Document


 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 27, 2019 (February 27, 2019)


ALTISOURCE ASSET MANAGEMENT CORPORATION
(Exact name of Registrant as specified in its charter)

United States Virgin Islands
 
001-36063
 
66-0783125
(State or other jurisdiction of incorporation or organization)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)

5100 Tamarind Reef
Christiansted, United States Virgin Islands 00820
(Address of principal executive offices including zip code)

(340) 692-1055
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter):
 
Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 






Item 2.02 Results of Operations and Financial Condition
 
On February 27, 2019, Altisource Asset Management Corporation issued a press release announcing its financial results for the quarter and year ended December 31, 2018. A copy of the press release is attached hereto as Exhibit 99.1.

The information in this Item 2.02, including the information in Exhibit 99.1, is furnished solely pursuant to Item 2.02 of this Form 8-K. Consequently, it is not deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that Section. It may only be incorporated by reference in another filing under the Securities Exchange Act of 1934 or Securities Act of 1933 if such subsequent filing specifically references this Item 2.02 of this Form 8-K.


Item 9.01 Financial Statements and Exhibits

(d) Exhibits.


Exhibit No.
 
Description
 
Press Release of Altisource Asset Management Corporation dated February 27, 2019






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 
 
Altisource Asset Management Corporation
February 27, 2019
By:
/s/ Stephen H. Gray
 
 
Stephen H. Gray
General Counsel and Secretary



Exhibit


Exhibit 99.1

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12738239&doc=3

FOR IMMEDIATE RELEASE
FOR FURTHER INFORMATION CONTACT:
 
Robin N. Lowe
 
Chief Financial Officer
 
T: +1-345-815-9919
 
E: Robin.Lowe@AltisourceAMC.com

Altisource Asset Management Corporation Reports Fourth Quarter and Full Year 2018 Results

CHRISTIANSTED, U.S. Virgin Islands, February 27, 2019 (GLOBE NEWSWIRE) - Altisource Asset Management Corporation (“AAMC” or the “Company”) (NYSE American: AAMC) today announced financial and operating results for the fourth quarter and full year of 2018.

Fourth Quarter 2018 Highlights and Recent Developments

Conducted the transition of all ASPS-managed properties to Front Yard Residential Corporation's (“Front Yard”) internal property management platform ahead of schedule.
Negotiated the transfer of the remaining 7,646 properties managed by Main Street Renewal, LLC to Front Yard's internal platform; 6,025 of such homes have already been transferred, bringing total internally managed homes to 12,868 as of February 21, 2019.
Advised Front Yard in refinancing its $489.3 million MSR Loan Agreement with Morgan Stanley, with a credit spread reduction from 3.285% to 1.80%, LIBOR cap at 2.50% and increased funding to $505.0 million at an approximately 5% lower advance rate.
Managed Front Yard's sale of 444 non-core homes on February 8, 2019 for an aggregate sales price of $102.9 million, resulting in a net gain of $4.8 million that will be recognized by Front Yard in Q1 2019.
Maintained strong operating metrics for Front Yard during its internalization of property management.

Full Year 2018 Highlights

Advised Front Yard in the acquisition of property manager HavenBrook Partners, LLC (“HavenBrook”) and the 3,236 affordable single-family rental (“SFR”) homes managed by HavenBrook, growing Front Yard's portfolio to approximately 15,000 homes.
Managed Front Yard's liquidation of 386 legacy REO properties, reducing the portfolio of legacy REO properties by 79% to 104 at December 31, 2018 from 490 at December 31, 2017.
Obtained $508.7 million of 10-year, 4.65% fixed rate, non-amortizing financing for Front Yard as part of Freddie Mac's affordable SFR pilot program.
Continued to optimize Front Yard's financing: 87% of debt had fixed or capped rates at December 31, 2018 compared to 64% at December 31, 2017, and the weighted average debt maturity was 5.5 years at December 31, 2018 compared to 3.5 years at December 31, 2017.

“Our development and execution of Front Yard's strategic plan in 2018 resulted in a transformational year for our client,” stated Chief Executive Officer George Ellison. “Under our management, Front Yard made significant strides in the internalization of property management while growing its rental portfolio and strengthening its balance sheet with an improved financing structure. These developments have laid the foundation for Front Yard to achieve its operating targets, which will ultimately benefit the stockholders of both Front Yard and AAMC.”






Fourth Quarter and Full Year 2018 GAAP Financial Results

Net loss attributable to stockholders for the fourth quarter of 2018 totaled $4.3 million, or $2.69 per diluted common share, which included a $(3.4) million change in the fair value of its shares of Front Yard common stock, compared to a net loss attributable to stockholders of $1.8 million, or $1.15 per diluted common share, for the fourth quarter of 2017. Net loss attributable to stockholders for the year ended December 31, 2018 totaled $10.9 million, or $6.88 per diluted common share, which included a $(5.1) million change in the fair value of its shares of Front Yard common stock, compared to net loss attributable to stockholders of $7.0 million, or $4.57 per diluted common share, for the year ended December 31, 2017.

About AAMC

AAMC is an asset management company that provides portfolio management and corporate governance services to investment vehicles. Additional information is available at www.altisourceamc.com.

Forward-looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding management’s beliefs, estimates, projections, anticipations and assumptions with respect to, among other things, the Company’s financial results, future operations, business plans and investment strategies as well as industry and market conditions. These statements may be identified by words such as “anticipate,” “intend,” “expect,” “may,” “could,” “should,” “would,” “plan,” “estimate,” “target,” “seek,” “believe” and other expressions or words of similar meaning. We caution that forward-looking statements are qualified by the existence of certain risks and uncertainties that could cause actual results and events to differ materially from what is contemplated by the forward-looking statements. Factors that could cause our actual results to differ materially from these forward-looking statements may include, without limitation, AAMC's ability to implement its business strategy and the business strategy of Front Yard; AAMC's ability to retain Front Yard as a client; AAMC's ability to retain and maintain our strategic relationships; the ability of Front Yard to generate a return on invested capital in excess of applicable hurdle rates under AAMC's management; AAMC's ability to obtain additional asset management clients or businesses; AAMC's ability to effectively compete with our competitors; Front Yard's ability to complete future or pending transactions; the failure of service providers to effectively perform their obligations under their agreements with AAMC and Front Yard; AAMC's ability to successfully and efficiently integrate and manage Front Yard’s newly acquired property manager or effectively manage the performance of Front Yard’s internal property manager at the level and/or the cost that it anticipates; AAMC's failure to maintain Front Yard's qualification as a REIT; and other risks and uncertainties detailed in the “Risk Factors” and other sections described from time to time in the Company’s current and future filings with the Securities and Exchange Commission. The foregoing list of factors should not be construed as exhaustive.


The statements made in this press release are current as of the date of this press release only. The Company undertakes no obligation to publicly update or revise any forward-looking statements or any other information contained herein, whether as a result of new information, future events or otherwise.






Altisource Asset Management Corporation
Consolidated Statements of Operations
(In thousands, except share and per share amounts)

 
Three Months Ended December 31,
 
Year Ended December 31,
 
2018
 
2017
 
2018
 
2017
 
(unaudited)
 
(unaudited)
 
 
 
 
Revenues:
 
 
 
 
 
 
 
Management fees from Front Yard
$
3,583

 
$
3,834

 
$
14,567

 
$
16,010

Conversion fees from Front Yard
25

 
90

 
176

 
1,291

Expense reimbursements from Front Yard
416

 
153

 
1,183

 
859

Total revenues
4,024

 
4,077

 
15,926

 
18,160

Expenses:
 
 
 
 
 
 
 
Salaries and employee benefits
3,977

 
4,390

 
17,320

 
19,393

Legal and professional fees
312

 
875

 
1,605

 
2,794

General and administrative
826

 
659

 
3,609

 
3,320

Total expenses
5,115

 
5,924

 
22,534

 
25,507

Other income:
 
 
 
 
 
 
 
Change in fair value of Front Yard common stock
(3,443
)
 

 
(5,084
)
 

Dividend income on Front Yard common stock
244

 
244

 
975

 
975

Other income
66

 
43

 
216

 
111

Total other (loss) income
(3,133
)
 
287

 
(3,893
)
 
1,086

Loss before income taxes
(4,224
)
 
(1,560
)
 
(10,501
)
 
(6,261
)
Income tax expense
66

 
224

 
375

 
708

Net loss attributable to stockholders
(4,290
)
 
(1,784
)
 
(10,876
)
 
(6,969
)
Amortization of preferred stock issuance costs
(51
)
 
(51
)
 
(206
)
 
(206
)
Net loss attributable to common stockholders
$
(4,341
)
 
$
(1,835
)
 
$
(11,082
)
 
$
(7,175
)
 
 
 
 
 
 
 
 
Loss per share of common stock – basic:
 
 
 
 
 
 
 
Loss per basic common share
$
(2.69
)
 
$
(1.15
)
 
$
(6.88
)
 
$
(4.57
)
Weighted average common stock outstanding – basic
1,615,848

 
1,595,272

 
1,611,424

 
1,570,428

Loss per share of common stock – diluted:
 
 
 
 
 
 
 
Loss per diluted common share
$
(2.69
)
 
$
(1.15
)
 
$
(6.88
)
 
$
(4.57
)
Weighted average common stock outstanding – diluted
1,615,848

 
1,595,272

 
1,611,424

 
1,570,428







Altisource Asset Management Corporation
Consolidated Balance Sheets
(In thousands, except share and per share amounts)

 
December 31, 2018
 
December 31, 2017
Current assets:
 
 
 
Cash and cash equivalents
$
27,171

 
$
33,349

Short-term investments
584

 
625

Front Yard common stock
14,182

 
19,266

Receivable from Front Yard
3,968

 
4,151

Prepaid expenses and other assets
1,552

 
1,022

Total current assets
47,457

 
58,413

Other non-current assets
1,910

 
1,974

Total assets
$
49,367

 
$
60,387

 
 
 
 
Current liabilities:
 
 
 
Accrued salaries and employee benefits
$
5,583

 
$
5,651

Accounts payable and accrued liabilities
1,188

 
2,085

Total liabilities
6,771

 
7,736

 
 
 
 
Commitments and contingencies

 

 
 
 
 
Redeemable preferred stock:
 
 
 
Series A preferred stock, $0.01 par value, 250,000 shares issued and outstanding as of December 31, 2018 and 2017; redemption value $250,000
249,752

 
249,546

 
 
 
 
Stockholders' deficit:
 
 
 
Common stock, $.01 par value, 5,000,000 authorized shares; 2,862,760 and 1,573,691 shares issued and outstanding, respectively, as of December 31, 2018 and 2,815,122 and 1,599,210 shares issued and outstanding, respectively, as of December 31, 2017
29

 
28

Additional paid-in capital
42,245

 
37,765

Retained earnings
26,558

 
38,970

Accumulated other comprehensive loss

 
(1,330
)
Treasury stock, at cost, 1,289,069 and 1,215,912 shares as of December 31, 2018 and 2017, respectively
(275,988
)
 
(272,328
)
Total stockholders' deficit
(207,156
)
 
(196,895
)
Total liabilities and equity
$
49,367

 
$
60,387