Altisource Residential Corporation (NYSE:RESI) today reported financial and operating results for the third quarter of 2016.
Third Quarter 2016 Highlights
|•||Completed the acquisition of a highly stabilized portfolio of 4,262 single-family rental homes for an aggregate purchase price of $652.3 million in a seller financed transaction that significantly enhances Residential’s presence in new and existing strategic target markets (the “HOME SFR Transaction”).|
|•||Increased the rental portfolio during the quarter by 115% over the prior quarter to 8,541 homes.|
|•||Stabilized rentals grew by 140% to 7,466 properties with 95% leased.|
|•||Rental revenue increased 12% over last quarter to $9.6 million bringing year to date rental revenue to $24.2 million.|
|•||Reduced non-rental REO and NPL portfolios by 16% and 9%, respectively, since June 30, 2016.|
|•||Achieved average rent increases of approximately 10% on re-leases and 7% on lease renewals.|
|•||Diversified our property management capabilities, retaining Main Street Renewal LLC (“MSR”) as manager for the properties acquired in the HOME SFR Transaction.|
|•||Repurchased $6.3 million in stock bringing total purchases under the plan to $43.8 million.|
|•||Declared and paid a third quarter 2016 dividend of $0.15 per share.|
“Residential continues to deliver on its stated goals. In the third quarter, we completed a transformative acquisition that doubled the size of our single-family rental portfolio and diversified our property management infrastructure, while continuing to improve our operating metrics,” said Chief Executive Officer, George Ellison. “The successful acquisition of a large portfolio of highly stabilized single-family rental properties in our target markets was a significant accomplishment for Residential. We continue to execute on our objectives and make strong progress on our strategy of building long-term stockholder value through the creation of a large portfolio of rental homes that we target operating at a best-in-class yield.”
During the third quarter of 2016 and thereafter, Residential has continued to pursue its objective of becoming one of the top single-family REITs serving working class American families and their communities with a view to providing robust returns on equity and long-term growth for investors. Among others, important steps taken recently to achieve these objectives include the following:
|•||On September 30, 2016, we completed a transformative acquisition of 4,262 rental homes for an aggregate purchase price of $652.3 million in two separate seller financed transactions. The HOME SFR Transaction brings our total rental portfolio to 8,541 properties at September 30, 2016 and enhances our presence in new and existing strategic target markets, including Florida, Texas, Georgia, Tennessee, North Carolina and South Carolina. The HOME SFR Transaction is immediately accretive to our earnings with approximately 97% of the properties being stabilized rentals.|
|•||In connection with the HOME SFR Transaction, our subsidiary that owns the properties, HOME SFR Borrower, LLC, received approximately $489.3 million in seller financing, representing 75% of the aggregate purchase price. This loan|
was made pursuant to a loan agreement with an ultimate maturity date of November 9, 2021, thereby ensuring term financing for up to five (5) years on the newly acquired portfolio at 1 month LIBOR + 3.285%. We believe that the terms of the loan were attractive in comparison to the financing terms otherwise available to us and will satisfy our financing requirements for the 4,262 rental homes acquired for the foreseeable future.
|•||In connection with the seller financing, we retained the current property manager for the portfolio, MSR, to provide property management services with respect to the properties acquired in the HOME SFR Transaction. This new property management relationship diversifies our property management services and supplements our strong relationship with Altisource Portfolio Solutions S.A. (“ASPS”). We believe that the property management agreements with MSR and ASPS are, and will continue to be, key drivers of efficiency and cost management in our model and provide us with scalable, established, geographically dispersed property management infrastructures to support our portfolios of rental homes.|
The Company believes the foregoing developments are highly positive in driving its strategy of building long-term stockholder value through the creation of a large portfolio of single-family rental homes that it targets operating at a best-in-class yield.
Third Quarter 2016 Financial Results
Net loss for the third quarter of 2016 was $57.6 million, or $1.06 per diluted share, compared to a net loss of $5.4 million, or $0.09 per diluted share, for the third quarter of 2015. Net loss for the nine months ended September 30, 2016 was $166.8 million, or $3.05 per diluted share, compared to net income of $20.2 million, or $0.35 per diluted share, for the nine months ended September 30, 2015.
Webcast and Conference Call
The Company will host a webcast and conference call on Monday, November 7, 2016 at 8:30 a.m. Eastern Time to discuss its financial results for the third quarter of 2016. The conference call will be webcast live over the internet from the Company’s website at www.altisourceresi.com and can be accessed by clicking on the “Shareholders” link.
Residential is focused on providing quality, affordable rental homes to families throughout the United States. Additional information is available at www.altisourceresi.com.