|3 Months Ended|
Mar. 31, 2014
These financial statements include a discussion of material events that have occurred subsequent to March 31, 2014 (referred to as subsequent events) through the issuance of these consolidated financial statements. Events subsequent to that date have not been considered in these financial statements.
On May 12, 2014 New Residential invested approximately $34.0 million to acquire a one-third interest in the Excess MSRs on each of three portfolios of GSE residential mortgage loans (Pools 14, 16 and 19) with an aggregate UPB of $12.9 billion. Fortress-managed funds and Nationstar each agreed to acquire a one-third interest in the Excess MSRs. On May 13, 2014, New Residential invested approximately $2.2 million to acquire a one-third interest in the Excess MSRs on a portfolio of GSE residential mortgage loans (Pool 20) with an aggregate UPB of $0.7 billion. Fortress-managed funds and Nationstar each agreed to acquire a one-third interest in the Excess MSRs.
Nationstar as servicer will perform all servicing and advancing functions, and retain the ancillary income, servicing obligations and liabilities as the servicer of the underlying loans in each of the portfolios. Under the terms of these investments, to the extent that any loans in the portfolios are refinanced by Nationstar, the resulting Excess MSRs are shared on a pro rata basis by New Residential, the Fortress-managed funds and Nationstar, subject to certain limitations.
New Residential has remaining commitments of $20.8 million to invest in Excess MSRs on portfolios of GSE residential mortgages comprised of two pools (Pools 13 and 15) with an aggregate outstanding unpaid principal balance of approximately $8.3 billion that New Residential committed to in 2013. Commitments related to GSE residential mortgage loans are contingent upon GSE approval of Nationstar to service such loans and transfer Excess MSRs to New Residential.
Subsequent to March 31, 2014 and prior to May 5, 2014, the Buyer funded a total of $911.0 million of servicer advances, including the purchase of $617.5 million of additional advances described below, and recovered $545.2 million of existing servicer advances. Notes payable outstanding increased by $346.9 million and restricted cash increased approximately $5.0 million in relation to these fundings. Additionally, the Buyer received $12.3 million from Nationstar to satisfy a targeted return shortfall.
On May 2, 2014, the Buyer received $86.4 million from New Residential to fund the purchase of $617.5 million of new servicer advances, which were financed with a new note issued to Morgan Stanley bearing interest at a rate equal 2.10% and maturing in May 2016. As of May 2, 2014, the principal balance of this note was approximately $580.5 million.
Real Estate Securities
Subsequent to March 31, 2014, New Residential acquired Agency ARM RMBS with an aggregate face amount of approximately $223.9 million for approximately $238.1 million, financed with repurchase agreements. Furthermore, New Residential acquired Non-Agency RMBS with an aggregate face amount of approximately $50.7 million for approximately $14.2 million, financed with repurchase agreements. New Residential sold no Agency ARM RMBS and sold Non-Agency RMBS with a face amount of $207.1 million and an amortized cost basis of approximately $138.5 million for approximately $145.0 million and recorded a gain of $6.5 million.
Subsequent to March 31, 2014, New Residential acquired additional net short TBA positions that increased our net short notional position by $30.0 million of Agency RMBS and any amounts or obligations owed by or to New Residential are subject to the right of set-off with the TBA counterparty. New Residential also entered into two additional interest rate swaps with a total notional amount of $400.0 million in order to mitigate New Residentials interest rate risk assumed as part of its purchased securities with Merrill Lynch, Pierce, Fenner & Smith Incorporated that were previously sponsored by Springleaf, and its planned resecuritization of certain Non-Agency RMBS.
Subsequent to March 31, 2014, New Residential paid down approximately $7.5 million of the master repurchase agreement secured by its ownership interest in the consumer loan companies.
On March 19, 2014, New Residentials board of directors declared a first quarter 2014 dividend of $0.175 per share of common stock, or $44.3 million, which was paid on April 30, 2014 to stockholders of record as of March 31, 2014.
In April 2014, New Residential issued 27,750,000 shares of its common stock in a public offering at a price to the public of $6.10 per share for net proceeds of approximately $164.1 million. One of New Residentials executive officers participated in this offering and purchased an additional 1,000,000 shares at the public offering price for net proceeds of approximately $6.1 million. For the purpose of compensating the Manager for its successful efforts in raising capital for New Residential, in connection with this offering, New Residential granted options to the Manager to purchase 2,875,000 shares of New Residentials common stock at a price of $6.10, which had a fair value of approximately $1.4 million as of the grant date. The assumptions used in valuing the options were: a 2.87% risk-free rate, a 12.584% dividend yield, 25.66% volatility and a 10 year term.
An employee of the Manager exercised 215,000 options with a weighted average exercise price of $2.81 on May 7, 2013. Upon exercise, 215,000 shares of common stock of New Residential were issued.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
No definition available.