New Residential Investment Corp. (NYSE:NRZ, the “Company”) announced
today that the Company and other third-party co-investors (collectively,
“Buyer”) agreed to acquire approximately $3.2 billion of servicing
advances from Nationstar Mortgage LLC (“Nationstar”). The advances
relate to non-Agency residential mortgage loans with an unpaid principal
balance of approximately $58 billion.
The total purchase price is approximately $3.2 billion(1),
excluding working capital, and will be funded with 90% debt and 10%
equity. The Buyer assumed two servicing advance debt facilities
transferred from Nationstar, and will finance this acquisition by
utilizing a portion of those facilities. New Residential will fund its
pro rata share of the equity, which is approximately $0.2 billion, using
cash on hand. The Buyer has agreed to make future advances related to
the underlying loans.
The investment is expected to generate a stable 14% return(2)
for the Buyer, with the potential for upside. The Buyer’s return will be
supported by the servicing cash flows related to the $58 billion of
underlying loans. Nationstar will continue to service the loans in
exchange for a servicing fee plus the ability to earn performance
compensation. Nationstar will also retain all ancillary, Solutionstar
and originations income related to the loans.
Furthermore, the Buyer has the right, but not the obligation, to acquire
Nationstar’s remaining non-Agency advances on substantially the same
terms as this acquisition, subject to certain conditions. Nationstar
currently has approximately $3.1 billion of remaining advances related
to $72 billion of non-Agency loans.
New Residential Chief Executive Officer, Michael Nierenberg, commented
"The servicing advances acquired through this acquisition are highly
complementary to our current stable of servicing related assets. We
continue to believe that our robust portfolio of servicing related
assets, non-Agency RMBS, consumer loans and other related investments
positions us well to generate strong returns for our shareholders."
Houlihan Lokey acted as a financial advisor to the Company in connection
with the acquisition.
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1
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Of the total approximately $3.2 billion of servicing advances,
$2.4 billion of advances were funded on December 17, 2013, and the
remaining $0.8 billion are anticipated to be fully funded by
mid-January, subject to various conditions.
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2
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Please refer to Forward Looking Statements below.
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ADDITIONAL INFORMATION
For additional information that management believes to be useful for
investors, please refer to the presentation posted on the Investor
Relations section of the Company’s website, www.newresi.com.
CONFERENCE CALL
New Residential’s management will host a live call today
at 10:00 AM Eastern Time to discuss the acquisition.
All interested parties are welcome to participate on the live call. The
call may be accessed by dialing 1-866-393-1506 (from within the U.S.) or
1-706-634-0623 (from outside of the U.S.) ten minutes prior to the
scheduled start of the call; please reference “New Residential Investor
Call.”
A telephonic replay of the call will also be available two hours
following the call’s completion through 11:59 P.M. Eastern Time on
Tuesday, December 31, 2013 by dialing 1-855-859-2056 (from within the
U.S.) or 1-404-537-3406 (from outside of the U.S.); please reference
conference code “25676811.”
ABOUT NEW RESIDENTIAL
New Residential focuses on opportunistically investing in, and actively
managing, investments related to residential real estate. The Company
primarily targets investments in: (1) mortgage servicing related assets,
(2) residential mortgage backed securities (“RMBS”), (3) residential
mortgage loans and (4) other related investments. New Residential is
organized and conducts its operations to qualify as a real estate
investment trust (“REIT”) for federal income tax purposes. The Company
is managed by an affiliate of Fortress Investment Group LLC, a global
investment management firm.
FORWARD-LOOKING STATEMENTS
Certain statements in this press release may constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, including without limitation references to a stable
14% return with the potential for upside expected to be generated by the
acquisition described in this press release and the Company’s ability to
deliver strong returns to stockholders. These statements are based on
management's current expectations and beliefs and are subject to a
number of trends and uncertainties that could cause actual results to
differ materially from those described in the forward-looking
statements, many of which are beyond our control. The Company can give
no assurance that its expectations will be attained. Accordingly, you
should not place undue reliance on any forward-looking statements
contained in this press release. For a discussion of some of the risks
and important factors that could affect such forward-looking statements,
see the sections entitled “Risk Factors” and “Management’s Discussion
and Analysis of Financial Condition and Results of Operation” in the
Company’s Quarterly Report on Form 10-Q, which is available on the
Company’s website (www.newresi.com).
In addition, new risks and uncertainties emerge from time to time, and
it is not possible for the Company to predict or assess the impact of
every factor that may cause its actual results to differ from those
contained in any forward-looking statements. Such forward-looking
statements speak only as of the date of this press release. The Company
expressly disclaims any obligation to release publicly any updates or
revisions to any forward-looking statements contained herein to reflect
any change in the Company's expectations with regard thereto or change
in events, conditions or circumstances on which any statement is based.
Copyright Business Wire 2013