US VIRGIN ISLANDS, Oct. 7, 2020 /PRNewswire/ -- William C. Erbey recently issued the below open
letter to the Chair of the Board of Directors of Front Yard
Residential Corporation (NYSE: RESI) ("Front Yard" or the
"Company"), a provider of affordable single family housing across
America. Front Yard was established as an independent public
company following its spin-off from Altisource Portfolio Solutions
S.A. (NASDAQ: ASPS) in December
2012.
Source: William C.
Erbey
Press Contact:
Sam
Garcia
Publicist
Strategic Vantage Marketing & Public Relations
214.762.4457 | SamGarcia@StrategicVantage.com
September 30, 2020
Front Yard Residential Corporation
c/o Altisource Asset Management Corporation
5100 Tamarind Reef
Christiansted, VI 00820
Attn: Rochelle Dobbs, Chair of the
Board
Dear Chairwoman Dobbs:
I have been an investor in Front Yard Residential since its
inception. And as much as I would like to see the Company
continue, the time has come, in the best interests of the
shareholders, to liquidate the Company. As far back as
May 2018, CFO Robin Lowe stated on the Q1 Earnings call that
"But we're solidly in the $18 to
$19 range per share" in terms of NAV.
This guidance was confirmed in the following Q2
Earnings Call in response to the following observation by an
analyst: "Then lastly, just we keep seeing industry data,
home prices are rising, things are -- there is a big tailwind, you
guys have been obviously at the lower end of the market. Those
houses seem to be going up faster than higher priced homes. Last
quarter, you kind of talked about an $18 to $19
NAV. How are you thinking about that number now…?" Mr.
Lowe assured he was "absolutely convinced" that the NAV was in that
range and later alluded to an independent valuation company
validating the same range.
The Company has never reversed its guidance of two years ago nor
subsequently disclosed anything that would call it into
question. To the contrary, given the continued market
increase in overall housing values since that time, it would be
difficult to support a NAV of less than $20-21/share assuming the Company has
professionally executed over this time period. The record is
replete with management's assertions that they have been doing an
outstanding job.
The Company's assertion that the cost of liquidating the
portfolio is $6.50/share begs
credulity. That cost equates to 14% of the total enterprise
value of the properties at a $20/share NAV, upwards of $383 million. In my limited experience in
the industry, this is way over market – more than double what a
well-run firm should spend to sell homes.
Adjusting to a more reasonable cost to liquidate the homes, the
net liquidation value of the Company is $16.50/share ($20/share - $3.50/share).
I call upon the Board to exercise its fiduciary duties and
liquidate the Company.
Best regards,
William C. Erbey
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SOURCE William C. Erbey