RESI - Earnings call transcript Q1 2018 | Front Yard Residential Corp

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Operator

Good day, ladies and gentlemen and welcome to the Front Yard Residential Corporation Q1 2018 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call maybe recorded. I would now like to turn the conference over to our host of today's call, Mr. Officer. Financial Chief Lowe, Robin

You may begin.

Robin Lowe

Officer Good Thank for I and Residential Financial you everyone us you, am today. Chief and Sonia. joining Lowe My thank Robin Yard morning, name Front of the Corporation. is

information we website a presentation that slides at remarks. access www.frontyardresidential.com. is remind log please additional our slide the accompany These I slides, to investors to on Before useful. begin, To you may want find available to provide our

future certain period statements forward-looking one, results the forward-looking Harbor cause a slide our involve by contain the Federal could the may presentation on or reference company's statements. pursuant actual discussed indicated that Safe in differ statements may Provisions by the of Securities terminology results and As to from laws. that maybe forward-looking to risks the of These forward-looking uncertainties identified to use materially

our refer XX, as Form difference, For risk we and XX-K, disclosure an that such the December with including cause elaboration Exchange in quarter first and a Form release XX-Q filed may Securities of Commission, factors our the to company's today. that filings earnings year-end as XXXX please the statement XXXX the well

e-mail, SEC of to filings the on you the news website If materials e-mail via would using receive page our please our and like releases, register other Investors alerts button.

to the over Officer Yard Residential. Front call of I for me Executive like George presentation today's to now Chief Joining turn Ellison, is would George.

George Ellison

another quarter Yard The on Residential. Robin front. almost strong and everyone. Front of Thanks, of numbers results to morning pleased solid good We're are report every

leased stabilized core $X.XX increases first This legacy from X.X% XX% both fixed. a was over XX% Turnover an the that’s number core see XX% the of we're Stabilized X.X%. Blended of announced revenue been the page of the to our And turn at years If which portfolio year-end. of of loans you and pleased to is per reporting was sense. XX%. the all strong issues, please this can remained on earnings, at you that’s in from have years now earnings, NOI was been full committed Stabilized legacy work Rental XX% X.X for the that of XX% our assets cleaning stabilized into end. manifestation funding were We QX makes increased Rental expenses. quarter was margin FFO quarter. to sheet. non-strategic and rent the FFO share. important were eliminate rentals gone XXXX rental turnaround $X.XX since since share. company finally, drag the extremely REO balance up This reached. milestone and removing number and the per After is four,

We and this make continue have delivered number grow. to

going important forward. focus will on this We metric

and with portfolio FFO the rentals core being optimize per to of continue of We properties $X.XX very of a the stabilized. and XX% meaningful XX% rental positive portfolio accomplishments. is now company Full share

a rates difficult rent. for expectations stronger more will continues our our we we industry more have five, families Front the state and full On some economic to which to it are mortgage, you mortgage company going choose whole FFO of can increasing, steadily inflation get and means tailwinds, make forward. see means Let’s and will are company. of why Higher rising. look The which to which future the at grow to economy page core think been rates relevant business the rates, interest people and afford specifically higher Yard,

our be rise. our home housing creating are this more the rental of real housing Higher into will We are be more. rates pronounced. even forget means population more will And renters to estate, worst. year. more in starts the space, will the More housing impact worth to affordable where affordable households, don’t grow, renters every Single-family continue down and already U.S. starts are continues inflation

and years positioned positive well core eliminating company continued now to similar strategy ago now report with show Front intended quarters. draw starting over On legacy to the yield would clearly this a employed starts, call is NOI, as key important the for full assets of renters. to strength cleanup results. FFO, some Yard six, rental in to company leaves goal last I’ll Rob. FFO and lines. that new The needs stabilized back meet turn All of data of page we few line we trend growth. us Steady we in core of your steady I growth the a three our now the attention is trend growing

Robin Lowe

portfolio and you, activity development. our results Today George. I’ll sheet balance and financial cover Thank

total more XX% Our of XX We REOs about the quarter, at REOs a million. in end $XX.X portfolio XX,XXX quarter, reduction have the value. of with leaving was remaining sold first stabilized. a the $XX we further REOs of XX,XXX value approximately by during end first carrying of which Since with was legacy or XXX legacy homes rentable the reduced legacy the million XX% of quarter, carrying

refine continue by in for identifying non-core to rental homes sales markets. portfolio We our

During the of previous a and price further rental increased an by of XX of $XX revenues quarter, Rental XX% purchased XXXX. value quarter to the the fourth million during $XXX,XXX. million. at quarter homes average XXX a sold with homes compared XX with carrying rental for We $XX.X homes identified we approximately sale,

FFO per the the homes XXXX. at rental was and November As impact XX.X% we quarter Amherst full share. the X,XXX from NOI $X.XX rental margin diluted was of purchased Stabilized end of saw stabilized core

we metrics As portfolio disposition, company full to we rental to stabilized legacy reporting metric. asset move near from end plan the of

for of first are $X.XX full core per share. time reporting FFO This diluted quarter the company we

million the and purchase available of $XXX to anticipate and a with further As we X,XXX to we $XX and this leverage. continue approximately homes assets equity for million cash, We a overtime. X,XXX depending disposal significant unrestricted into have estimate number legacy complete asset homes, on rental we increase equity recycle pricing legacy embedded sale, in to that ability

During increase the At to over in potential further years. XX% rates, strengthen and three and the first capped end and of rates. half our quarter had hedging of took quarter, we against of funding XX% by balance maturity a sheet, interest extending or term steps our fixed had debt the

We XXXX, provided continue XX new earnings our January material work gains financial our on XX turn statements. to strengthening a FFO income. no other U.S. funding and to from the slides Reconciliations back loss GAAP component and adopted over NOI core on profile. are I'll FFO, XX, Effective the classified revenue sales recognition as George. and real of reported supplement. The standard impacts call X, estate our we net losses numbers GAAP and now mortgage of standard we had other and now loans from new on

George Ellison

Yard full Rob. is $X.XX now making Front Residential Thanks, company core per share the of FFO.

Yard call housing very it The this open the and and the improve, are of our affordable demand. core demand affordable we meet remaining stronger. healthy bright. and More and turning Front and back especially future the efficiencies indicators for in corner evolve to number for and even assets As continue continue is so up renting will families getting enormous turn I'll to looks will be small there the company legacy as now operations questions. to Residential the reduce the the to housing FFO. Economic are is operator sector, and

Operator

Harter Credit Instructions]. from And our comes [Operator first Certainly. of Suisse. Doug quarter

is line Your open.

Douglas Harter

hoping Robin? the how your your you Thanks. you see for excess you I was what if pipeline to deploy expectations talk mentioned, that about and are that timeframe capital

George Ellison

X,XXX that in the talked Doug. about flow some The we've significant think is folks We'll say to some and get X,XXX. at still smaller is past, that in Rob there or those. the are three as to available of really some use pipeline We've larger programs morning, see if out about we're But with able about in the would X,XXX talked -- we Good remaining we're There episodic. X,XXX past. somewhat talked X,XXX. we've equity pools the developed pools looking up to that terms

I'd of terms we would use able the I be before of timing, -- be year the that I would said on the the think In equity. we hope end last call. the of rest this to

would is And hope have smooth modeling we but price, be it But where they year, this about year-end. so again between and to I now disciplined get sort purposes, we yield our of are cetera. out that for it et

Douglas Harter

price I just the talk changed And how past several and about and yield the can quarters? guess, over that's you month's

George Ellison

It that hasn't changed much.

leverage. a for X% yield shooting all still We’re upfront start we before in applying

and So, by very then sometimes X%. from that I very, bit a can high-Xs above obviously you little get we mean, if vary it's

that wouldn't few over all. for I changed if say has target the at last So quarters dramatically our

Douglas Harter

Alright, thank you.

George Ellison

Doug. Thanks,

Operator

comes from Jade question of next our KBW. And Rahmani

Your line open. is

Jade Rahmani

for the sector? meaningful Are the taking questions. for prospects M&A any Thanks in there

Robin Lowe

As Doug's oppose acquisition pipeline? question the about to

Jade Rahmani

just and benefits scale be market? that you you dialogue in could there where guess platforms characterize guess -- I would of just how Yes, levels would I the that

George Ellison

of XXXX we on We’ve put property the some we at would our XQ, management. out call goals last and mentioned of earnings consider internalization looking always that the

said we've folks and possible. of property numbers was an a didn't both of indicate and are job great that as and both MSR Rob's incredibly managers as our doing lot So ASPS think

look doesn't So well. that won’t have But at. we partnerships we're very so that pleased that mean worked two out those

internal little we As say pulling I be bit steel grow, at able continue point more. some property management a this to believe even might to

way save on for but we're it. do to comment I'm close it to And but there is platforms -- another. one So, a now, please are money that is pleased looking where out we can't be and I with obviously we're there, to might always yes, ways

Jade Rahmani

up merge a then do them look management? and So, on property they your following with that that, acquire to could property provides in-house just management you company would

George Ellison

is all hypothetical. this Again,

weeks space were excellent sort your the out the IAH list very anybody that first put players a think couple that's I everybody and and guys was you at AMH So, obviously listed a on in -- was we list ago, look which all pretty who's large know progress the third. much of of couple and the report

it you’d if homes were I the probably and go that you think just don't a to platform. I -- there So, out be platform, happen, acquiring

if following on where some list. look names, XX would probably that's then it the your one of a you were So, we the be combination shopping of people list

things a not look if the we that -- on up that's some homes and do great we'll But and you so about are and we said you hey that's call, internalizing that think see pick But we say it. think that. something last at have So like would property you able or X,XXX pickup and yet. manager can to as then far about technology X,XXX

Jade Rahmani

do in that you where see you most just are targeting And the for growth, terms currently of attractive markets prospects?

George Ellison

probably deck the some you of in leave takes see where spend we significant XXXX time and breakdown. I pretty it's or we lot -- And XXXX think XXXX where do things. we it We're XXXX, a

the numbers pretty OKC strong. little continue is although bit Atlanta, we're on a we're but So, on still to coming probably great, Houston storm, full out about slower very Memphis Houston. is very be the of is little talked on on it's although NOI great, been rents, with bit last starting a but positive both you name, we've calls. difficult, has the about OKC, been turn. pushing has rents We're the more the a positive

just done, get either we top have of back selling do or our by focus. have see would yield. want. do as cities And we're going be XX sub-pieces it pools where -- they're by region you XXXX pool, they’re on question, someone buying focus we that but probably cities on other -- we a have most in, going you of But they where buying don't buying as again other and off of to or folks probably feet, that your list most start to So, have that's to our if probably if that you’re by or our have then buying bigger, to size, we'll

So, I'd good say question. XXXX would your answer to be a

Chicago, Although time before stay try talked we're be of as Chicago is know to spending from there. St. and a a at incredibly difficult you and to continues but away Louis, focus, lot people we've some about looking

tricky. can So, we're looking at be Chicago But Chicago population. of very the hard because

go there, but studying hard. So we pretty we’ll see to it whether we're have

Jade Rahmani

the last on commentary quarter? just AMC on there AMC comment any And you the update lastly, is provided or

George Ellison

always ideas all to suggestions talked that and We reserve we we all right with about our that. were and to the boards open on obviously it said and decide

have I recommendation. question, specific very a asked specific very a You

last to you So, always the both is it quarter. boards at and we've thing pretty about or the as about companies, there talk or call on two every internalization look partial we a the talk whether active we are internalization an mentioned will single them

the dramatically boards as there here. we we’ve we’ve if sacred decide And things cows thing I start pretty so we than time, said we decide process. And are last do, won’t I around no things proven right changed [ph] that’s that think the that would

partial plan do about always it but whether table, we the no right internalization or talk openly there’s internalization, now. it’s the it’s on So to

Jade Rahmani

for the very Thanks taking much questions.

Operator

Mike Instructions] Securities. Our of from Northland Grondahl [Operator question next comes

open. is line Your

Mike Grondahl

Hey, are below of to rental what column NOI George and that right margin, Robin. is? think about stabilized slide Quick you question markets that do as how it XX, say average relates the XX% kind the far

George Ellison

at So let’s one look first that. mentioned is is the just list XX% -- Houston at going the down I

completely We’re little Houston on as storm be know bit has back. little still and so positive Houston you to have post think more disappointed they’ve committed just and But they that a everyone quickly very been a we are how I we’ll come to patient.

all housing unfortunately lot think they in can lost homes a that’s for a and Houston. of you fundamentals long-term positive fundamentals of If about Houston the

under of work, that that. is how XXs we’re probably the those tightly. with the guys and presence struggled has very pretty we’ve MSR very, a a that we’re Randall, kind number there’s see it’s but there Renee positive Alicia, aware So hard to around. on been of doesn’t most, you very one And one very top that a Indianapolis next and just has of and XX% turn that on sit working big

be that’s was one, there next I little fine it’s a and Randall so The Tampa we’re one the Mason as still I’ll And watching like just with fundamentals honest you problematic. are there well. think been and

tried at sit as is fundamentals, of children you’ll that you slows you [ph] the know furthest of and of to physical of down in obviously in see isn’t some in And know more you and the unacceptable. look to eye anything multifamily. where dips presence stay live homes people seasonables you changing and things in then most of and our the damage is homes large in obviously XXs really because Indianapolis into the take you just school tend what’s consideration moving to the but back the have the difficult into terms the have into And it’s also So a on, our going the warmer XXs winter as we part North than catches probably everything we building, -- world, locations. have people

I We that add that’s very, around and just cold work so school going we’re their weather in we calendars and there. their North, get people with kids harder. then why and And a have can very cyclical their the And to you to issues. and struggle think but little

to there’s there. We’re we’re yet not ready ready give said Chicago up not off to many people [indiscernible], as too I cross

with fix why we So we’re we’ll dig radar to the pleased, I'm to is not it figure in to how the way the I'm on out get not hug about we case into -- have on concerned, it is, we in Tampa Indi and Indi. Houston think fine it, is and out figure XXs our

Mike Grondahl

sprinkled geographies or over Got geographies? they were those identified concentrated it. in two sold you XX bunch the a were sale XQ, The in or and one XXX rentals for of

George Ellison

we of that bank, we loans the of what platform because their bought recall their loans. geography whichever what financial -- geography large with from institutions you’ll was if whatever the would bought legacy No, mirror

so you’d And of to similar with up geography the the very end country. population

homes three end up you’d the up you’d California, home Atlanta, but a one XX homes also end a lot and and Harrisburg. cities, in with a of of Providence, So big in lot lot of in with Boise

it that’s not have of don’t like St. intended just small where number, significant it’s grow. Louis to enough to so to where have places good we optimization we And a but getting of really an homes out with confuse be locations

we diverse have not country, to if are the yield. to of clean hit we’re it is to do in we’re we going Idaho, but going Seattle, in up, Michael in trying what we’re going it’s not rid homes Island, homes So the Rhode homes to across pretty doesn’t have get have

expenses mass, can much, So which it’s grow critical to the really yield drive lower. much ability and

locations the So of and will so the but still narrow loan and XX have that we to it size places far the some need won’t out purchases. you yield, need these XX be you be,

Mike Grondahl

Got it. envelop rough Then your kind Robin, of on back of NAV? update any the

Robin Lowe

as you discount the Mike, different XX range have that so ways different and people rates. share. XX to of apply know But in we’re Yes, it solidly calculating per

Mike Grondahl

okay. Thanks, Got it, guys.

George Ellison

Mike. Thanks,

Operator

JPMorgan. from our Paolone And Anthony last of question comes

now Your line is open.

Anthony Paolone

morning. good Thanks,

So into for sale I there being ahead of think winding guess down. portfolio to the that following up rentals REO of on kind are number pretty want as do and see of recycling see though a just get the even non-core? Like consistently we XXX of think more you to finite portfolio out properties question, kind move do we’re keeps move units identified that do you rid of is you think homes going like or XXX, we

Robin Lowe

sort number this there an I as these acquired of initial a is always we’re going a is through Tony, the of to homes of initial but foreclosure said, think number finite of we probably way pruning, be George sales. thing because kind

get be to don’t or So states to reason. critical where yield these of we reasons out intent need we mass for

showing although couple not XX are that, homes identified that there’s sale, there addition we be hundred. to sold but we XXX be continue could for there we of the dealt But going it quarter in that probably the have have to with in we to once always another So another first more, refine. much already

if other but we not the can I those that see. made pool we George acquire those, scenarios fit sell do of the would somebody from and some point may maybe only earlier, are big so And maybe those

Anthony Paolone

yields like look it. your Got some do buy? down to… are Or strengths that the now that those those which you rentals in what do comparison like yields -- at get And to sales, non-core,

Robin Lowe

we varies. HPI generally seen it as have positive good, normally Pretty

these pretty good from getting sales. So yield we’re

Anthony Paolone

you some balance now of balance you as on sheet other I think maybe about sheet Okay. completed moving types how either the know to securitizations repurchase cleanup these the there? loans from And move don’t do debt anything or ahead then any have guys and just term the away terms largely in like of are agreements more just opportunities of

Robin Lowe

to are we duration. Yes, continue definitely our out term looking to funding

as debt continue for new looking we plan come with as refi and debt to But prepared against debt exposure, the rate rate be my I we’ll things definitely are secondly, is out in how to we we obviously term longer then potential that. up long-term at And So hedge looking are as interest to acquisitions term our said looking for well. increases. existing deal also and remarks

So as is last said now, or is quarter, which more but already fixed XX% rate a there cap we big increase I there. think to do is over

be we’ll go as So well, improving forward. looking at we that as

Anthony Paolone

would Okay. idea or like the just the is at like just in question, you to it’s you property gaining you that is rather in key control? some piece point you’d that perhaps a there or just like R&M management those leasing there feel that And on a feel the then benefit last future, control, the whether operations from of internalizing of process

George Ellison

you just I'd other you more a have this folks to issues. team over on things R&M time extremely some of it's even lot the of to call is that list, I we price bring control charge, believe team more them but most or of until guys have Setting management own would to people to other management, said, And rent get answer whether as you key it doing a have internal over the high I ratio it. process. R&M said really is is There I'm to Tony, I up important to thing an up watching clearly we those mean, it's a who get science G&A We as you believe ancillary answer controlling other the IT saying have, have like have as one bigger assets can absolute like best believe, that of the to I directly with like technical external rent you we'd some your rent And just the having business only know. you your The agree. people do REITs. other whole not just and believe requires divided the are revenue we really is need are but for both guys control would last don't. I my job. to to what as But great and by external of to it's because if at But those the line on

you think and have more, penny think internal can I rents money we properly but you better you on and so we set it to this you last just I lot you if that optimize wrong, rents believe incentives of squeeze have can every think of rather a pulled I align we’d And can could control and thing R&M, be I squeeze over. out

Anthony Paolone

it, thank you. Got

George Ellison

Thanks, Tony.

Operator

like the showing I'm back call turn for And this I to time. at closing questions now further no would remarks. to management over

Robin Lowe

Thank And day. for a have you. call. Thank joining you great everyone the

George Ellison

Thank you.

Operator

day. and and a Ladies today's wonderful for gentlemen, have Thank concludes that your you conference. participation

Front Yard Residential (RESI) 8 May 182018 Q1 Earnings call transcript