- GAAP Income of $49 million, or $0.19 per diluted share
- Core Earnings of $42 million, or $0.16 per diluted share
- Common Dividend of $44 million, or $0.175 per share
|Q1 2014||Q4 2013|
|Summary Operating Results:|
|GAAP Income||$49 million||$81 million|
|GAAP Income per Diluted Share||$0.19||$0.31|
|Core Earnings*||$42 million||$37 million|
|Core Earnings per Diluted Share*||$0.16||$0.14|
- Excess Mortgage Servicing Rights (“Excess MSRs”) – During the quarter, New Residential invested $19 million to fund previously committed interests in pools of Excess MSRs related to $8 billion UPB of non-Agency residential mortgage loans. Returns on New Residential’s existing Excess MSR portfolio remain strong and have outperformed expectations. The Company has received $230 million of cash flow to date and still expects to receive approximately $1.2 billion in the future, although actual results may differ.
- Servicer Advances – As of the end of Q1, a joint venture formed by New Residential and co-investors (the “Buyer”) acquired or agreed to acquire $6.3 billion of advances from Nationstar Mortgage Holdings Inc. (“Nationstar”). To date, returns on these investments have outperformed the Buyer’s initial projections. Advance balances have decreased by $1.8 billion, versus the Buyer’s initial projection of a $0.5 billion decline, and the advance to UPB ratio has declined 1.4%, versus the Buyer’s initial estimate of a 0.3% decline. Furthermore, the Buyer closed on two financing facilities totaling $2.9 billion, one during the quarter and another subsequent to quarter end. Both facilities improved upon prior financing terms, with a loan-to-value of 94% and an average cost of funds of approximately 2.5%. Given the outperformance and improved financing terms, the Buyer’s projected lifetime IRR was revised to 20% from the initial target of 15%.
- Non-Performing Loans (“NPLs”) – New Residential acquired $72 million UPB of NPLs during the quarter, bringing the total portfolio to $229 million UPB. Actual results on the existing portfolio to date have exceeded New Residential’s expectations. In the first quarter alone, the portfolio had 50 liquidations, which represents an implied 24% cash-on-cash yield, although the lifetime yield may differ.
- Non-Agency RMBS – Through a transaction that occurred during the quarter, New Residential purchased approximately $625 million current face amount of Non-Agency RMBS for approximately $553 million.
- $175 Million Equity Offering – On April 25, 2014, New Residential priced its first public offering of 25,000,000 shares of its common stock for gross proceeds of approximately $152.5 million, before deducting underwriting costs and expenses. Including the exercised overallotment option of 3,750,000 shares of common stock, the gross proceeds totaled approximately $175.4 million. The net proceeds from the offering will be used for general corporate purposes, including making a variety of investments, which may include, but are not limited to, investments in Excess MSRs, servicer advances, real estate securities and real estate related loans.
- Excess Mortgage Servicing Rights (“Excess MSRs”) – On May 12, 2014, New Residential invested $34 million to acquire an interest in Excess MSRs related to $13 billion UPB of residential mortgage loans.
- Servicer Advances – On May 2, 2014, the Buyer received $86 million from New Residential to fund the purchase of $618 million of new servicer advances.
- Non-Performing Loans (“NPLs”) – Subsequent to quarter end, New Residential agreed on the purchase prices for two separate pools of NPLs with $618 million UPB in total. New Residential expects to complete these investments in the second quarter, although there can be no assurance that these investments will be completed in such timeframe or at all.