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Press Release

Mar 01, 2017

Altisource Asset Management Corporation Reports Fourth Quarter and Full Year 2016 Results; Continues to Successfully Deliver on RESI's Strategic Objectives

CHRISTIANSTED, U.S. Virgin Islands, March 01, 2017 (GLOBE NEWSWIRE) -- Altisource Asset Management Corporation ("AAMC" or the "Company") (NYSE MKT:AAMC) today announced financial and operating results for the fourth quarter and full year of 2016.

Fourth Quarter 2016 Highlights and Recent Developments

  • Negotiated a non-binding letter of intent for Altisource Residential Corporation ("RESI") to purchase up to 3,500 rental homes with seller financing from two entities sponsored by Amherst Holdings, LLC, with the first closing expected to occur in the first quarter of 2017.1
  • Successfully integrated RESI's recently purchased portfolio of 4,262 rental properties into its growing single-family rental business.
  • Managed an increase of RESI's fourth quarter 2016 rental revenue by 154% over the third quarter to $24.3 million.
  • Facilitated RESI's agreements for the sale of two loan portfolios sales totaling 2,940 mortgage loans with an unpaid principal balance ("UPB") of $694.7 million for estimated proceeds of approximately 97% of RESI's September 30, 2016 balance sheet carrying value. Upon completion, the sales are expected to represent the divestiture by RESI of substantially all of its mortgage loan portfolio.2
  • Managed RESI's sale of 468 non-rental REO properties.
  • Completed repurchases of $4.2 million of AAMC common stock, bringing total repurchases under AAMC's repurchase program to $260.5 million.

Full Year 2016 Highlights

  • Increased RESI's rental portfolio by 215% to 8,603 homes as of December 31, 2016 from 2,732 properties as of December 31, 2015.
  • Increased RESI's rental revenue by 267% over the 2015 fiscal year to $48.6 million.
  • Diversified the RESI's property management services, adding Main Street Renewal, LLC as an additional nationwide property manager for a large portion of RESI's single-family rental portfolio.
  • Reduced RESI's mortgage loan portfolio by 54% from 7,036 loans with an aggregate UPB of $1.8 billion at December 31, 2015 to 3,474 loans with an aggregate UPB of $823.3 million at December 31, 2016.
  • Assisted RESI in the sale of 2,668 non-rental REO properties compared to the 1,321 REO properties sold in 2015.
  • Facilitated RESI's continued optimization of its funding with longer term financing and higher advance rates.

"Over the past year, we generated substantial growth for RESI's SFR portfolio, ensured the continued improvement of RESI's rental operating metrics and managed RESI's divestiture of legacy loan and REO assets in favor of productive single-family rental properties," stated Chief Executive Officer George Ellison. "Our long-term view remains that AAMC's ultimate success and profitability will be directly attributable to our continued success in executing on RESI's stated business objectives."

Fourth Quarter and Full Year 2016 Financial Results

Net loss attributable to stockholders for the fourth quarter of 2016 totaled $1.7 million, or $1.09 per diluted share, compared to net loss attributable to stockholders of $8.9 million, or $4.12 per diluted share, for the fourth quarter of 2015. Net loss attributable to stockholders for the year ended December 31, 2016 totaled $4.9 million, or $2.93 per diluted share, compared to net loss attributable to stockholders of $3.3 million, or $1.59 per diluted share, for the year ended December 31, 2015.

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 that involve a number of risks and uncertainties. Those forward-looking statements include all statements that are not historical fact, including statements about management's beliefs and expectations. Forward-looking statements are based on management's beliefs as well as assumptions made by and information currently available to management. Because such statements are based on expectations as to future economic performance and are not statements of historical fact, actual results may differ materially from those projected. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to: AAMC's ability to implement its business plan; AAMC's ability to leverage strategic relationships on an efficient and cost-effective basis; AAMC's and RESI's ability to compete; RESI's ability to implement its business plan; general economic and market conditions; governmental regulations, taxes and policies; AAMC's ability to generate adequate and timely sources of liquidity and financing for itself or RESI; RESI's ability to sell residential mortgage assets on favorable terms or at all; AAMC's ability to identify and acquire assets for RESI's portfolio; RESI's ability to complete potential transactions in accordance with anticipated terms and on a timely basis or at all; Altisource Portfolio Solutions S.A. and its affiliates' ability to effectively perform its obligations under various agreements with RESI; the failure of Main Street Renewal, LLC to effectively perform under its property management agreement with RESI; 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.

________________
1  Transaction is subject to negotiation of definitive transaction agreements and RESI's completion of due diligence.
2  First sale closed in January 2017. Second sale is subject to negotiation of definitive purchase agreement and buyer's completion of due diligence.

 
Altisource Asset Management Corporation
Consolidated Statements of Operations
(In thousands, except share and per share amounts)
 
 Three months ended December 31, 2016 Three months ended December 31, 2015 Year ended December 31, 2016 Year ended December 31, 2015
Revenues:       
Management fees from RESI$4,496  $—  $17,334  $— 
Conversion fees from RESI445  —  1,841  — 
Expense reimbursements from RESI263  —  816  — 
Rental revenues—  5,672  —  13,233 
Change in unrealized gain on mortgage loans—  (42,013) —  88,829 
Net realized gain on mortgage loans—  10,533  —  58,061 
Net realized gain on mortgage loans held for sale—  35,927  —  36,432 
Net realized gain on real estate—  14,006  —  50,932 
Interest income—  17  —  612 
Total revenues5,204  24,142  19,991  248,099 
Expenses:       
Salaries and employee benefits4,315  5,085  17,369  16,294 
Legal and professional fees670  1,287  2,173  11,311 
Residential property operating expenses—  20,376  —  66,266 
Real estate depreciation and amortization—  3,080  —  7,472 
Selling costs and impairment—  37,995  —  72,230 
Mortgage loan servicing costs—  14,357  —  62,346 
Interest expense—  14,217  —  53,131 
General and administrative1,429  2,351  4,772  7,583 
Total expenses6,414  98,748  24,314  296,633 
Other income:       
Dividend income on RESI common stock243  —  1,023  — 
Other income7  —  71  — 
Total other income250  —  1,094  — 
Loss before income taxes(960) (74,606) (3,229) (48,534)
Income tax expense703  114  1,706  354 
Net loss(1,663) (74,720) (4,935) (48,888)
Net loss attributable to non-controlling interest in consolidated affiliate—  65,779  —  45,598 
Net loss attributable to stockholders$(1,663) $(8,941) $(4,935) $(3,290)
        
Loss per share of common stock — basic:       
Loss per basic share$(1.09) $(4.12) $(2.93) $(1.59)
Weighted average common stock outstanding — basic1,568,637  2,180,167  1,752,302  2,202,815 
Loss per share of common stock — diluted:       
Loss per diluted share$(1.09) $(4.12) $(2.93) $(1.59)
Weighted average common stock outstanding — diluted1,568,637  2,180,167  1,752,302  2,202,815 


Altisource Asset Management Corporation
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
 December 31, 2016 December 31, 2015
Assets:   
Real estate held for use:   
Land (from previously consolidated VIE as of December 31, 2015)$—  $56,346 
Rental residential properties (net of accumulated depreciation of $7,127 as of December 31, 2015 - from previously consolidated VIE)—  224,040 
Real estate owned (from previously consolidated VIE as of December 31, 2015)—  455,483 
Total real estate held for use, net—  735,869 
Real estate assets held for sale (from previously consolidated VIE as of December 31, 2015)—  250,557 
Mortgage loans at fair value (from previously consolidated VIE as of December 31, 2015)—  960,534 
Mortgage loans held for sale (from previously consolidated VIE as of December 31, 2015)—  317,336 
Cash and cash equivalents (including $116,702 from previously consolidated VIE as of December 31, 2015)40,584  184,544 
Restricted cash (from previously consolidated VIE as of December 31, 2015)—  20,566 
Available-for-sale securities (RESI common stock)17,934  — 
Accounts receivable, net (including $45,903 from previously consolidated VIE as of December 31, 2015)—  46,026 
Related party receivables5,266  — 
Prepaid expenses and other assets (including $1,126 from consolidated VIE as of December 31, 2015)1,964  3,169 
Total assets$65,748  $2,518,601 
Liabilities:   
Repurchase and loan agreements (from previously consolidated VIE as of December 31, 2015)$—  $763,369 
Other secured borrowings (from previously consolidated VIE as of December 31, 2015)—  502,599 
Accrued salaries and employee benefits4,100  4,006 
Accounts payable and accrued liabilities (including $32,448 from previously consolidated VIE as of December 31, 2015)4,587  34,716 
Total liabilities8,687  1,304,690 
Commitments and contingencies—  — 
Redeemable preferred stock:   
Preferred stock, $0.01 par value, 250,000 shares issued and outstanding as of December 31, 2016 and 2015; redemption value $250,000249,340  249,133 
Stockholders' (deficit) equity:   
Common stock, $.01 par value, 5,000,000 authorized shares; 2,637,629 and 1,513,912 shares issued and outstanding, respectively, as of December 31, 2016 and 2,556,828 and 2,048,223 shares issued and outstanding, respectively, as of December 31, 201526  26 
Additional paid-in capital30,696  23,419 
Retained earnings46,145  50,678 
Accumulated other comprehensive loss(2,662) — 
Treasury stock, at cost, 1,123,717 and 508,605 shares as of December 31, 2016 and 2015, respectively(266,484) (254,984)
Total stockholders' deficit(192,279) (180,861)
Non-controlling interest in consolidated affiliate—  1,145,639 
Total (deficit) equity(192,279) 964,778 
Total liabilities and equity$65,748  $2,518,601 
 

Summary Management Reporting Information

Prior to our deconsolidation of RESI, we evaluated the operations of AAMC on a stand-alone basis in addition to evaluating our consolidated financial performance, which included the results of RESI and NewSource under U.S. GAAP. In evaluating our operating performance and managing our business under the Original AMA, we considered the incentive management fees and reimbursement of expenses paid to us by RESI as well as our stand-alone operating expenses. We maintained our internal management reporting on this basis. The following tables present our consolidating balance sheets and statements of operations, which are reconciled to U.S. GAAP. Accordingly, the entries necessary to consolidate AAMC's subsidiaries, including, but not limited to, elimination of investment in subsidiaries, elimination of intercompany receivables and payables, elimination of fees paid under the asset management agreement and reimbursed expenses, are reflected in the Consolidating Entries column.

Upon our adoption of ASU 2015-02, we are no longer required to consolidate the results of RESI. Therefore, we do not present the table for the current period.

The following tables include non-GAAP performance measures that we believe are useful to assist investors in gaining an understanding of the trends and operating results for our business on a stand-alone basis. This information should be considered in addition to, and not as a substitute for, our financial results determined in accordance with U.S. GAAP.

 
Altisource Asset Management Corporation
Consolidating Statement of Operations
Three months ended December 31, 2015
(In thousands, unaudited)
 
  RESI (GAAP) NewSource Stand-alone (Non-GAAP)  AAMC Stand-alone
(Non-GAAP)		  Consolidating Entries  AAMC Consolidated (GAAP)
Revenues:         
Management fees$—  $—  $4,524  $(4,524) $— 
Incentive management fee—  —  (6,906) 6,906  — 
Conversion fees—  —  309  (309) — 
Rental revenues5,672  —  —  —  5,672 
Change in unrealized gain on mortgage loans(42,013) —  —  —  (42,013)
Net realized gain on mortgage loans10,533  —  —  —  10,533 
Net realized gain on mortgage loans held for sale35,927  —  —  —  35,927 
Net realized gain on real estate14,006  —  —  —  14,006 
Interest income16  1  —  —  17 
Total revenues24,141  1  (2,073) 2,073  24,142 
Expenses:         
Salaries and employee benefits—  —  5,085  —  5,085 
Legal and professional fees978  41  268  —  1,287 
Residential property operating expenses20,376  —  —  —  20,376 
Real estate depreciation and amortization3,080  —  —  —  3,080 
Selling costs and impairment37,995  —  —  —  37,995 
Mortgage loan servicing costs14,357  —  —  —  14,357 
Interest expense14,217  —  —  —  14,217 
General and administrative1,356  —  995  —  2,351 
Management fees, net of reimbursements(2,073) —  —  2,073  — 
Total expenses90,286  41  6,348  2,073  98,748 
Other income:         
Dividend income—  —  33  (33) — 
Total other income—  —  33  (33) — 
Loss before income taxes(66,145) (40) (8,388) (33) (74,606)
Income tax expense13  —  101  —  114 
Net loss(66,158) (40) (8,489) (33) (74,720)
Net loss attributable to non-controlling interest in consolidated affiliate—  —  —  65,779  65,779 
Net loss attributable to stockholders$(66,158) $(40) $(8,489) $65,746  $(8,941)


Altisource Asset Management Corporation
Consolidating Statement of Operations
Year ended December 31, 2015
(In thousands, unaudited)
 
  RESI (GAAP) NewSource Stand-alone (Non-GAAP)  AAMC Stand-alone
(Non-GAAP)		  Consolidating Entries  AAMC Consolidated (GAAP)
Revenues:         
Management fees$—  $—  $14,565  $(14,565) $— 
Incentive management fee—  —  7,994  (7,994) — 
Conversion fees—  —  1,037  (1,037) — 
Expense reimbursements—  —  750  (750) — 
Rental revenues13,233  —  —  —  13,233 
Change in unrealized gain on mortgage loans88,829  —  —  —  88,829 
Net realized gain on mortgage loans58,061  —  —  —  58,061 
Net realized gain on mortgage loans held for sale36,432  —  —  —  36,432 
Net realized gain on real estate50,932  —  —  —  50,932 
Interest income611  564  —  (563) 612 
Total revenues248,098  564  24,346  (24,909) 248,099 
Expenses:         
Salaries and employee benefits—  —  16,294  —  16,294 
Legal and professional fees6,480  199  6,632  (2,000) 11,311 
Residential property operating expenses66,266  —  —  —  66,266 
Real estate depreciation and amortization7,472  —  —  —  7,472 
Selling costs and impairment72,230  —  —  —  72,230 
Mortgage loan servicing costs62,346  —  —  —  62,346 
Interest expense53,694  —  —  (563) 53,131 
General and administrative6,101  —  2,232  (750) 7,583 
Management fees22,966  630  —  (23,596) — 
Total expenses297,555  829  25,158  (26,909) 296,633 
Other income:         
Dividend income1,518  —  211  (1,729) — 
Other income2,000  —  —  (2,000) — 
Total other income3,518  —  211  (3,729) — 
Loss before income taxes(45,939) (265) (601) (1,729) (48,534)
Income tax expense66  —  288  —  354 
Net loss(46,005) (265) (889) (1,729) (48,888)
Net loss attributable to non-controlling interest in consolidated affiliate—  —  —  45,598  45,598 
Net loss attributable to stockholders$(46,005) $(265) $(889) $43,869  $(3,290)


Altisource Asset Management Corporation
Consolidating Balance Sheet
December 31, 2015
(In thousands, unaudited)
 
  RESI (GAAP) NewSource stand-alone (non-GAAP)  AAMC Stand-alone
(Non-GAAP)		  Consolidating Entries  AAMC Consolidated (GAAP)
Assets:         
Real estate held for use:         
Land$56,346  $—  $—  $—  $56,346 
Rental residential properties, net224,040  —  —  —  224,040 
Real estate owned455,483  —  —  —  455,483 
Total real estate held for use, net735,869  —  —  —  735,869 
Real estate assets held for sale250,557  —  —  —  250,557 
Mortgage loans at fair value960,534  —  —  —  960,534 
Mortgage loans held for sale317,336  —  —  —  317,336 
Cash and cash equivalents116,702  4,583  63,259  —  184,544 
Restricted cash20,566  —  —  —  20,566 
Accounts receivable, net45,903  —  123  —  46,026 
Related party receivables2,180  —  —  (2,180) — 
Investment in affiliate—  —  12,007  (12,007) — 
Prepaid expenses and other assets1,126  5  2,028  10  3,169 
Total assets$2,450,773  $4,588  $77,417  $(14,177) $2,518,601 
Liabilities:         
Repurchase and loan agreements$763,369  $—  $—  $—  $763,369 
Other secured borrowings502,599  —  —  —  502,599 
Accrued salaries and employee benefits—  —  4,006  —  4,006 
Accounts payable and accrued liabilities32,448  1,546  722  —  34,716 
Related party payables—  —  2,180  (2,180) — 
Total liabilities1,298,416  1,546  6,908  (2,180) 1,304,690 
Commitments and contingencies—  —  —  —  — 
Redeemable preferred stock—  —  249,133  —  249,133 
Stockholders' equity (deficit):         
Common stock556  —  26  (556) 26 
Additional paid-in capital1,202,418  7,000  21,089  (1,207,088) 23,419 
(Accumulated deficit) retained earnings(50,617) (3,958) 55,245  50,008  50,678 
Treasury stock—  —  (254,984) —  (254,984)
Total stockholders' equity (deficit)1,152,357  3,042  (178,624) (1,157,636) (180,861)
Non-controlling interest in consolidated affiliate—  —  —  1,145,639  1,145,639 
Total equity (deficit)1,152,357  3,042  (178,624) (11,997) 964,778 
Total liabilities and equity$2,450,773  $4,588  $77,417  $(14,177) $2,518,601 

 

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

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Christiansted, VI 00820

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