Rithm Capital Corp (RITM)

[Enterprising Investor]

New Residential Announces Acquisition of MSRs, Estimated Preliminary Financial Results and Increase in 1Q17 Dividend (1/30/17)

NEW YORK--(BUSINESS WIRE)--New Residential Investment Corp. (NYSE:NRZ; “New Residential” or the “Company”) today announced (i) an agreement to acquire approximately $97 billion unpaid principal balance (“UPB”) of mortgage servicing rights (“MSRs”), (ii) estimated preliminary results for the fourth quarter and full year ended December 31, 2016 and (iii) an increase in its dividend for the first quarter of 2017. Each of these items is described in more detail below.

Agreement to Acquire Approximately $97 Billion UPB of MSRs

On January 27, 2017, New Residential, through its wholly-owned subsidiary New Residential Mortgage LLC (“NRM”), entered into an agreement to purchase approximately $97 billion UPB of seasoned Agency MSRs and related servicer advances from CitiMortgage, Inc. (“Citi”) for a purchase price of approximately $950 million and $32 million, respectively. The acquisition of the MSRs is expected to close in the first quarter of 2017, subject to government-sponsored enterprise (“GSE”) and regulatory approvals and other customary closing conditions. Citi will continue to subservice the portfolio on behalf of NRM, pending receipt of GSE and regulatory approvals to transfer servicing to Nationstar Mortgage LLC.

Estimated Preliminary Financial Results

The Company’s estimated preliminary results of operations for the fourth quarter and full year ended December 31, 2016 are set forth below.

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For the fourth quarter of 2016, the Company expects GAAP Net Income to be in the range of $0.87 to $0.91 per diluted share and core earnings to be in the range of $0.59 to $0.63 per diluted share. For the full year 2016, the Company expects GAAP Net Income to be in the range of $2.09 to $2.13 per diluted share and core earnings to be in the range of $2.12 to $2.16 per diluted share.

Increase in First Quarter Dividend to $0.48 per Common Share

In addition, New Residential’s board of directors declared a quarterly dividend of $0.48 per common share for the first quarter of 2017, up from $0.46 per common share in the fourth quarter of 2016. The dividend is payable on April 28, 2017 to shareholders of record on March 27, 2017.

“2016 was an outstanding year for New Residential and we achieved impressive results across our core business segments,” said Michael Nierenberg, Chairman and Chief Executive Officer of New Residential. “Our recent announcements demonstrate our focus in executing our key strategic initiatives and our ability to identify attractive investments. In particular, during the year, we consistently expanded our portfolio of servicing assets in order to strategically position the Company for a variety of market environments. The dividend increase this quarter reflects our longstanding commitment to grow earnings and optimize returns for our shareholders. We continue to see strength in our business’s cash flow generation, and we remain confident that our investment portfolio is poised to continue to perform in 2017.”

Notable Events for the Quarter Ended December 31, 2016

MSRs

? During the quarter, New Residential acquired MSRs and related servicer advances with respect to Agency residential mortgage loans with a total UPB of approximately $82.1 billion for an aggregate purchase price of approximately $572.5 million and $68.2 million, respectively.

? In October 2016, NRZ acquired $32.3 billion UPB of Agency MSRs and related servicer advances from Ditech Financial LLC (“Ditech”), a subsidiary of Walter Investment Management Corp., for a purchase price of approximately $212.7 million and $27.4 million, respectively.

? In December 2016, NRZ also acquired $4.8 billion UPB of Agency MSRs and related servicer advances from Ditech for a purchase price of approximately $26.4 million and $3.9 million, respectively.

? In December 2016, NRZ acquired $32.5 billion UPB of Agency MSRs and related servicer advances from Walter Capital Opportunity, LP for a purchase price of approximately $244.3 million and $34.8 million, respectively.

? In December 2016, NRZ acquired $12.5 billion UPB of Agency MSRs and related servicer advances from FirstKey Mortgage, LLC for a purchase price of approximately $89.1 million and $2.1 million, respectively.

? In December 2016, New Residential agreed to acquire approximately $72.0 billion UPB of Agency and private-label MSRs and related servicer advances from PHH Mortgage Corporation for a purchase price of approximately $612.0 million and $300.0 million, respectively. The purchase is expected to close in the second quarter of 2017 and is subject to (i) PHH shareholder approval, (ii) GSE and other regulatory approvals and (iii) other customary closing conditions.

? In October 2016, New Residential entered into a $345.0 million corporate loan secured by Non-Agency Excess MSRs. The loan bears interest equal to 5.68% per annum and matures in July 2021.

Servicer Advances

? During the quarter, the Company refinanced $1.4 billion of floating rate debt with $500 million of three-year and $400 million of five-year fixed rate notes issued in October 2016, and $500 million of three-year fixed rate notes issued in November 2016.

? In December 2016, the Company refinanced $800 million of fixed rate term notes with a weighted average maturity of 2.5 years and weighted average cost of funds of 3.58% with $400 million of four-year and $400 million of five-year fixed rate notes with a weighted average cost of funds of 3.48% per annum.
Other Activity

? Consumer Loan Refinancing - In October 2016, New Residential completed a $1.7 billion refinancing of the SpringCastle consumer-loan backed securitization, reducing the blended cost of funds from 4.5% to 3.6%.

? Call Rights - During the quarter, New Residential called 14 seasoned Non-Agency RMBS deals with an aggregate UPB of approximately $416.9 million and securitized approximately $274.2 million UPB of performing loans acquired as part of the Company’s call rights strategy.

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 mortgage servicing related assets and other related opportunistic 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 (NYSE:FIG), a global investment management firm.

http://www.businesswire.com/news/home/20170130005364/en/Residential-Announces-Acquisition-MSRs-Estimated-Preliminary-Financial