Snow Park Urges Stockholders to Not Be Misled by Front Yard and Focus on its Lack of Any Plan for Realizing NAV
Believes Front Yard’s Board Only Has Strong Focus and Passion When
It Comes to Attacking Stockholders, Such as Snow Park, Who Simply Seek
Enhanced Oversight and a Strategy to Unlock NAV
Reminds Stockholders the Incumbent Board Has Delivered Nothing But
Value Destruction Over the Past Four Years and Does Not Feel the Current
Directors Have Provided Hope That The Next Four Years Will Be Better
Notes that Front Yard’s May 10th
Press Release Again Attempts to Obfuscate its Own Failings and Despite
Dismal Returns, the Company is Still Yet to Produce a Credible Business
Plan to Realize NAV
Reminds Stockholders That in Contrast to Front Yard, the Snow Park
Slate Has a Vision to Unlock the Tremendous Real Estate Value Trapped
Within the Company’s Shares
Stockholders Have a Clear Choice: Follow the Path
That Has Led to Industry-Worst Total Returns OR Vote the BLUE
Proxy Card to Elect the Full Snow Park Slate, Which Offers True
Independence and Will Push the Company to Finally Realize Management’s
Stated NAV of $17.50 Per Share
NEW YORK–(BUSINESS WIRE)–Snow Park Capital Partners, LP (together with its affiliates, “Snow
Park” or “we”) today responded to the latest attempt by Front Yard
Residential Corporation (NYSE: RESI) (“Front Yard” or the “Company”) to
mislead stockholders about the value-destructive amendments made to the
Company’s external management agreement with Altisource Asset Management
Corporation (“AAMC”). For more information on Snow Park’s assessment of
the agreement and voting resources, please visit www.RenewRESI.com
today.
Snow Park, which together with the other participants in its
solicitation beneficially owns approximately 2.1% of Front Yard’s
outstanding shares, urges all stockholders to vote the BLUE
proxy card today. Our nominees – Leland Abrams, Lazar Nikolic and
Jeffrey Pierce – possess strong real estate pedigrees, robust mortgage
and financial services experience, and deep knowledge of effective
corporate governance practices in the Real Estate Investment Trust
(“REIT”) sector. Our nominees also understand the fundamentals and
operating realities of the single-family residential market due to their
respective experiences analyzing, investing in, and overseeing the
management of individual properties across various markets. These are
the types of qualifications that Front Yard’s current Board of Directors
(the “Board”) lacks, in our view, as evidenced by its approval of the
amended AAMC agreement. If elected, our nominees will be laser-focused
on bringing independent ownership perspectives to the boardroom and
driving a plan to finally realize Net Asset Value (“NAV”).
Jeffrey Pierce, Founder and Managing Partner of Snow Park, commented:
“We believe Front Yard’s defensive, rash response to our assessment of
the Company’s amended agreement with AAMC misrepresents key facts and
continues to reinforce our view that the incumbent Board lacks either
the ability or desire to implement a strategy for finally realizing
management’s stated NAV of $17.50 per share.1 We also feel it
is notable that Front Yard’s latest missive makes no attempt to refute
Snow Park’s view that serious unchecked conflicts exist in Front Yard’s
boardroom – ones that have undeniably contributed to losses in excess of
$500 million for stockholders since 2015. We also contend it is very
telling that Front Yard does not have an answer for a sobering fact that
Snow Park continues to highlight: management’s growth-at-all-costs
strategy, which is perpetuated by the amended agreement with AAMC, has
already led to significant structural issues that include one of the
most highly-leveraged balance sheets of any publicly-traded REIT,
persistently high fixed expenses and poor corporate governance policies
that keep stockholders muted. The amended agreement continues to
incentivize high leverage through asset growth while failing to take
total shareholder returns into account as a performance metric.
Further, despite all of Front Yard’s costly failures, the current
six-member Board – which includes George Ellison, Chairman and CEO of
AAMC, as well as his former colleagues from Bank of America – concluded
this week that AAMC deserves a five-year extension, more
growth-at-all-costs incentives and sweetened financial considerations in
the event the agreement is terminated. We believe this development
represents another setback for the Company’s long-suffering
stockholders. We also feel it is offensive to stockholders to highlight
a one-day share price move – likely driven by a combination of factors –
as “success” after four years of value destruction.
The truth is that Snow Park hoped its efforts to finally add qualified
stockholder representation to the boardroom would at least have prompted
the incumbent Board to produce a credible business plan to disrupt the
dismal status quo, but instead the directors have unfortunately chosen
to fight checks and balances and spend their time attacking independent
stockholders. To this day, the incumbent Board has still not
acknowledged the mistakes of the past four years that have led to a
roughly 50% decline in undepreciated book value per share as well as an
approximately 50% decline in stockholder wealth.
We urge stockholders to see through Front Yard’s
effort to distract from the failures of the past four years, which have
already left the Company in a perilous financial position and destroyed
both stockholder value and NAV. It should now be clearer than
ever that it is time to add independent ownership perspectives, real
REIT and single-family market experience, and a strategic vision to the
boardroom.”
Stockholders Deserve a Real Plan to Realize
NAV: The Snow Park Slate Has a Vision for Helping the Company Finally
Unlock the Tremendous Real Estate Value Trapped Within its Shares
As previously disclosed, our nominees have a plan – in contrast to the
incumbent Board – to evaluate viable paths to realizing management’s
stated NAV of $17.50 per share2 – which represents a sizable
premium relative to Front Yard’s presently underperforming shares. These
paths include:
1. Full Sale of the Company – Given that there has been a
tremendous amount of private capital flowing into real estate investment
vehicles in recent years, we believe now is the time for Front Yard to
consider exploring a sale to a company with the operating efficiencies
and scale to realize the full value of the portfolio. Despite this
week’s development, we still believe this option offers stockholders
significant benefits, including realizing a sizable premium on Front
Yard’s underperforming shares. Management has only offered growth –
despite Front Yard’s valuation gap and no identifiable capital sources –
as a strategy.
2. Asset Sales to De-Lever and Grow Distributions – The
significant amount of private capital that has flowed into real estate
investment vehicles provides a tailwind for Front Yard to explore an
orderly sale process for parcels within its portfolio. We believe this
option – although secondary to an outright sale – still offers
stockholders significant benefits over time, including decreasing Front
Yard’s valuation gap and returning capital to stockholders. To the
contrary, management and the incumbent Board continue to blindly speak
about growth despite the destructive results that its leveraged-fueled
acquisition spree has led to over the past four years.
3. Cost-Cutting Initiatives to Pursue Profitability at 16,000
Home Level – If necessary, Front Yard can drastically reduce costs
across the board to try to demonstrate to stockholders that 16,000 homes
can be operated profitably. Executing at this scale could possibly
enable the Company to issue more equity at reasonable levels and
increase scale. Simply put, the Company has leveraged nearly every asset
it has – it is not realistic to expect stockholders to fund growth if
management cannot maintain a reasonable fixed cost structure.
We urge Front Yard stockholders to vote FOR all three of Snow Park’s
highly-qualified, independent nominees on the BLUE
Proxy Card and to return it in your postage-paid envelope provided. If
you have already voted Front Yard’s proxy card, you can change your vote
by providing a later dated BLUE proxy.
Should you have any questions or need assistance with voting, please
contact Saratoga Proxy Consulting LLC at (888) 368-0379 or (212)
257-1311 or by email at info@saratogaproxy.com.
PROTECT YOUR INVESTMENT. PLEASE SIGN, DATE, AND MAIL
THE BLUE PROXY CARD TODAY!
VISIT WWW.RENEWRESI.COM
TODAY.
About Snow Park
Snow Park Capital Partners, LP is a privately-held investment manager
that specializes in investing in publicly-traded real estate securities
across the capital structure. Based in New York City and founded by
Jeffrey Pierce, the firm focuses on producing strong risk-adjusted
returns for a diverse investor base of public institutions, private
entities and qualified individual clients.
1 A NAV of $17.50 was set forth in Front Yard Residential
Corp.’s February 2019 earnings call transcript.
2 A NAV of $17.50 was set forth in Front Yard Residential
Corp.’s February 2019 earnings call transcript.
Contacts
For Investors:
Saratoga Proxy Consulting LLC
John Ferguson /
Joe Mills, 212-257-1311
jferguson@saratogaproxy.com
/ jmills@saratogaproxy.com
For
Media:
Profile
Greg Marose / Ashley Areopagita, 347-343-2999
gmarose@profileadvisors.com
/ aareopagita@profileadvisors.com