| | Per
Share | | | Total | |
Public offering price | | | $ | | | $ |
Underwriting
discount | | | $ | | | $ |
Proceeds,
before expenses, to us | | | $ | | | $ |
Citigroup |
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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 4/14/21 New Residential Investment Corp. 424B5 1:1.8M Edgarfilings Ltd. |
Document/Exhibit Description Pages Size 1: 424B5 Prospectus - Primary Offering or Shelf Securities HTML 1.37M - New Facts or Events
| | Per
Share | | | Total | |
Public offering price | | | $ | | | $ |
Underwriting
discount | | | $ | | | $ |
Proceeds,
before expenses, to us | | | $ | | | $ |
Citigroup |
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• | Annual
Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 16, 2021; |
• | Current Report on Form 8-K, filed with the SEC on April 14, 2021; |
• | The portions of our Definitive Proxy Statement on Schedule 14A for our 2021 Annual Meeting of Stockholders, filed on April 9,
2021, which are incorporated by reference in our Annual Report on Form 10-K for the year ended December 31, 2020. |
• | The description of our Common Stock set forth in our Registration Statement on Form 10, as amended, filed on April 29, 2013, including any amendment or report filed for the purpose of updating such description (including the “Description of Securities Registered under Section 12 of the Exchange Act” included as Exhibit 4.24 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed on February 16,
2021). |
• | the uncertainty and economic impact of the ongoing coronavirus (“COVID-19”) pandemic and of responsive measures implemented by various governmental authorities, businesses and other third parties, as well as the ultimate impact on us, our operations and personnel; |
• | our ability to successfully execute our business and investment strategy; |
• | our ability to deploy capital accretively and the timing of such deployment; |
• | reductions
in the value of, cash flows received from, or liquidity surrounding, our investments, which are based on various assumptions that could differ materially from actual results; |
• | our reliance on, and counterparty concentration and default risks in, the servicers and subservicers we engage (“Servicing Partners”) and other third parties; |
• | the impact of current or future legal proceedings and regulatory investigations and inquiries involving us, our Servicing Partners or other business partners; |
• | the risks related
to our origination and servicing operations, including, but not limited to, compliance with applicable laws, regulations and other requirements, significant increases in delinquencies for the loans, compliance with the terms of related servicing agreements, financing related servicer advances and the origination business, expenses related to servicing high risk loans, unrecovered or delayed recovery of servicing advances, foreclosure rates, servicer ratings, and termination of government mortgage refinancing programs; |
• | our ability to obtain and maintain financing arrangements on terms favorable to us or at all, particularly in light of the current disruption in the financial markets; |
• | changes
in general economic conditions, in our industry and in the commercial finance and real estate markets, including the impact on the value of our assets or the performance of our investments; |
• | the relative spreads between the yield on the assets in which we invest and the cost of financing; |
• | impairments in the value of the collateral underlying our investments and the relation of any such impairments to the value of our securities or loans; |
• | risks associated with our indebtedness, including our senior unsecured notes,
and related restrictive covenants and non-recourse long-term financing structures; |
• | adverse changes in the financing markets we access affecting our ability to finance our investments on attractive terms, or at all; |
• | changing risk assessments by lenders that potentially lead to increased margin calls, not extending our secured financing agreements or other financings in accordance with their current terms or not entering into new financings with us; |
• | changes in interest rates and/or credit spreads, as well as the success of any hedging strategy we may undertake in relation to such changes; |
• | the
impact that risks associated with subprime mortgage loans and consumer loans, as well as deficiencies in servicing and foreclosure practices, may have on the value of our mortgage servicing rights (“MSRs”), excess mortgage servicing rights (“Excess MSRs”), servicer advance investments, residential mortgage-backed securities (“residential MBS” or “RMBS”), residential mortgage loans and consumer loan portfolios; |
• | the risks that default and recovery rates on our MSRs, Excess MSRs, servicer advance investments servicer advance receivables, RMBS, residential mortgage loans and consumer loans deteriorate compared to our underwriting estimates; |
• | changes
in prepayment rates on the loans underlying certain of our assets, including, but not limited to, our MSRs or Excess MSRs; |
• | the risk that projected recapture rates on the loan pools underlying our MSRs or Excess MSRs are not achieved; |
• | servicer advances may not be recoverable or may take longer to recover than we expect, which could cause us to fail to achieve our targeted return on our Servicer Advance Investments or MSRs; |
• | cybersecurity incidents and technology disruptions or failures; |
• | our
dependence on counterparties and vendors to provide certain services, which subjects us to various risks; |
• | our ability to maintain our exclusion from registration under the Investment Company Act of 1940 (the “1940 Act”), and limits on our operations from maintaining such exclusion; |
• | our ability to maintain our qualification as a real estate investment trust (“REIT”) for U.S. federal income tax purposes, and limits on our operations from maintaining REIT status; |
• | competition within the finance and
real estate industries; |
• | our ability to attract and retain highly skilled personnel; |
• | impact from our past and future acquisitions, and our ability to successfully integrate the acquired assets and assumed liabilities; |
• | the impact of any material transactions or relationships with FIG LLC (the “Manager”) or one of its affiliates, including the impact of any actual, potential or perceived conflicts of interest; |
• | the
legislative/regulatory environment, including, but not limited to, the impact of the Dodd-Frank Act, regulation of corporate governance and public disclosure, changes in accounting rules, U.S. government programs intended to grow the economy, future changes to tax laws, the federal conservatorship of the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and legislation that permits modification of the terms of residential mortgage loans; |
• | the risk that actions by Fannie Mae or Freddie Mac or other regulatory initiatives or actions may adversely affect returns from investments in MSRs and Excess MSRs; |
• | adverse
market, regulatory or interest rate environments or our issuance of debt or equity, any of which may negatively affect the market price of our common stock; |
• | our ability to pay distributions on our common stock. |
| | Three Months Ended | |
Estimated
Preliminary Financial Results | | | |
GAAP Net Income Per Diluted Share(1) | | | $0.64
to $0.70 |
Core Earnings Per Diluted Share(1)* | | | $0.31 to $0.37 |
Book Value Per Share(2) | | | $11.32
to $11.42 |
* | Core earnings is a non-GAAP measure. For a reconciliation of core earnings to GAAP net income, as well as an explanation of this measure, please refer to “Non-GAAP Measures and Reconciliation to GAAP Net Income” below. |
(1) | Per common share calculations of GAAP net income and core earnings are based on 429,491,379 weighted average diluted common shares during the quarter ended March 31, 2021. |
(2) | Book
value per share based on 414,795,505 basic shares outstanding as of March 31, 2021. |
| | Three Months Ended
| ||||
Estimated Preliminary Financial Results (dollars in thousands, except per share data) | | | Low | | | High
|
Net (loss) income attributable to common stockholders | | | $275,178 | | | $300,948
|
Adjustments for Non-Core Earnings: | | | | | ||
Unrealized
and realized (gain) loss, net | | | (310,542) | | | (310,542)
|
Preferred stock management fee to affiliate | | | 3,048 | | | 3,048
|
Deferred taxes | | | 109,952 | | | 109,952
|
Other | | | 54,427 | | | 54,427
|
Core Earnings | | | $132,063 | | | $157,832
|
Net Income Per Diluted Share | | | $0.64 | | | $0.70
|
Core Earnings Per Diluted Share | | | $0.31 | | | $0.37
|
Weighted Average Number of Shares of Common Stock Outstanding, Diluted | | | 429,491,379 | | | 429,491,379 |
(i) | options relating to an aggregate of 11,667,675 shares of our common stock held by our Manager; |
(ii) | options relating to an aggregate of 6,000 shares of our common stock
held by our directors; and |
(iii) | options relating to 4,500,000 shares of our common stock (or 5,175,000 shares if the underwriters exercise their option to purchase additional shares of our common stock in full) at an exercise price per share equal to the public offering price, representing 10% of the number of shares being offered by us hereby, that have been approved by the compensation committee of our board of directors to be granted pursuant to and in accordance with the terms of our Nonqualified Stock Option and Incentive Award Plan, as amended (the “Plan”), to an affiliate of our Manager in connection with this offering, and subject to adjustment if the underwriters exercise their option to purchase additional shares of our common stock. The options are fully vested as of the date of grant, become
exercisable as to 1/30 of the shares to which it is subject on the first day of each of the 30 calendar months following the first month after the date of the grant and expire on the tenth anniversary of the date of grant. |
| | Pro
Forma for the year ended 2020 | | | Year
Ended December 31, | |||||||
| | 2020 | | | 2019 | | | 2018 | ||||
Revenues | | | | | | | | | ||||
Interest
income | | | $1,177,345 | | | $1,102,537 | | | $1,766,130 | | | $1,664,223 |
Fee
income | | | 229,739 | | | — | | | — | | | — |
Servicing
revenue, net | | | (631,247) | | | (555,041) | | | 385,159 | | | 528,595 |
Gain
on sale of originated mortgage loans, held-for-sale, net | | | 3,932,204 | | | 1,399,092 | | | 460,107 | | | 86,065 |
| | 4,708,041 | | | 1,946,588 | | | 2,611,396 | | | 2,278,883 | |
Expenses | | | | | | | | | ||||
Interest
expense | | | 743,337 | | | 584,469 | | | 933,751 | | | 606,433 |
General
and administrative expenses | | | 2,932,341 | | | 1,120,087 | | | 781,971 | | | 441,886
|
Management fee to affiliate | | | 96,634 | | | 89,134 | | | 79,472 | | | 62,594
|
Incentive compensation to affiliate | | | — | | | — | | | 91,892 | | | 94,900
|
| | 3,772,312 | | | 1,793,690 | | | 1,887,086 | | | 1,205,813
| |
Other income (loss) | | | | | | | | | ||||
Change
in fair value of investments | | | (410,843) | | | (437,126) | | | (307,396) | | | (136,212) |
Gain
(loss) on settlement of investments, net | | | (930,205) | | | (930,131) | | | 227,981 | | | 96,064
|
Earnings from investments in consumer loans, equity method investees | | | — | | | — | | | (1,438) | | | 10,803
|
Other income (loss), net | | | (2,797) | | | (2,797) | | | 39,819 | | | (21,984) |
| | (1,343,845) | | | (1,370,054) | | | (41,034) | | | (51,329) | |
Impairment | | | | | | | | | ||||
Provision
(reversal) for credit losses on securities | | | 13,404 | | | 13,404 | | | 25,174 | | | 30,017 |
Valuation
and credit loss provision (reversal) on loans and real estate owned | | | 110,208 | | | 110,208 | | | 10,403 | | | 60,624 |
| | 123,612 | | | 123,612 | | | 35,577 | | | 90,641 | |
Income
(Loss) Before Income Taxes | | | (531,728) | | | (1,340,768) | | | 647,699 | | | 931,100
|
Income tax expense (benefit) | | | 242,579 | | | 16,916 | | | 41,766 | | | (73,431) |
Net
Income (Loss) | | | $(774,307) | | | $(1,357,684) | | | $605,933 | | | $1,004,531 |
Noncontrolling
interests in income of consolidated subsidiaries | | | 52,674 | | | 52,674 | | | 42,637 | | | 40,564 |
Dividends
on preferred stock | | | 54,295 | | | 54,295 | | | 13,281 | | | — |
Net
Income (Loss) Attributable to Common Stockholders | | | $(881,276) | | | $(1,464,653) | | | $550,015 | | | $963,967 |
Net
Income (Loss) Per Share of Common Stock | | | | | | | | | ||||
Basic | | | $(1.91) | | | $(3.52) | | | $1.35 | | | $2.82 |
Diluted | | | $(1.91) | | | $(3.52) | | | $1.34 | | | $2.81 |
Weighted
Average Number of Shares of Common Stock Outstanding | | | | | | | | | ||||
Basic | | | 461,258,841 | | | 415,513,187 | | | 408,789,642 | | | 341,268,923
|
Diluted | | | 461,258,841 | | | 415,513,187 | | | 408,990,107 | | | 343,137,361
|
Dividends Declared Per Share of Common Stock | | | | | $0.50 | | | $2.00 | | | $2.00 | |
| | | | | | | | |||||
Other
Data | | | | | | | | | ||||
Core
Earnings(A) | | | | | $607,174 | | | $886,794 | | | $815,158 |
| | Pro
Forma as of 2020 | | | |||||
| | 2020 | | | 2019 | ||||
Assets | | | | | | | |||
Excess
mortgage servicing rights, at fair value | | | $410,855 | | | $410,855 | | | $505,343 |
Mortgage
servicing rights, at fair value | | | 4,944,251 | | | 3,489,675 | | | 3,967,960 |
Mortgage
servicing rights financing receivables, at fair value | | | 1,096,166 | | | 1,096,166 | | | 1,718,273 |
Servicer
advance investments, at fair value | | | 538,056 | | | 538,056 | | | 581,777 |
Real
estate and other securities | | | 9,244,558 | | | 14,244,558 | | | 19,477,728 |
Residential
loans and variable interest entity consumer loans held-for-investment, at fair value | | | 1,359,754 | | | 1,359,754 | | | 1,753,251 |
Residential
mortgage loans, held-for-sale (includes $4,705,816 and $4,613,612 at fair value at December 31, 2020 and 2019, respectively) | | | 11,952,142 | | | 5,215,703 | | | 6,042,664 |
Residential
mortgage loans subject to repurchase | | | 3,874,509 | | | 1,452,005 | | | 172,336 |
Cash
and cash equivalents | | | 723,751 | | | 944,854 | | | 528,737 |
Restricted
cash | | | 188,696 | | | 135,619 | | | 162,197 |
Servicer
advances receivable | | | 3,133,390 | | | 3,002,267 | | | 3,301,374 |
Trades
receivable | | | 4,180 | | | 4,180 | | | 5,256,014 |
Other
assets | | | 2,364,560 | | | 1,358,422 | | | 1,395,800 |
| | $39,834,868 | | | $33,252,114 | | | $44,863,454 | |
Liabilities
and Equity | | | | | | | |||
Liabilities | | | | | | | |||
Secured
financing agreements | | | $19,176,986 | | | $17,547,680 | | | $27,916,225 |
Secured
notes and bonds payable (includes $1,662,852 and $659,738 at fair value at December 31, 2020 and 2019, respectively) | | | 8,462,981 | | | 7,644,195 | | | 7,720,148 |
Residential
mortgage loan repurchase liability | | | 3,874,509 | | | 1,452,005 | | | 172,336 |
Unsecured
senior notes, net of issuance costs | | | 541,516 | | | 541,516 | | | — |
Trades
payable | | | 154 | | | 154 | | | 902,081 |
Due
to affiliates | | | 9,450 | | | 9,450 | | | 103,882 |
Dividends
payable | | | 90,128 | | | 90,128 | | | 211,732 |
Accrued
expenses and other liabilities | | | 1,749,460 | | | 537,302 | | | 600,790 |
| | 33,905,184 | | | 27,822,430 | | | 37,627,194 | |
Commitments
and Contingencies | | | | | | | |||
Equity | | | | | | | |||
Preferred
stock, $0.01 per value, 39,100,000 shares authorized, 33,610,000 and 17,510,000 issued and outstanding at December 31, 2020 and 2019, respectively ($840,250 and $437,750 aggregate liquidation preference, respectively) | | | 812,992 | | | 812,992 | | | 423,444 |
Common
stock, $0.01 par value, 2,000,000,000 shares authorized, 414,744,518 and 415,520,780 issued and outstanding at December 31, 2020 and 2019, respectively | | | 4,605 | | | 4,148 | | | 4,156 |
Additional
paid-in capital | | | 6,046,651 | | | 5,547,108 | | | 5,498,226 |
Retained
earnings (accumulated deficit) | | | (1,108,929) | | | (1,108,929) | | | 549,733 |
Accumulated
other comprehensive income | | | 65,697 | | | 65,697 | | | 682,151 |
Total
New Residential stockholders' equity | | | 5,821,016 | | | 5,321,016 | | | 7,157,710 |
Noncontrolling
interests in equity of consolidated subsidiaries | | | 108,668 | | | 108,668 | | | 78,550 |
Total
Equity | | | 5,929,684 | | | 5,429,684 | | | 7,236,260 |
| | $39,834,868 | | | $33,252,114 | | | $44,863,454 |
(A) | We have five primary variables that impact our operating performance: (i) the current yield earned on our investments, (ii) the interest expense under the debt incurred to finance our investments, (iii) our operating expenses and taxes, (iv) our realized and unrealized gains or losses on our investments, including any impairment or reserve for expected credit losses and (v) income from our origination and servicing businesses. “Core earnings” is a non-GAAP measure of our operating performance, excluding the fourth variable above and |
(dollars
in thousands, except share and per share data) | | | Year Ended December 31, | ||||||
| | 2020 | | | 2019 | | | 2018 | |
Net
(loss) income attributable to common stockholders | | | $(1,464,653) | | | $550,015 | | | $963,967 |
Adjustments
for Non-Core Earnings: | | | | | | | |||
Impairment | | | 123,612 | | | 35,344 | | | 90,641 |
Change
in fair value of investments | | | 743,239 | | | 254,335 | | | (115,896) |
(Gain)
loss on settlement of investments, net | | | 947,316 | | | (188,381) | | | (96,319) |
Other
(income) loss | | | 132,741 | | | 1,756 | | | 11,425 |
Other
income and impairment attributable to non-controlling interests | | | (5,585) | | | (13,548) | | | (22,247) |
Non-capitalized
transaction-related expenses | | | 56,522 | | | 56,289 | | | 21,946 |
Incentive
compensation to affiliate | | | — | | | 91,892 | | | 94,900 |
Preferred
stock management fee to affiliate | | | 11,439 | | | 2,642 | | | — |
Deferred
taxes | | | 15,029 | | | 38,207 | | | (80,054) |
Interest
income on residential mortgage loans, held-for-sale | | | 37,246 | | | 60,689 | | | 13,374 |
Limit
on RMBS discount accretion related to called deals | | | — | | | (19,590) | | | (58,581) |
Adjust
consumer loans to level yield | | | (1,147) | | | 5,239 | | | (21,181) |
Core
Earnings of equity method investees: | | | | | | | |||
Excess
mortgage servicing rights | | | 11,415 | | | 11,905 | | | 13,183 |
Core
Earnings | | | $607,174 | | | $886,794 | | | $815,158 |
| | | | | | ||||
Net
(Loss) Income Per Diluted Share | | | $(3.52) | | | $1.34 | | | $2.81 |
Core
Earnings Per Diluted Share | | | $1.46 | | | $2.17 | | | $2.38 |
| | | | | | ||||
Weighted
Average Number of Shares of Common Stock Outstanding, Diluted | | | 415,513,187 | | | 408,990,107 | | | 343,137,361 |
| | Year
Ended December 31, | |||||||
| | 2020 | | | 2019 | | | 2018 | |
Revenues: | | | | | | | |||
Gain
on sale, net | | | $2,533,112 | | | $1,093,233 | | | $725,802 |
Fee
income | | | 229,739 | | | 164,734 | | | 133,583 |
Servicing
fees, net | | | 501,950 | | | 490,073 | | | 485,514 |
Change
in fair value of mortgage servicing rights | | | (596,954) | | | (565,640) | | | (110,086) |
Other
income | | | 18,798 | | | 12,377 | | | 4,266 |
Total
revenues | | | 2,686,645 | | | 1,194,777 | | | 1,239,079 |
| | | | | | ||||
Operating
expenses: | | | | | | | |||
Compensation
and benefits | | | 1,360,367 | | | 836,688 | | | 729,937 |
Occupancy
and equipment | | | 48,162 | | | 46,894 | | | 57,585 |
| | Year
Ended December 31, | |||||||
| | 2020 | | | 2019 | | | 2018 | |
General
and administrative | | | 371,079 | | | 258,031 | | | 211,916 |
Depreciation
and amortization | | | 32,646 | | | 31,921 | | | 29,763 |
Total
operating expenses | | | 1,812,254 | | | 1,173,534 | | | 1,029,201 |
| | | | | | ||||
Income
from operations | | | 874,391 | | | 21,243 | | | 209,878 |
| | | | | | ||||
Other
income (expense): | | | | | | | |||
Interest
income | | | 187,091 | | | 207,452 | | | 148,772 |
Interest
expense | | | (170,546) | | | (199,944) | | | (173,949) |
Loss
on extinguishment of debt | | | (74) | | | (519) | | | (8,454) |
Other
income (expense), net | | | 16,471 | | | 6,989 | | | (33,631) |
Net
income before taxes | | | 890,862 | | | 28,232 | | | 176,247 |
Income
tax expense | | | (225,663) | | | (6,605) | | | (47,208) |
Net
income | | | $665,199 | | | $21,627 | | | $129,039 |
| | | | | | ||||
Earnings
per share | | | | | | | |||
Basic | | | $5.58 | | | $0.18 | | | $1.08 |
| | |||||
| | 2020 | | | 2019 | |
Assets | | | | | ||
Cash
and cash equivalents | | | $504,378 | | | $90,739 |
Restricted
cash | | | 29,293 | | | 49,200 |
Servicing
advances, net | | | 160,606 | | | 119,630 |
Mortgage
loans held for sale, at fair value | | | 8,007,730 | | | 6,639,122 |
Mortgage
servicing rights, at fair value | | | 1,156,831 | | | 1,743,570 |
Property
and equipment, net | | | 77,055 | | | 67,352 |
Loans
eligible for repurchase from GNMA | | | 2,273,601 | | | 194,554 |
Derivative
assets | | | 315,488 | | | 100,504 |
Prepaid
expenses and other assets | | | 430,257 | | | 274,443 |
Total
assets | | | $12,955,239 | | | $9,279,114 |
| | | | |||
Liabilities
and stockholder’s equity | | | | | ||
Accounts
payable and accrued expenses | | | $417,148 | | | $234,038 |
Servicer
advance facilities, net | | | 109,965 | | | 46,060 |
Warehouse
credit facilities, net | | | 7,369,193 | | | 6,316,133 |
MSR
financing facilities, net | | | 899,898 | | | 1,071,224 |
Liability
for loans eligible for repurchase from GNMA | | | 2,273,601 | | | 194,554 |
Derivative
liabilities | | | 95,285 | | | 22,607 |
Other
liabilities | | | 386,371 | | | 309,222 |
Total
liabilities | | | 11,551,461 | | | 8,193,838 |
| | | | |||
Stockholder’s
equity | | | | | ||
Preferred
stock – 15,000,000 shares authorized, no shares issued and outstanding, $0.0001 par value | | | — | | | — |
Common
stock – 485,000,000 shares authorized, 119,172,000 shares issued and outstanding, $0.0001 par value | | | 12 | | | 12 |
Additional
paid-in capital | | | 659,644 | | | 656,341 |
Retained
earnings | | | 744,122 | | | 428,923 |
Total
stockholder’s equity | | | 1,403,778 | | | 1,085,276 |
Total
liabilities and stockholder’s equity | | | $12,955,239 | | | $9,279,114 |
| | Year
Ended December 31, | ||||
| | 2020 | | | 2019
| |
Servicing | | | | | ||
Servicing
Portfolio (Unpaid Principal Balance (“UPB”), dollars in billions) | | | | | ||
Owned
or Parent Owned Performing MSR | | | $134.5 | | | $140.6 |
Third
Party / Special / Whole Loans | | | $14.0 | | | $12.1 |
Total
UPB | | | $148.5 | | | $152.7 |
| | | | |||
Origination | | | | | ||
Funded
Volume by Channel (UPB, dollars in billions) | | | | | ||
Direct to Consumer | | | $3.3 | | | $9.0 |
Distributed
Retail | | | $21.4 | | | $39.0 |
Joint
Venture | | | — | | | — |
Wholesale | | | $16.3 | | | $22.5 |
Correspondent | | | $20.4 | | | $9.8 |
Total
Funded Volume | | | $61.3 | | | $80.3 |
| | | | |||
Funded
Volume by Product (UPB, dollars in billions) | | | | | ||
Agency | | | $29.5 | | | $54.6 |
Government | | | $28.9 | | | $24.2 |
Non-Agency | | | $1.4 | | | $0.3 |
Non-QM | | | $1.6 | | | $1.2 |
| | | | |||
Purchase
Refinance Funded Volume (UPB, dollars in billions) | | | | | ||
Purchase | | | $33.5 | | | $35.7 |
Refinance | | | $27.8 | | | $44.6 |
| | | | |||
Pull-Through
Adjusted Lock Volume (UPB, dollars in billions) | | | | | ||
Direct to Consumer | | | $4.1 | | | $10.5 |
Total
Pull-Through Adjusted Lock Volume | | | $64.5 | | | $84.6 |
| | | | |||
GOS
Revenue Margin | | | | | ||
Direct to Consumers | | | 4.23% | | | 4.64% |
Distributed
Retail | | | 3.69% | | | 4.31% |
Joint
Venture | | | — | | | — |
Wholesale | | | 1.14% | | | 2.48% |
Correspondent | | | 0.46% | | | 0.41% |
Total | | | 1.97% | | | 3.41% |
• | the market price of our common stock could decline; |
• | we
could owe a substantial termination fee to the other party under certain circumstances; |
• | time and resources committed by our management to matters relating to the Caliber Acquisition could otherwise have been devoted to pursuing other beneficial opportunities for our Company; |
• | we may experience negative reactions from the financial markets or from our customers, employees, suppliers and regulators; and |
• | we will be required to pay the costs relating to the Caliber Acquisition, such as legal, accounting and financial advisory fees, whether or not the Caliber Acquisition is completed. |
• | the diversion of management’s attention from ongoing business concerns and performance shortfalls
as a result of the devotion of management’s attention to the Caliber Acquisition; |
• | managing a larger Company; |
• | maintaining employee morale and attracting and motivating and retaining management personnel and other key employees; |
• | the possibility of faulty assumptions underlying expectations regarding the integration process; |
• | retaining existing business and operational
relationships and attracting new business and operational relationships; |
• | consolidating corporate and administrative infrastructures and eliminating duplicative operations; |
• | coordinating geographically separate organizations; |
• | unanticipated issues in integrating information technology, communications and other systems; |
• | unanticipated changes in federal or state
laws or regulations; and |
• | unforeseen expenses or delays associated with the Caliber Acquisition. |
• | credit standards for mortgage loans; |
• | minimum financial requirements relating to its net worth, capital ratio and
liquidity; |
• | its servicing practices; |
• | the servicing and incentive fees that may be charged; |
• | modification standards and procedures; and |
• | the amount of reimbursable advances. |
• | a
shift in our investor base; |
• | our quarterly or annual earnings and cash flows, or those of other comparable companies; |
• | actual or anticipated fluctuations in our operating results; |
• | changes in accounting standards, policies, guidance, interpretations or principles; |
• | announcements by us or our competitors of significant investments, acquisitions, dispositions or
other transactions; |
• | the failure of securities analysts to cover our common stock; |
• | changes in earnings estimates by securities analysts or our ability to meet those estimates; |
• | market performance of affiliates and other counterparties with whom we conduct business; |
• | the operating and stock price performance of other comparable companies; |
• | our
failure to qualify as a REIT, maintain our exemption under the Investment Company Act of 1940 or satisfy the NYSE listing requirements; |
• | negative public perception of us, our competitors or industry; |
• | overall market fluctuations; and |
• | general economic conditions. |
• | a
classified board of directors with staggered three-year terms; |
• | provisions regarding the election of directors, classes of directors, the term of office of directors, the filling of director vacancies and the resignation and removal of directors for cause only upon the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote thereon; |
• | provisions regarding corporate opportunity only upon the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote thereon; |
• | removal
of directors only for cause and only with the affirmative vote of at least 80% of the then issued and outstanding shares of our capital stock entitled to vote in the election of directors; |
• | our board of directors to determine the powers, preferences and rights of our preferred stock and to issue such preferred stock without stockholder approval; |
• | advance notice requirements applicable to stockholders for director nominations and actions to be taken at annual meetings; |
• | a prohibition, in our certificate
of incorporation, stating that no holder of shares of our common stock will have cumulative voting rights in the election of directors, which means that the holders of a majority of the issued and outstanding shares of common stock can elect all the directors standing for election; and |
• | a requirement in our bylaws specifically denying the ability of our stockholders to consent in writing to take any action in lieu of taking such action at a duly called annual or special meeting of our stockholders. |
| | As
of December 31, 2020 | |||||||
| | Historical | | | As
Adjusted | | | Pro Forma | |
| | (Dollars
in thousands, unaudited) | |||||||
Cash and cash equivalents | | | $944,854 | | | $1,494,854
| | | $723,751 |
Restricted cash | | | 135,619 | | | 135,619 | | | 188,696
|
Mortgage servicing rights, at fair value | | | 3,489,675 | | | 3,489,675 | | | 4,944,251 |
Real
estate and other securities | | | 14,244,558 | | | 14,244,558 | | | 9,244,558 |
Residential
mortgage loans, held-for-sale | | | 5,215,703 | | | 5,215,703 | | | 11,952,142 |
Residential
mortgage loans subject to repurchase | | | 1,452,005 | | | 1,452,005 | | | 3,874,509 |
Servicer
advances receivable | | | 3,002,267 | | | 3,002,267 | | | 3,133,390 |
Other
assets | | | 1,358,422 | | | 1,358,422 | | | 2,364,560
|
Secured financing agreements | | | 17,547,680 | | | 17,547,680 | | | 19,176,986
|
Secured notes and bonds payable | | | 7,644,195 | | | 7,644,195 | | | 8,462,981
|
Unsecured senior notes, net of issuance costs | | | 541,516 | | | 541,516 | | | 541,516
|
Residential mortgage loan repurchase liability | | | 1,452,005 | | | 1,452,005 | | | 3,874,509 |
Accrued
expenses and other liabilities | | | 537,302 | | | 537,302 | | | 1,749,460
|
Total debt | | | 25,733,391 | | | 25,733,391 | | | 28,181,483
|
Stockholders’ equity: | | | | | | | |||
Preferred
stock, $0.01 per value, 100,000,000 shares authorized, 33,610,000 issued and outstanding at December 31, 2020 ($840,250 aggregate liquidation preference, respectively) | | | 812,992 | | | 812,992 | | | 812,992 |
Common
stock, par value $0.01 per share, 2,000,000,000 shares authorized; 414,744,518 shares issued and outstanding, historical and 460,490,172 shares issued and outstanding, as adjusted | | | 4,148 | | | 4,648 | | | 4,605 |
Additional
paid-in capital | | | 5,547,108 | | | 6,096,608 | | | 6,046,651 |
Retained
earnings (accumulated deficit) | | | (1,108,929) | | | (1,108,929) | | | (1,108,929) |
Accumulated
other comprehensive income (loss) | | | 65,697 | | | 65,697 | | | 65,697 |
Total
stockholders’ equity | | | 5,321,016 | | | 5,871,016 | | | 5,821,016 |
Noncontrolling
interests in equity of consolidated subsidiaries | | | 108,668 | | | 108,668 | | | 108,668 |
Total
equity | | | 5,429,684 | | | 5,979,684 | | | 5,929,684 |
Total
capitalization | | | $31,163,075 | | | $31,713,075 | | | $34,111,167 |
• | The probable Caliber Acquisition included in the unaudited pro forma condensed combined balance sheet as if it occurred on December 31, 2020 and the unaudited pro forma combined statement of income as if it occurred on January 1, 2020. The adjustments related to the Caliber Acquisition
are shown in a separate column as “Transaction Accounting Adjustments —Acquisition Adjustments.” |
• | The assumed issuance by us of an aggregate of 45.75 million common shares hereby at a purchase price of $10.93 per share in exchange for gross proceeds of approximately $500.0 million. The adjustments related to the issuance of common stock are shown in a separate column as “Transaction Accounting Adjustments — Financing Adjustments.” |
• | The assumed sale by us of approximately $5.0 billion face value of Agency residential mortgage-backed securities for net cash proceeds of $250.0 million after repayment of $4.75 billion debt financing. The adjustments related to the sale of securities are shown in a separate column as “Transaction Accounting Adjustments — Financing Adjustments.” |
| | Historical | | | Transaction
Accounting Adjustments | | | Pro Forma | |||||||||||||
| | New
Residential | | | Caliber | | | Acquisition
Adjustments | | | Note 2 Reference | | | Financing
Adjustments | | | Note 2 Reference | | | Combined | |
Assets | | | | | | | | | | | | | | | |||||||
Excess
mortgage servicing rights, at fair value | | | $410,855 | | | $— | | | $— | | | | | $— | | | | | $410,855 | ||
Mortgage
servicing rights, at fair value | | | 3,489,675 | | | 1,156,831 | | | 297,745 | | | G | | | — | | | | | 4,944,251 | |
Mortgage
servicing rights financing receivables, at fair value | | | 1,096,166 | | | — | | | — | | | | | — | | | | | 1,096,166 | ||
Servicer
advance investments, at fair value | | | 538,056 | | | — | | | — | | | | | — | | | | | 538,056 | ||
Real
estate and other securities | | | 14,244,558 | | | — | | | — | | | | | (5,000,000) | | | B | | | 9,244,558 | |
Residential
loans and variable interest entity consumer loans held-for-investment, at fair value | | | 1,359,754 | | | — | | | — | | | | | — | | | | | 1,359,754 | ||
Residential
mortgage loans, held-for-sale | | | 5,215,703 | | | 8,007,730 | | | (1,271,291) | | | G | | | — | | | | | 11,952,142 | |
Residential
mortgage loans subject to repurchase | | | 1,452,005 | | | 2,273,601 | | | 148,903 | | | G | | | — | | | | | 3,874,509 | |
Cash
and cash equivalents | | | 944,854 | | | 504,378 | | | (1,475,481) | | | C | | | 750,000 | | | A,B | | | 723,751 |
Restricted
cash | | | 135,619 | | | 29,293 | | | 23,784 | | | | | — | | | | | 188,696 | ||
Servicer
advances receivable | | | 3,002,267 | | | 160,606 | | | (29,483) | | | G | | | — | | | | | 3,133,390 | |
Trades
receivable | | | 4,180 | | | — | | | — | | | | | — | | | | | 4,180 | ||
Other
assets | | | 1,358,422 | | | 822,800 | | | 183,338 | | | D,E,G | | | — | | | | | 2,364,560 | |
| | $33,252,114 | | | $12,955,239 | | | $(2,122,485) | | | | | $(4,250,000) | | | | | $39,834,868 | |||
| | | | | | | | | | | | | | ||||||||
Liabilities
and Equity | | | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | ||||||||
Liabilities | | | | | | | | | | | | | | | |||||||
Secured
financing agreements | | | $17,547,680 | | | $7,369,193 | | | $(989,887) | | | G | | | $(4,750,000) | | | B | | | $19,176,986 |
Secured
notes and bonds payable | | | 7,644,195 | | | 1,009,863 | | | (191,077) | | | G | | | — | | | | | 8,462,981 | |
Residential
mortgage loan repurchase liability | | | 1,452,005 | | | 2,273,601 | | | 148,903 | | | G | | | — | | | | | 3,874,509 | |
Unsecured
senior notes, net of issuance costs | | | 541,516 | | | — | | | — | | | | | — | | | | | 541,516 | ||
Trades
payable | | | 154 | | | — | | | — | | | | | — | | | | | 154 | ||
Due
to affiliates | | | 9,450 | | | — | | | — | | | | | — | | | | | 9,450 | ||
Dividends
payable | | | 90,128 | | | — | | | — | | | | | — | | | | | 90,128 | ||
Accrued
expenses and other liabilities(A) | | | 537,302 | | | 898,804 | | | 313,354 | | | G | | | — | | | | | 1,749,460 | |
| | 27,822,430 | | | 11,551,461 | | | (718,707) | | | | | (4,750,000) | | | | | 33,905,184 | |||
| | | | | | | | | | | | | | ||||||||
Equity | | | | | | | | | | | | | | | |||||||
Preferred
stock, par value $0.01 per share | | | 812,992 | | | — | | | — | | | | | — | | | | | 812,992 | ||
Common
stock, par value $0.01 per share | | | 4,148 | | | 12 | | | (12) | | | F | | | 457 | | | A | | | 4,605 |
Additional
paid-in capital | | | 5,547,108 | | | 659,644 | | | (659,644) | | | F | | | 499,543 | | | A | | | 6,046,651 |
Retained
earnings (accumulated deficit) | | | (1,108,929) | | | 744,122 | | | (744,122) | | | F | | | — | | | | | (1,108,929) | |
Accumulated
other comprehensive income (loss) | | | 65,697 | | | — | | | — | | | | | — | | | | | 65,697 | ||
Total
New Residential stockholders’ equity | | | 5,321,016 | | | 1,403,778 | | | (1,403,778) | | | | | 500,000 | | | | | 5,821,016 | ||
Noncontrolling
interests in equity of consolidated subsidiaries | | | 108,668 | | | — | | | — | | | | | — | | | | | 108,668 | ||
Total
Equity | | | 5,429,684 | | | 1,403,778 | | | (1,403,778) | | | | | 500,000 | | | | | 5,929,684 | ||
| | $33,252,114 | | | $12,955,239 | | | $(2,122,485) | | | | | $(4,250,000) | | | | | $39,834,868 |
| | Historical | | | Transaction
Accounting Adjustments | | | Pro Forma | |||||||||||||
| | New
Residential | | | Caliber | | | Acquisition
Adjustments | | | Note 2 Reference | | | Financing
Adjustments | | | Note 2 Reference | | | Combined | |
Revenues | | | | | | | | | | | | | | | |||||||
Interest
income | | | $1,102,537 | | | $187,091 | | | $— | | | | | $(112,283) | | | 2 | | | $1,177,345 | |
Fee
income | | | — | | | 229,739 | | | — | | | | | — | | | | | 229,739 | ||
Servicing
revenue, net of change in fair value | | | (555,041) | | | (76,206) | | | — | | | | | — | | | | | (631,247) | ||
Gain
on originated mortgage loans, held-for-sale, net | | | 1,399,092 | | | 2,533,112 | | | — | | | | | — | | | | | 3,932,204 | ||
| | 1,946,588 | | | 2,873,736 | | | — | | | | | (112,283) | | | | | 4,708,041 | |||
Expenses | | | | | | | | | | | | | | | |||||||
Interest
expense | | | 584,469 | | | 170,546 | | | — | | | | | (11,678) | | | 2 | | | 743,337 | |
Compensation
and benefits | | | 571,646 | | | 1,360,367 | | | — | | | | | — | | | | | 1,932,013 | ||
General
and administrative expenses | | | 548,441 | | | 451,887 | | | — | | | | | — | | | | | 1,000,328 | ||
Management
fee to affiliate | | | 89,134 | | | — | | | — | | | | | 7,500 | | | 3 | | | 96,634 | |
Incentive
compensation to affiliate | | | — | | | — | | | — | | | | | — | | | | | — | ||
| | 1,793,690 | | | 1,982,800 | | | — | | | | | (4,178) | | | | | 3,772,312 | |||
Other
income (loss) | | | | | | | | | | | | | | | |||||||
Change
in fair value of investments | | | (437,126) | | | — | | | — | | | | | 26,283 | | | 2 | | | (410,843) | |
Gain
(loss) on settlement of investments, net | | | (930,131) | | | (74) | | | — | | | | | — | | | | | (930,205) | ||
Earnings
from investments in consumer loans, equity method investees | | | — | | | — | | | — | | | | | — | | | | | — | ||
Other
income (loss), net | | | (2,797) | | | — | | | — | | | | | — | | | | | (2,797) | ||
| | (1,370,054) | | | (74) | | | — | | | | | 26,283 | | | | | (1,343,845) | |||
Impairment | | | | | | | | | | | | | | | |||||||
Provision
(reversal) for credit losses on securities | | | 13,404 | | | — | | | — | | | | | — | | | | | 13,404 | ||
Valuation
and credit loss provision (reversal) on loans and real estate owned | | | 110,208 | | | — | | | — | | | | | — | | | | | 110,208 | ||
| | 123,612 | | | — | | | — | | | | | — | | | | | 123,612 | |||
Income
(Loss) Before Income Taxes | | | (1,340,768) | | | 890,862 | | | — | | | | | (81,822) | | | | | (531,728) | ||
Income
tax expense (benefit) | | | 16,916 | | | 225,663 | | | — | | | | | — | | | | | 242,579 | ||
Net
Income (Loss) | | | $(1,357,684) | | | $665,199 | | | $— | | | | | $(81,822) | | | | | $(774,307) | ||
Noncontrolling
interests in income of consolidated subsidiaries | | | 52,674 | | | — | | | — | | | | | — | | | | | 52,674 | ||
Dividends
on preferred stock | | | 54,295 | | | — | | | — | | | | | — | | | | | 54,295 | ||
Net
Income (Loss) Attributable to Common Stockholders | | | $(1,464,653) | | | $665,199 | | | $— | | | | | $(81,822) | | | | | $(881,276) | ||
Net
Income (Loss) Per Share of Common Stock | | | | | | | | | | | | | | | |||||||
Basic | | | $(3.52) | | | $5.58 | | | $(5.58) | | | | | | | | | $(1.91) | |||
Diluted | | | $(3.52) | | | $— | | | $— | | | | | | | | | $(1.91) | |||
| | | | | | | | | | | | | | ||||||||
Weighted
Average Number of Shares of Common Stock Outstanding | | | | | | | | | | | | | | | |||||||
Basic | | | 415,513,187 | | | 119,172 | | | (119,172) | | | | | 45,745,654 | | | 1 | | | 461,258,841 | |
Diluted | | | 415,513,187 | | | — | | | — | | | | | 45,745,654 | | | 1 | | | 461,258,841 |
Balance Sheet / Income Statement | | | Historical | | | Reclassification | | | Amount |
Balance
sheet | | | Property and equipment, net | | | Other assets | | | $77,055 |
Balance
sheet | | | Derivative assets | | | Other assets | | | 315,488 |
Balance
sheet | | | Prepaid and other assets | | | Other assets | | | 430,257 |
Balance
sheet | | | Servicer advances facilities, net | | | Secured notes and bonds payable | | | 109,965 |
Balance
sheet | | | Warehouse credit facilities, net | | | Secured financing agreements | | | 7,369,193 |
Balance
sheet | | | MSR financing facilities, net | | | Secured notes and bonds payable | | | 899,898 |
Balance
sheet | | | Derivative liabilities | | | Accrued expenses and other liabilities | | | 95,285 |
| | | | | | ||||
Income
statement | | | Change in fair value of mortgage servicing rights | | | Servicing revenue,
net of change in fair value | | | $(596,954) |
Income statement | | | Other
income | | | Servicing revenue, net of change in fair value | | | 18,798 |
Income
statement | | | Occupancy and equipment | | | General and administrative expenses | | | 48,162 |
Income
statement | | | Depreciation and amortization | | | General and administrative expenses | | | 32,646 |
Income
statement | | | Loss on extinguishment of debt | | | Gain (loss) on settlement of investments,
net | | | (74) |
Assets
Acquired | | | |
Mortgage servicing rights, at fair value | | | $1,454.6 |
Residential
mortgage loans, held-for-sale | | | 6,736.4 |
Residential mortgage loans subject to repurchase | | | 2,422.5 |
Cash
and cash equivalents | | | 703.9 |
Restricted cash | | | 53.1 |
Servicer
advances receivable | | | 131.1 |
Other assets | | | 881.1 |
Total
Assets Acquired | | | $12,382.7 |
| | ||
Liabilities
Assumed | | | |
Secured financing agreements | | | $6,379.3 |
Secured
notes and bonds payable | | | 818.8 |
Residential mortgage loan repurchase liability | | | 2,422.5 |
Accrued
expenses and other liabilities | | | 1,212.2 |
Total Liabilities Assumed | | | $10,832.8 |
| | ||
Net
Assets | | | $1,549.9 |
| | ||
Total
Estimated Consideration | | | $1,675.0 |
| | ||
Goodwill | | | $125.1 |
A. | Represents the assumed proceeds from the April 2021 issuance of 45.75 million common shares hereby at a purchase price of $10.93 per share for gross cash proceeds of $500.0 million as if it had occurred on December 31, 2020. |
B. | Represents the assumed sale of approximately $5.0 billion face value of Agency residential mortgage-backed securities for net cash proceeds of $250.0 million after repayment of $4.75 billion debt financing. |
C. | Represents estimated cash consideration
of $1.675 billion paid to Caliber, net of adjustments of the historical amounts of Caliber’s cash on hand to reflect the current amount. |
D. | Represents the elimination of $65.0 million of aggregate identifiable indefinite-lived intangible assets and goodwill recorded on Caliber’s balance sheet at December 31, 2020. |
E. | Record the preliminary goodwill of $125.1 million arising from the Caliber Acquisition as if it occurred on December 31, 2020. |
F. | Represents
the elimination of Caliber’s common stock, additional paid-in capital and retained earnings as the assets acquired and liabilities assumed were recorded at fair value and the difference between assets acquired and liabilities assumed were recorded as goodwill. |
G. | Represents adjustments of the Caliber’s historical amounts to the current fair value. |
1. | Record 45.75 million additional common shares issued hereby to fund the Caliber Acquisition. Assumed share issuance
based on our closing stock price of $10.93 as of April 13, 2021. |
2. | Represents the sale of Agency residential mortgage-backed securities and elimination of (i) interest income and interest expense of $112.3 million and $11.7 million, respectively, and (ii) amortization of premium of $26.3 million. |
3. | Record 1.5% management fee on assumed $500.0 million equity offering hereby to fund the Caliber Acquisition. |
Underwriters | | | Number
of shares |
Citigroup Global Markets Inc. | | | |
Total | | | 45,000,000 |
• | receipt and acceptance of our common stock by the underwriters; and |
• | the
underwriters’ right to reject orders in whole or in part. |
| | Per Share | | | Without
Option | | | With Option | |
Public offering price | | | $ | | | $ | | | $ |
Underwriting
discount | | | $ | | | $ | | | $ |
Proceeds,
before expenses, to us | | | $ | | | $ | | | $ |
• | “Covered” short sales are sales of common stock in an amount up to the number of shares of common stock represented by the underwriters’ option to purchase additional shares. |
• | “Naked” short sales are sales of shares of common stock in an amount in excess of the number of shares of common stock represented by the underwriters’ option to purchase additional shares. |
• | Covering
transactions involve purchases of shares of common stock either pursuant to the underwriters’ option to purchase additional shares of common stock or in the open market after the distribution has been completed in order to cover short positions. |
• | To close a naked short position, the underwriters must purchase shares of common stock in the open market after the distribution has been completed. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the shares of common stock in the open market after pricing that could adversely affect investors who purchase in the offering. |
• | To close
a covered short position, the underwriters must purchase shares of common stock in the open market after the distribution has been completed or must exercise the option to purchase additional shares of common stock. In determining the source of shares of common stock to close the covered short position, the underwriters will consider, among other things, the price of shares of common stock available for purchase in the open market as compared to the price at which it may purchase shares of common stock through their option to purchase additional shares. |
(a) | you confirm and warrant that you are either: |
(i) | “sophisticated investor” under Section 708(8)(a) or (b) of the Corporations Act; |
(ii) | a “sophisticated investor” under Section 708(8)(c) or (d) of the Corporations Act and that you have provided an accountant’s certificate to us which complies with the
requirements of section 708(8)(c)(i) or (ii) of the Corporations Act and related regulations before the offer has been made; |
(iii) | a person associated with us under Section 708(12) of the Corporations Act; or |
(b) | a “professional investor” within the meaning of Section 708(11)(a) or (b) of the Corporations Act, and to the extent that you are unable to confirm or warrant that you are an exempt sophisticated investor, associated person or professional investor under the Corporations Act any offer made to you under this document is void and incapable of acceptance; and |
(c) | you warrant and agree that you will not offer any of the shares of our common stock for resale in Australia within 12 months of the shares of our common stock being issued unless any such resale offer is exempt from the requirement to issue a disclosure document under Section 708 of the Corporations Act. |
• | the purchaser is entitled under applicable provincial securities laws to purchase the shares without the benefit of a prospectus qualified under those securities laws as it is an “accredited investor” as defined under National Instrument 45-106 – Prospectus Exemptions or Section 73.3(1) of the Securities Act (Ontario), as applicable, |
• | the purchaser is a “permitted client” as defined in National Instrument 31-103 – Registration Requirements, Exemptions and Ongoing Registrant Obligations, |
• | where
required by law, the purchaser is purchasing as principal and not as agent, and |
• | the purchaser has reviewed the text above under Resale Restrictions. |
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• | Annual Report on Form 10-K for the year ended December 31,
2018; |
• | Quarterly Reports on Form 10-Q for the quarters ended March 31, 2019 and June 30, 2019; |
• | Current Reports on Form 8-K filed on February 22, 2019, March 15, 2019, April 15,
2019, May 24, 2019, June 18, 2019, June 26, 2019, July 2, 2019 and July 26, 2019; |
• | The portions of our Definitive Proxy Statement on Schedule 14A for our 2019 Annual Meeting of Stockholders, filed on April 11,
2019, which are incorporated by reference in our above-mentioned Annual Report on Form 10-K; |
• | The description of our common stock set forth in our Registration Statement on Form 10, as amended, filed on April 29, 2013, including any amendment or report filed for the purpose of updating such description; and |
• | The description of our Series A Preferred Stock included in our Registration Statement on Form 8-A, filed on July 2,
2019, including any amendment or report filed for the purpose of updating such description. |
• | reductions in the value of, or cash flows received from, our investments; |
• | the quality and size of the investment pipeline and our ability to take advantage of investment opportunities at attractive risk-adjusted prices; |
• | the relationship between yields on assets which are paid off and yields on assets in which such monies can be reinvested; |
• | our
ability to deploy capital accretively and the timing of such deployment; |
• | our counterparty concentration and default risks in Nationstar Mortgage LLC (“Nationstar”), Ocwen Financial Corporation (“Ocwen”), OneMain Holdings, Inc. (“OneMain”), Ditech Financial LLC (“Ditech”), PHH Mortgage Corporation (“PHH”) and other third parties; |
• | events, conditions or actions that might occur at Nationstar, Ocwen, OneMain, Ditech, PHH and other third parties, as well as the continued effect of prior events; |
• | a
lack of liquidity surrounding our investments, which could impede our ability to vary our portfolio in an appropriate manner; |
• | the impact that risks associated with subprime mortgage loans and consumer loans, as well as deficiencies in servicing and foreclosure practices, may have on the value of our mortgage servicing rights (“MSRs”), Excess MSRs, servicer advance investments, residential mortgage-backed securities (“RMBS”), residential mortgage loans and consumer loan portfolios; |
• | the risks related to our acquisition of Shellpoint Partners LLC and ownership of entities that perform origination and servicing operations; |
• | the
risks that default and recovery rates on our MSRs, Excess MSRs, servicer advance investments, RMBS, residential mortgage loans and consumer loans deteriorate compared to our underwriting estimates; |
• | changes in prepayment rates on the loans underlying certain of our assets, including, but not limited to, our MSRs or Excess MSRs; |
• | the risk that projected recapture rates on the loan pools underlying our MSRs or Excess MSRs are not achieved; |
• | servicer advances may not be recoverable or may take longer to recover than
we expect, which could cause us to fail to achieve our targeted return on our servicer advance investments or MSRs; |
• | impairments in the value of the collateral underlying our investments and the relation of any such impairments to our judgments as to whether changes in the market value of our securities or loans are temporary or not and whether circumstances bearing on the value of such assets warrant changes in carrying values; |
• | the relative spreads between the yield on the assets in which
we invest and the cost of financing; |
• | adverse changes in the financing markets we access affecting our ability to finance our investments on attractive terms, or at all; |
• | changing risk assessments by lenders that potentially lead to increased margin calls, not extending our repurchase agreements or other financings in accordance with their current terms or not entering into new financings with us; |
• | changes in interest rates and/or credit spreads, as well as the success of any hedging strategy we may undertake in
relation to such changes; |
• | the availability and terms of capital for future investments; |
• | changes in economic conditions generally and the real estate and bond markets specifically; |
• | competition within the finance and real estate industries; |
• | the legislative/regulatory environment, including, but not limited to, the impact of the Dodd-Frank Act, U.S. government
programs intended to grow the economy, future changes to tax laws, the federal conservatorship of Federal National Mortgage Association and Federal Home Loan Mortgage Corporation and legislation that permits modification of the terms of residential mortgage loans; |
• | the risk that government sponsored enterprises or other regulatory initiatives or actions may adversely affect returns from investments in MSRs and Excess MSRs; |
• | our ability to maintain our qualification as a real estate investment trust (“REIT”) for U.S. federal income tax purposes and the potentially onerous consequences that any failure to maintain such qualification would have on our business; |
• | our
ability to maintain our exclusion from registration under the Investment Company Act of 1940 (the “1940 Act”) and the fact that maintaining such exclusion imposes limits on our operations; |
• | the risks related to Home Loan Servicing Solutions liabilities that we have assumed; |
• | the impact of current or future legal proceedings and regulatory investigations and inquiries; |
• | the impact of any material transactions with our Manager or one of its affiliates, including the impact of any actual, potential or perceived
conflicts of interest; and |
• | effects of the completed merger of Fortress Investment Group LLC with affiliates of SoftBank Group Corp. |
• | the title and aggregate principal amount of the debt securities and any limit on the aggregate principal amount; |
• | whether the debt securities will be senior, subordinated or junior subordinated; |
• | any
applicable subordination provisions for any subordinated debt securities; |
• | the maturity date(s) or method for determining same; |
• | the interest rate(s) or the method for determining same; |
• | the dates on which interest will accrue or the method for determining dates on which interest will accrue and dates on which interest will be payable and whether interest shall be payable in cash or additional securities; |
• | whether
the debt securities are convertible or exchangeable into other securities and any related terms and conditions; |
• | redemption or early repayment provisions; |
• | authorized denominations; |
• | if other than the principal amount, the principal amount of debt securities payable upon acceleration; |
• | place(s) where payment of principal and interest may be made, where debt securities
may be presented and where notices or demands upon the company may be made; |
• | whether such debt securities will be issued in whole or in part in the form of one or more global securities and the date as which the securities are dated if other than the date of original issuance; |
• | amount of discount or premium, if any, with which such debt securities will be issued; |
• | any covenants applicable to the particular debt securities being
issued; |
• | any additions or changes in the defaults and events of default applicable to the particular debt securities being issued; |
• | the guarantors of each series, if any, and the extent of the guarantees (including provisions relating to seniority, subordination and release of the guarantees), if any; |
• | the currency, currencies or currency units in which the purchase price for, the principal of and any premium and any interest on, such debt securities will be payable; |
• | the
time period within which, the manner in which and the terms and conditions upon which the holders of the debt securities or the company can select the payment currency; |
• | our obligation or right to redeem, purchase or repay debt securities under a sinking fund, amortization or analogous provision; |
• | any restriction or conditions on the transferability of the debt securities; |
• | provisions granting special rights to holders of the debt securities upon occurrence of specified events; |
• | additions or changes relating to compensation
or reimbursement of the trustee of the series of debt securities; |
• | additions or changes to the provisions for the defeasance of the debt securities or to provisions related to satisfaction and discharge of the indenture; |
• | provisions relating to the modification of the indenture both with and without the consent of holders of debt securities issued under the indenture and the execution of supplemental
indentures for such series; and |
• | any other terms of the debt securities (which terms shall not be inconsistent with the provisions of the TIA, but may modify, amend, supplement or delete any of the terms of the indenture with respect to such debt securities). |
• | 2,000,000,000 shares of common stock, par value $0.01 per share; and |
• | 100,000,000 shares of preferred stock, par value $0.01 per share, 6,210,000 of which are shares of Series A Preferred Stock. |
• | restricting dividends in respect of our common stock; |
• | diluting the voting power of our common stock or providing that holders of preferred stock have the right to vote on matters as a class; |
• | impairing the liquidation rights of our common stock; or |
• | delaying, deferring or preventing
a change of control of us. |
• | All outstanding depositary shares to which it relates have been redeemed or converted. |
• | The
depositary has made a final distribution to the holders of the depositary shares issued under the deposit agreement upon our liquidation, dissolution or winding up. |
• | the title of the warrants; |
• | the designation, amount and terms
of the securities for which the warrants are exercisable; |
• | the designation and terms of the other securities, if any, with which the warrants are to be issued and the number of warrants issued with each other security; |
• | the price or prices at which the warrants will be issued; |
• | the aggregate number of warrants; |
• | any provisions for adjustment of the number or
amount of securities receivable upon exercise of the warrants or the exercise price of the warrants; |
• | the price or prices at which the securities purchasable upon exercise of the warrants may be purchased; |
• | if applicable, the date on and after which the warrants and the securities purchasable upon exercise of the warrants will be separately transferable; |
• | if applicable, a discussion of the material U.S. federal income tax considerations applicable to the exercise of the warrants; |
• | any
other terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the warrants; |
• | the date on which the right to exercise the warrants will commence, and the date on which the right will expire; |
• | the maximum or minimum number of warrants that may be exercised at any time; and |
• | information with respect to book-entry procedures, if any. |
• | the price, if any, for the subscription rights; |
• | the number and terms of each
share of common stock or preferred stock or debt securities which may be purchased per each subscription right; |
• | the exercise price payable for each share of common stock or preferred stock or debt securities upon the exercise of the subscription rights; |
• | the extent to which the subscription rights are transferable; |
• | any provisions for adjustment of the number or amount of securities receivable upon exercise of the subscription rights or the exercise price of the subscription rights; |
• | any
other terms of the subscription rights, including the terms, procedures and limitations relating to the exchange and exercise of the subscription rights; |
• | the date on which the right to exercise the subscription rights shall commence, and the date on which the subscription rights shall expire; |
• | the extent to which the subscription rights may include an over-subscription privilege with respect to unsubscribed securities; and |
• | if applicable, the material terms of any standby underwriting or purchase arrangement entered
into by us in connection with the offering of subscription rights. |
• | any breach of the director’s duty of loyalty to us or our stockholders, |
• | intentional misconduct or a knowing violation of law; |
• | liability under Delaware
corporate law for an unlawful payment of dividends or an unlawful stock purchase or redemption of stock; or |
• | any transaction from which the director derives an improper personal benefit. |
• | Fortress
and Fortress’s affiliates and their permitted transferees have the right to, and have no duty to abstain from, exercising such right to, engage or invest in the same or similar business as us, do business with any of our clients, customers or vendors or employ or otherwise engage any of our officers, directors or employees; |
• | if Fortress and Fortress’s affiliates and their permitted transferees or any of their officers, directors or employees acquire knowledge of a potential transaction that could be a corporate opportunity, they have no duty to offer such corporate opportunity to us, our stockholders or affiliates; |
• | we have renounced any interest or expectancy in,
or in being offered an opportunity to participate in, such corporate opportunities; and |
• | in the event that any of our directors and officers who is also a director, officer or employee of Fortress or Fortress’s affiliates or their permitted transferees acquire knowledge of a corporate opportunity or is offered a corporate opportunity, provided that this knowledge was not acquired solely in such person’s capacity as our director or officer and such person acted in good faith, then such person is deemed to have fully satisfied such person’s fiduciary duty and is not liable to us if Fortress, or its affiliates, pursues or acquires the corporate opportunity or if such person did not present the corporate opportunity to us. |
• | financial institutions; |
• | insurance companies; |
• | broker-dealers; |
• | regulated investment companies; |
• | partnerships and trusts; |
• | persons
who hold our stock on behalf of another person as a nominee; |
• | persons who receive our stock through the exercise of employee stock options or otherwise as compensation; |
• | persons holding our stock as part of a “straddle,” “hedge,” “conversion transaction,” “synthetic security” or other integrated investment; |
• | U.S. expatriates; |
• | persons
whose functional currency is not the U.S. dollar; |
• | persons subject to the mark-to-market method of accounting for their securities; |
• | an accrual method taxpayer subject to special tax accounting rules as a result of its use of financial statements (within the meaning of Section 451(b)(3) of the Code); |
• | persons who own (actually or constructively) more than 10% of our stock; |
• | tax-exempt organizations; and |
• | foreign investors. |
• | a citizen or resident of the U.S., |
• | a corporation created or organized in the U.S. or under the laws of the U.S., or of any state thereof, or the District of Columbia, |
• | an estate, the income of which is includable in gross income for U.S. federal income tax purposes regardless of its source, or |
• | a
trust if a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. fiduciaries have the authority to control all substantial decisions of the trust. |
• | We will be taxed at regular corporate rates on any undistributed net taxable income, including undistributed net capital gains. |
• | If
we have net income from prohibited transactions, which are, in general, sales or other dispositions of property held primarily for sale to customers in the ordinary course of business, other than foreclosure property, such income will be subject to a 100% tax. See “—Prohibited Transactions,” and “—Foreclosure Property,” below. |
• | If we elect to treat property that we acquire in connection with a foreclosure of a mortgage loan or certain leasehold terminations as “foreclosure property”, we may thereby avoid the 100% tax on gain from a resale of that property (if the sale would otherwise constitute a prohibited transaction), but the income from the sale or operation of the property may be subject to corporate income tax at the highest applicable rate. |
• | If
we derive “excess inclusion income” from an interest in certain mortgage loan securitization structures (i.e., a “taxable mortgage pool” or a residual interest in a real estate mortgage investment conduit (“REMIC”)), we could be subject to corporate level U.S. federal income tax at the highest applicable rate to the extent that such income is allocable to specified types of tax-exempt stockholders known as “disqualified organizations” that are not subject to unrelated business income tax. See “—Taxable Mortgage Pools and Excess Inclusion Income” below. |
• | If we should fail to satisfy the 75% gross income test or the 95% gross income test, as discussed below, but nonetheless maintain our qualification as a REIT because we satisfy other requirements, we will be subject to a 100% tax on
an amount based on the magnitude of the failure adjusted to reflect the profit margin associated with our gross income. |
• | If we should fail to satisfy the asset tests (other than certain de minimis violations) or other requirements applicable to REITs, as described below, and yet maintain our qualification as a REIT because there is reasonable cause for the failure and other applicable requirements are met, we may be subject to a penalty tax. In that case, the amount of the penalty tax will be at least $50,000 per failure, and, in the case of certain asset test failures, will be determined as the amount of net income generated by the assets in question multiplied by the highest corporate tax rate if that amount exceeds $50,000 per failure. |
• | If
we should fail to distribute during each calendar year at least the sum of (a) 85% of our REIT ordinary income for such year, (b) 95% of our REIT capital gain net income for such year, and (c) any undistributed taxable income from prior periods, we would be subject to a non-deductible 4% excise tax on the excess of the required distribution over the sum of (i) the amounts that we actually distributed, plus (ii) the amounts we retained and upon which we paid income tax at the corporate level. |
• | We may be required to pay monetary penalties to the IRS in certain circumstances, including if we fail to meet record keeping requirements intended to monitor our compliance with rules relating to the composition of a REIT’s stockholders, as described below in “—Requirements for Qualification—General.” |
• | A
100% tax may be imposed on transactions between us and a TRS (as described below) that do not reflect arm’s length terms. |
• | If we acquire appreciated assets from a corporation that is not a REIT (i.e., a corporation taxable under subchapter C of the Code) in a transaction in which the adjusted tax basis of the assets in our hands is determined by reference to the adjusted tax basis of the assets in the hands of the subchapter C corporation, we may be subject to tax on such appreciation at the highest corporate income tax rate then applicable if we subsequently recognize gain on a disposition of any such assets during a period of five years following their acquisition from the subchapter C corporation. |
• | The
earnings of any subsidiary that is a subchapter C corporation, including any TRS, may be subject to U.S. federal corporate income tax. |
(1) | that is managed by one or more trustees or directors; |
(2) | the beneficial ownership of which is evidenced by transferable shares, or by transferable certificates of beneficial interest; |
(3) | that would be taxable as a domestic corporation but for its election to be subject
to tax as a REIT; |
(4) | that is neither a financial institution nor an insurance company subject to specific provisions of the Code; |
(5) | the beneficial ownership of which is held by 100 or more persons; |
(6) | in which, during the last half of each taxable year, not more than 50% in value of the outstanding stock is owned, directly or indirectly, by five or fewer “individuals” (as defined in the Code to include specified tax-exempt entities); |
(7) | which
meets other tests described below, including with respect to the nature of its income and assets; and |
(8) | that makes an election to be a REIT for the current taxable year or has made such an election for a previous taxable year that has not been terminated or revoked. |
(1) | the sum of |
(a) | 90%
of our “REIT taxable income,” computed without regard to our net capital gains and the deduction for dividends paid, and |
(b) | 90% of our net income, if any, (after tax) from foreclosure property (as described below), minus |
(2) | the sum of specified items of noncash income. |
• | Excess MSRs, |
• | loans or MBS held as assets that are issued at a discount and require the accrual of taxable economic interest in advance of receipt in cash, |
• | loans
on which the borrower is permitted to defer cash payments of interest, and distressed loans on which we may be required to accrue taxable interest income even though the borrower is unable to make current servicing payments in cash, |
• | real estate securities that are financed through securitization structures, and |
• | “residual interests” in REMICs or taxable mortgage pools. |
• | substantially all of its assets consist of debt obligations or interests in debt obligations, |
• | more than 50% of those debt obligations are real estate mortgages or interests in real estate mortgages as of specified testing dates, |
• | the entity has issued debt obligations (liabilities) that have two or more maturities, and |
• | the
payments required to be made by the entity on its debt obligations (liabilities) “bear a relationship” to the payments to be received by the entity on the debt obligations that it holds as assets. |
• | cannot be offset by any net operating losses otherwise available to the stockholder, |
• | is subject to tax as unrelated business taxable income in the hands of most types of stockholders that are otherwise generally exempt from U.S. federal income tax, and |
• | results
in the application of U.S. federal income tax withholding at the maximum rate, without reduction for any otherwise applicable income tax treaty or other exemption, to the extent allocable to most types of non-U.S. holders. |
• | income retained by the REIT in the prior taxable year on which the REIT was subject to corporate level income tax (less the amount of tax), |
• | dividends received by the REIT from TRSs or other taxable C corporations, or |
• | income in the prior taxable year from the sales of “built-in gain” property acquired by the REIT from C corporations in carryover basis transactions (less the amount of corporate
tax on such income). |
• | employee benefit plans as defined in Section 3(3) of ERISA that are subject to Title I of ERISA, |
• | plans described in Section 4975(e)(1) of the Code that are subject to Section 4975 of the Internal Revenue Code, including individual retirement accounts and Keogh Plans, |
• | entities whose underlying assets include plan assets by reason of a plan’s investment in such entities including, without limitation, insurance company general accounts (each of the
foregoing, a “Plan”), and |
• | persons who have certain specified relationships to a Plan described as “parties in interest” under ERISA and “disqualified persons” under the Internal Revenue Code. |
• | is freely transferable, |
• | is part of a class of securities that is owned by 100 or more investors independent of the issuer and of one another, and |
• | is either: |
(i) | part of a class of securities registered under Section 12(b) or 12(g) of the Exchange Act, or |
(ii) | sold
to the Plan as part of an offering of securities to the public pursuant to an effective registration statement under the Securities Act and the class of securities of which such security is part is registered under the Exchange Act within the requisite time. |
• | whether the Plan’s investment could give rise to a non-exempt prohibited transaction under ERISA or Section 4975 of the Code, |
• | whether the fiduciary has the authority to make the investment, |
• | the
composition of the Plan’s portfolio with respect to diversification by type of asset, |
• | the Plan’s funding objectives, |
• | the tax effects of the investment, |
• | whether our assets would be considered plan assets, and |
• | whether, under the general fiduciary standards of investment prudence and diversification an investment in these shares is appropriate for the Plan taking
into account the overall investment policy of the Plan and the composition of the Plan’s investment portfolio. |
• | directly
to one or more purchasers; |
• | through agents; |
• | to or through underwriters, brokers or dealers; or |
• | through a combination of any of these methods. |
• | a block trade in which a broker-dealer will attempt to sell as agent, but may position or resell a portion of the block, as principal, in order to facilitate the transaction; |
• | purchases by
a broker-dealer, as principal, and resale by the broker-dealer for its account; |
• | ordinary brokerage transactions and transactions in which a broker solicits purchasers; or |
• | privately negotiated transactions. |
• | enter into transactions with a broker-dealer or affiliate thereof in connection
with which such broker-dealer or affiliate will engage in short sales of the common stock pursuant to this prospectus, in which case such broker-dealer or affiliate may use shares of common stock received from us to close out its short positions; |
• | sell securities short and redeliver such shares to close out our short positions; |
• | enter into option or other types of transactions that require us to deliver common stock to a broker-dealer or an affiliate thereof, who will then resell or transfer the common stock under this prospectus; or |
• | loan
or pledge the common stock to a broker-dealer or an affiliate thereof, who may sell the loaned shares or, in an event of default in the case of a pledge, sell the pledged shares pursuant to this prospectus. |
• | on a national securities exchange; |
• | in the over-the-counter market; or |
• | in transactions otherwise
than on an exchange or in the over-the-counter market, or in combination. |
• | the name or names of any participating underwriters, brokers, dealers or agents and the amounts of securities underwritten or purchased by each of them, if any; |
• | the
public offering price or purchase price of the securities and the net proceeds to be received by us from the sale; |
• | any delayed delivery arrangements; |
• | any underwriting discounts, commissions or agency fees and other items constituting underwriters’, brokers’, dealers’ or agents’ compensation; |
• | any discounts or concessions allowed or reallowed or paid to dealers; |
• | any
securities exchange or markets on which the securities may be listed; and |
• | other material terms of the offering. |
• | at a fixed price or prices, which may be changed; |
• | at
market prices prevailing at the time of sale; |
• | at prices related to the prevailing market prices; or |
• | at negotiated prices. |
• | transfer its equity securities in other ways not involving market maker or established trading markets, including directly by gift, distribution,
or other transfer; |
• | sell its equity securities under Rule 144 or Rule 145 of the Securities Act rather than under this prospectus, if the transaction meets the requirements of Rule 144 or Rule 145; or |
• | sell its equity securities by any other legally available means. |
This ‘424B5’ Filing | Date | Other Filings | ||
---|---|---|---|---|
1/1/26 | ||||
8/15/24 | ||||
12/31/21 | 10-K, 5 | |||
Filed on: | 4/14/21 | 8-K | ||
4/13/21 | ||||
3/31/21 | 10-Q | |||
12/31/20 | 10-K, 5 | |||
12/17/20 | ||||
7/14/20 | ||||
1/1/20 | ||||
12/31/19 | 10-K | |||
9/30/19 | 10-Q | |||
8/1/19 | 10-Q, 424B2, 424B5, 8-K, S-3ASR | |||
7/2/19 | 8-A12B, 8-K, CERT | |||
6/30/19 | 10-Q | |||
3/31/19 | 10-Q | |||
12/31/18 | 10-K | |||
12/31/14 | 10-K, 10-K/A | |||
12/31/13 | 10-K, 4 | |||
List all Filings |
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 4/14/21 Rithm Capital Corp. 8-K:1,2,8,9 4/14/21 16:2.8M Broadridge Fin’l So… Inc 4/09/21 Rithm Capital Corp. DEF 14A 5/27/21 1:1.8M Broadridge Fin’l So… Inc 2/16/21 Rithm Capital Corp. 10-K 12/31/20 174:44M 8/01/19 Rithm Capital Corp. 10-Q 6/30/19 149:160M 4/29/13 Rithm Capital Corp. 10-12B/A 3:3M Donnelley … Solutions/FA |