properties; our ability to
successfully operate our internal property manager and perform property
management services for our SFR assets at the standard and/or the cost
that we anticipate; our ability to transition property management for
the SFR properties currently managed by third party property managers to
our internal property management platform; our ability to predict our
costs; our ability to effectively compete with our competitors; our
ability to apply the proceeds from financing activities or non-rental
real estate owned asset sales to target SFR assets in a timely manner;
our ability to sell non-rental real estate owned properties 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 SFR 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
The statements made in this press release are current as of the date of this press release only. The Company undertakes no obligation to publicly update or revise any forward-looking statements or any other information contained herein, whether as a result of new information, future events or otherwise, except as required by law.
Important Additional Information and Where to Find It
The Company has filed a definitive proxy statement on Schedule 14A and
form of associated WHITE proxy card with the
Certain Information Regarding Participants in Solicitation
The Company, its directors and certain of its executive officers may be
deemed to be participants in the solicitation of proxies from
stockholders in connection with the matters to be considered at the 2019
Annual Meeting. Information regarding the ownership of the Company’s
directors and executive officers in the Company’s stock is included in
Robin N. Lowe
Chief Financial Officer
Jonathan Gasthalter/Nathaniel Garnick
Gasthalter & Co.