Altisource Residential (RESI) Announces $652M Acquisition of ~4,262 Single Family Rental Homes
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Altisource Residential Corporation (NYSE: RESI) announced that it has acquired a portfolio of 4,262 single family rental properties for an aggregate purchase price of $652.3 million in a seller financed transaction. The assets were acquired from investment funds sponsored by Amherst Holdings, LLC.
The transaction more than doubles the size of the Company’s single family rental portfolio and greatly enhances Residential’s presence in new and existing strategic target markets, including Florida, Texas, Georgia, Tennessee, North Carolina and South Carolina. The newly-acquired portfolio is consistent with Residential’s existing portfolio of quality, affordable rental homes and is targeted to meet the Company’s return on equity objectives.
“Residential continues to successfully execute its strategy to transition the Company into a 100% single-family rental REIT and to capitalize on attractive single-family rental economics,” said George Ellison, Chief Executive Officer of Residential. “These high-yielding properties are an excellent fit for the Residential brand and expand our geographic reach in strategic markets. The acquisition of these properties is a crucial milestone for Residential and keeps the Company on track to achieve its stated goal of 10,000 rental homes by the end of 2016.”
“This is a transformative transaction for Residential,” said David Reiner, Chairman of the Company’s Board of Directors. “By continuing to execute on our strategy, Residential is well positioned to reward investors with long-term growth and attractive returns.”
The seller financing for this transaction represented 75% of the purchase price and was provided pursuant to a loan agreement with a term of up to five years and a floating interest rate of one-month LIBOR plus a fixed spread. In connection with the acquisition and as a condition to the seller financing, Residential has engaged the current property manager for the portfolio, Main Street Renewal, LLC, to provide property management services with respect to the acquired properties. Altisource Portfolio Solutions S.A. (“Altisource”) will continue to be Residential’s property manager with respect to all of the Company’s other REO and single family rental properties. Residential obtained a waiver of the exclusivity provisions in its existing Master Services Agreement with Altisource in order to complete the portfolio acquisition. In consideration of this waiver, the parties agreed to certain amendments to the Master Services Agreement, including a contingent liquidation fee of $60 million in the event Residential determines to liquidate 50% or more of its single family rental portfolio managed by Altisource.
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