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Edited Transcript of RESI earnings conference call or presentation 11-May-20 12:30pm GMT

Q1 2020 Front Yard Residential Corp Earnings Call

Frederiksted Jun 29, 2020 (Thomson StreetEvents) -- Edited Transcript of Front Yard Residential Corp earnings conference call or presentation Monday, May 11, 2020 at 12:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Alysia Cherry

Front Yard Residential Corporation - Head of IR

* George G. Ellison

Front Yard Residential Corporation - CEO & Director

* Miles Adams

Front Yard Residential Corporation - SVP of Property Operations

* Robin Neil Lowe

Front Yard Residential Corporation - CFO

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Conference Call Participants

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* Anthony Paolone

JP Morgan Chase & Co, Research Division - Senior Analyst

* Douglas Michael Harter

Crédit Suisse AG, Research Division - Director

* Michael John Grondahl

Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst

* Ryan John Tomasello

Keefe, Bruyette, & Woods, Inc., Research Division - Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by. And welcome to the Front Yard Residential First Quarter 2020 Earnings Call.

(Operator Instructions) I would now like to hand today's conference over to Alysia Cherry, Head of Investor Relations. Please go ahead.

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Alysia Cherry, Front Yard Residential Corporation - Head of IR [2]

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Thank you, Stephanie. Good morning and thank you for joining us for Front Yard's First Quarter 2020 Earnings Conference Call. Joining me on today's call is George Ellison, Chief Executive Officer; Miles Adams, Senior Vice President of Property Operations; and Robin Lowe, Chief Financial Officer.

I'd like to guide everyone to the earnings slide presentation available through the Investors section of our website at frontyardresidential.com. These slides were created to accompany our remarks and provide additional information investors may find useful. I'd also like to inform you that our comments today may contain forward-looking statements relating to the future performance of our business, the company's financial results, capital allocation and other nonhistorical information. These statements may involve risks and uncertainties that could cause the company's actual results to differ materially from those discussed in the forward-looking statements, particularly in light of the ongoing COVID-19 pandemic. We describe some of these risks and potential differences in our earnings release as well as the company's filings with the SEC, including the Form 10-Q we filed today. We may also discuss certain non-GAAP financial measures. You can find additional information on these measures, including a reconciliation to GAAP, within our earnings release and earnings presentation located in the Investors section of our website.

I'll now turn the call over to George Ellison, Chief Executive Officer. George?

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George G. Ellison, Front Yard Residential Corporation - CEO & Director [3]

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Thanks, Alysia. Good morning, everyone. It's good to be speaking with all of you again. All of us here at the Front Yard family hope that those of you listening are safe and successfully weathering this terrible storm. If the virus has touched you personally or your family or your friends, our prayers go out to you. Now let's get into today's call.

First, as most of you know, Front Yard's merger agreement with Amherst has been terminated. As all of you will appreciate, I can't really go into the details about why the deal ultimately didn't close, but what's important is this: what does Front Yard Residential look like now? As our announcement detailed, the settlement with Amherst has 3 distinct features. One, Amherst paid $25 million to Front Yard. Two, Front Yard is issuing 4.4 million shares of new stock at $12.50 to Amherst. This represents a roughly 7.5% stake in Front Yard and speaks to Amherst's continued commitment to the SFR space, and specifically to Front Yard's business model and management team. And last, Amherst is providing a $20 million, 2-year, committed, unsecured revolving credit facility that will be drawn down at any time with no transaction fees and with very attractive pricing.

All told, this provides roughly an additional $100 million in liquidity with the majority of that in equity. This sends a clear message to the market and our lenders that we have a strong balance sheet, no dependence on capital markets and the opportunity to play offense in the single-family rental marketplace when the opportunity presents itself. We thank the team at Amherst for all their hard work and effort. It was a very productive due diligence process, and I think both sides learned a lot from each other in terms of best practices.

What RESI shareholders new and old need to realize is that we are stronger than ever and remain focused on continuing to serve families that prefer to rent homes, while providing excellent returns to our stakeholders. Of course, the safety of our families and employees continues to be the top priority during the ongoing pandemic. Although we have experienced the same operational challenges as our peers, our team has demonstrated incredible resolve in the face of this crisis. And the recent operating results reflect our efforts. And for this, we thank them.

Obviously, we didn't do an earnings call on the fourth quarter, but on the third quarter call, we predicted that those results would be the low point for our performance metrics. If you'll recall, the third quarter showed $0.00 of core FFO per share. We predicted that the fourth quarter would be better and would approximate 2Q 2019 and indeed, it did. We also predicted that Q1 2020 would be better still, and we're pleased to report our strongest operational quarter ever.

So let's turn to Page 4 and look at the highlights. Rental revenue, $54 million, up over 4% from the previous quarter. Stabilized rental NOI, up 8%. Stabilized rental core NOI margin, 60%. Core FFO of $0.12 per share, more than doubling the last quarter. You can see our quarter-end balance sheet metrics, which were significantly strengthened by the proceeds from the settlement.

Our stabilized rent growth was a strong 3.2% in the quarter. Stabilized lease percentage was 97%, our best ever. And stabilized rental turnover, 7.2%. I'll leave the details to Miles, but April numbers continue to be strong and demonstrate the resilience of our business.

Page 5 is our company snapshot. There's a lot of strong numbers here, but as Miles will discuss, occupancy, collections and rent growth are all very strong, and core NOI margin continues to improve. Excellent results. Miles?

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Miles Adams, Front Yard Residential Corporation - SVP of Property Operations [4]

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Thank you, George, and good morning, everyone. COVID-19 has certainly resulted in many changes to our business, including where we work, how we interact with residents and prospects and the safety measures necessary to perform our daily tasks. Resident and employee safety is paramount. When the impact of the pandemic became apparent, our team took significant steps to maintain the well-being of our employees and residents.

These steps included working from home, closing our offices, and suspending nonemergency maintenance to limit social interaction to help prevent the spread of the virus. Our team has adapted quite well to the new normal, and while much has changed in our world over the past 2 months, the fundamentals of our business have continued to steadily improve. I'm very excited to discuss the performance of our team and the progress we've made in our operations over the past 6 months and in this quarter, in particular. We've made considerable progress on all of our key initiatives to build an efficient, scalable platform to maximize the long-term performance of our portfolio. Further, as I mentioned, we've been able to continue our operational improvements beyond the first quarter despite the challenges presented by the pandemic.

As a reminder, during our last earnings call, we discussed 3 primary operating challenges that resulted from the transition of homes onto our platform: occupancy, collections and elevated repairs and maintenance expense. We had particular concerns with these matters in 2 of our biggest markets, Texas and Tennessee. We've made significant progress across our entire platform on these issues.

Last year, you heard me talking about an initiative to stabilize the occupancy of our portfolio. Once our turn team worked through the significant backlog of homes in turn, the number of homes available for lease increased and leasing demand has been incredibly strong across all of our markets. Our occupancy has increased substantially since September.

Let me give you a few numbers. Stabilized leased occupancy rose from 94.3% at September 30, up to 97% by the end of March, with physical occupancy of 95.7% at March 31. Each of these metrics continued to improve to 97.7% and 96.2%, respectively, at April 30. These gains were driven largely by improvement in our Tennessee and Texas markets.

From September to March, Memphis occupancy grew from 92.8% up to 97.4%, with Nashville improving from 94.2% to 98.2%. In Texas, DFW occupancy improved from 91.3% to 96.1% and Houston grew from 91.7% to 93.6%. Each of the Texas markets showed continued improvement in April. Additionally, we achieved very strong gains in occupancy in 2 of our key Midwest markets. Indianapolis, our largest Midwest market, grew 490 basis points to 98.6%, and St. Louis grew an incredible 1,310 basis points from 84.5%, all the way to 97.6% at the end of March. In fact, as of April month end, we have reached a stabilized leased occupancy of at least 95% in every market where we own more than 150 homes.

While we grew our occupancy, we did not sacrifice rental rate growth. Our blended rental growth rate of 3.2% during Q1 remained strong and was comprised of renewal rent growth of 4.5% and re-lease rent growth of 1.5%. Blended rent growth further improved to 3.9% in April, comprised of renewal rent growth of 4.3%, while re-lease rent growth accelerated to 3.1%.

Since the COVID-19 pandemic reached our shores, we've taken steps to mitigate its impact on our business, including increased use of virtual and unassisted tours of homes. So far, we've seen a demand for our homes increase in April and into May. Total applications received and applications per marketed home are up in April and May versus our historical average. As prospects consider their family's needs for safety and space during these trying times, we believe that SFR is particularly well positioned to meet those needs.

Collections were improved during the quarter and were in line with our long-term expectations for our portfolio as of March. We previously discussed the disruption of the collection cycle that occurred with the transfer of homes from external managers. Our team worked tirelessly and made continual progress each month, resulting in our best quarter to date. I'm very proud of the effort our team made to achieve the improvement needed here. We first stabilized our 30-day collection rates in October of 2019. This is the key metric to drive terminal collection rates. This progress continued on a steady pace and resulted in collections in line with our targets for Q1.

As a result of the team's progress here, our portfolio's rent roll is well positioned for the challenges resulting from COVID-19. Although we suspended demands and the assessment of late fees in April, collection rates remain strong, even with the current headwinds facing our country's economy and collection rates exceeded 99% of our historical average at day 30 for April. While it is early, through day 8, collection rates in May were right in line with historical averages and were 104% of April collections through day 8.

Another key area of improvement which impacts both our revenue and expense is reducing unit turnover. With the improvement in collections, retention rates have improved. Even though March was our largest month of lease expirations, turnover remained quite low for the quarter at 7.2%. The month of April was low as well at 2.0%. We believe turnover will remain lower than normal in the near-term due to concerns related to COVID-19. This will benefit both physical occupancy and turn costs in the near term.

During our last call, we also discussed increasing our in-house performance of work orders to improve control of R&M expense. We discussed route optimization, and the exciting improvement in efficiency that resulted from that technology for scheduling our maintenance teams. We also added skilled maintenance technicians to our teams in certain markets during Q4 to achieve sufficient bandwidth to meet our goals of in-house performance of work orders.

Through a combination of additional staff and route optimization, we've seen an increase in the volume of in-house performance of work orders of approximately 22% over the fourth quarter of 2019. As of February and prior to the suspension of nonemergency work orders due to COVID-19, we were performing 47% of our work orders in-house. As a result of the increased efficiency, R&M per home declined by 3.4% on a sequential quarterly basis, even though work order volume increased by 4.8% from Q4 to Q1. Overall, total R&M and turn costs declined by 9.2% on a sequential quarterly basis.

So let's recap. Demand remains incredibly strong for our homes. Stabilized leased occupancy is on the rise from 94.3% at September 30 up to 97% at the end of March, with physical occupancy of 95.7% at March 31. Each of these metrics continued to improve in April to 97.7% and 96.2% at April 30. Blended rent growth remained strong at 3.2% for the quarter with April coming in at a robust 3.9%. Collections were improved during the quarter and were in line with our long-term expectations for our portfolio as of March. April collection rates had 99% of our historical average for April at day 30. And through day 8, collection rates in May were 104% of April collections. Turnover is low at 7.2% for the quarter. April turnover remains low as well at 2.0%.

In summary, the first quarter reflected significant and sustained improvement in all of our key focus areas. The operations of our company have matured significantly since the transition of last year, and we are performing well. Although additional work remains, and we are never satisfied, I am pleased with the progress we made during the quarter and excited about what this team can achieve going forward.

I will now turn the call over to Robin.

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Robin Neil Lowe, Front Yard Residential Corporation - CFO [5]

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Thanks, Miles, and good morning, everyone. Today, I will cover the financial results for the quarter, touch on our balance sheet and provide an update on the activity in our portfolio. GAAP net loss for the quarter was $20.2 million, an improvement of 21% over the prior quarter. Rental revenue was $54.3 million, up 4.3% sequentially. And stabilized rental core NOI margin was 60%, up from 57.6% last quarter. Core FFO was $0.12 per share, an increase of $0.07 over last quarter, reflecting the very strong operating performance that Miles has discussed.

Turning to the balance sheet, approximately $812 million or 49% of our financing was either capital floating, meaning that we are seeing an interest expense benefit due to the recent rate reductions. In the first quarter, the interest expense reduction was about $800,000. And if rates remain at current levels, we expect to see a saving of around $2 million in the second quarter. The weighted average time to maturity of our debt is 4.5 years.

Regarding liquidity, at the end of the first quarter, we reported $32.3 million of unrestricted cash. As part of the termination of the merger agreement, we will be adding a $25 million cash fee already received from Amherst, plus $55 million due from stock purchase on or before May 19.

In addition, we have access to a further $20 million of revolving unsecured credit under the promissory note agreement. We believe this puts us in a strong position not only to weather any potential short-term challenges in our industry, but also to take advantage of any potential attractive acquisition opportunities.

Furthermore, our Board has taken the decision to suspend the dividend until further notice. We believe that this is a prudent and responsible measure given the uncertainties in the current operating environment. During the quarter, we sold 82 noncore homes that did not fit our rental criteria. Net sale proceeds were approximately $12.9 million, with a gain of approximately $1.5 million of a GAAP carrying value.

Finally, on Slide 16 and 17, we provide details of investment cost and home price appreciation by key markets that we believe provides support for a baseline valuation of our portfolio.

I'll now turn the call back to George.

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George G. Ellison, Front Yard Residential Corporation - CEO & Director [6]

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Thanks, Rob. So it's been an interesting 12 months. We learned a great deal about our competition as many of them met with us during our strategic review. We finished the transition of 12,000 properties onto our own platform. As a result, we stumbled a bit last summer, but as promised, we turned things around. With our settlement, we significantly strengthened our balance sheet. And for all we've been through, we find ourselves still as one of the best investment opportunities to take advantage of the single-family rental workforce housing market.

This business held tremendous opportunity before, but now with families who already wanted more living space, desiring some increased degree of social distancing, it is an even stronger investment thesis. The demand for single-family rental housing will continue to grow. And with the lack of existing homes or new construction, the supply of available homes will not keep up; all positives for our business model.

In short, strong operating results, strong balance sheet to weather the storm, early indications that our residents are more resilient than predicted and what was already a strong business case for continued single-family rental demand just got stronger. I'd like to thank our Board of Directors for the enormous body of work and commitment during this last year as well as our bankers at Deutsche Bank, and particularly the tremendous team at Weil, Gotshal.

I'll now open the call up to questions. Stephanie?

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Questions and Answers

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Operator [1]

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(Operator Instructions) And your first question is from the line of Douglas Harter with Crédit Suisse.

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Douglas Michael Harter, Crédit Suisse AG, Research Division - Director [2]

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I'm hoping you could talk about kind of what it would take for you to kind of look to kind of take advantage of acquisition opportunities of new homes and kind of what you and the Board would be thinking about in terms of kind of reinstating the dividend from a liquidity perspective?

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George G. Ellison, Front Yard Residential Corporation - CEO & Director [3]

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Well, I -- so first of all, good morning, Doug. Right now, as I said, maintaining and preserving liquidity, which obviously the settlement helped, is job number one. So as Rob said, the Board and we recommended to hold off on the dividend until we see how this thing plays out. As Miles pointed out, the numbers are -- and I listened to the other calls as well. I think everybody is a little surprised at how resilient the residents are, but we just don't know. We've all watched the same news and we don't know if this thing's coming back. People say it's going to be around for 2 years or 1 year or it's coming back in the fall. So right now, protecting liquidity is job one. As it relates to the dividend, as I said, we'll suspend that for now, and then we'll revisit that as we always do all the time and every quarter.

As it relates to -- I made a comment, as did Rob, about looking at opportunities. I think there's going to be a -- when the smoke clears, there's going to be a lot of dislocation, there already is. And so I think there's going to be an opportunity down the road, not now, but down the road. So right now, job 1, 2 and 3 is just batten down the hatches, and let's see how this thing plays out. As Miles said, May is surprisingly off to a strong start, even stronger than April.

And so again, we're just trying to make sure everybody is safe, that we're keeping up with the homes, we're keeping people happy as they can be. We're focused on operations now. With the merger thing behind us, we're back to just running the business. We like the assets. We love the business. So we're going to focus on operations for the next 6 months, keep our heads down and try to get through this thing.

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Operator [4]

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Our next question is from the line of Anthony Paolone with JPMorgan.

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Anthony Paolone, JP Morgan Chase & Co, Research Division - Senior Analyst [5]

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I know you can't talk about why the Amherst deal didn't work out, but perhaps can you talk a minute about your decision to take sort of the payments you did versus, say, going into litigation or suing them to perform?

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George G. Ellison, Front Yard Residential Corporation - CEO & Director [6]

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Yes. As I said, there's not a whole lot we can say about that deal. But at the end of the day, we thought it was the best possible result for our shareholders under the circumstances. We took certainty over a long, sustained litigation, which again -- who knows how those things play out. So we went for the maximum, what we thought the optimal solution of also money and time. And so that's why we made the deal.

I would point out that there's been a lot of dislocation in the market and some deals are falling apart that we've seen and studied. And a lot of people have nothing to show for it. So we believe, as I said, we got the best possible result for our shareholders. We now have the certainty to focus on our business, and we have a much stronger liquidity position.

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Anthony Paolone, JP Morgan Chase & Co, Research Division - Senior Analyst [7]

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Okay. Maybe for Miles, you guys quoted the 99% of normal. Can you give us a sense as to what the normal level of collections is 30 days in for your portfolio?

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Miles Adams, Front Yard Residential Corporation - SVP of Property Operations [8]

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Yes. For -- our minimum target is at 93%, and we've been performing well above that over the last 6 months, as I mentioned. So March was our high water point. And typically, for this asset class, that's a really good month based on my experience. So that's that mark.

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Anthony Paolone, JP Morgan Chase & Co, Research Division - Senior Analyst [9]

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So when you say April was 99%, is that 99% of the 93%? So you guys got something in the low 90s basically or some other number?

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Miles Adams, Front Yard Residential Corporation - SVP of Property Operations [10]

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Yes, about 92%.

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Anthony Paolone, JP Morgan Chase & Co, Research Division - Senior Analyst [11]

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Okay. Okay. And can you -- what's your sense -- I mean, the rent spreads continue to be quite good. What's your sense of being able to hold those over the next few months?

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Miles Adams, Front Yard Residential Corporation - SVP of Property Operations [12]

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Yes. I think what I would just say on that is that we're seeing a little bit of moderation on the renewal spreads. We were running in the mid- to upper 4s, and that's sort of moderated towards that 4% level or slightly below that. But on the flip side, re-lease rates have continued to accelerate. So we're converging where those 2 numbers are virtually identical right now. So I think that we'll probably see, going forward, a little bit more moderation on the renewal side. But I -- so far, we haven't seen any indicators in the market in terms of demand that would make us think that re-lease rents won't remain fairly positive for the foreseeable future. So that's what I would say about that.

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Anthony Paolone, JP Morgan Chase & Co, Research Division - Senior Analyst [13]

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Okay. And then last question on the CapEx side, what do you think the portfolio needs, say, over the next 12 months in terms of where you anticipate cost per door on the CapEx side?

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Miles Adams, Front Yard Residential Corporation - SVP of Property Operations [14]

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So for the quarter, we ran at about that $1,400 to $1,450 range on the CapEx side for turn and recurring CapEx. Yes, I don't have any indication that that would be materially different, either up or down, over the next 6 to 12 months.

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Operator [15]

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(Operator Instructions) And your next question is from the line of Ryan Tomasello with KBW.

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Ryan John Tomasello, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [16]

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In light of the termination, do you expect the Board to revisit the sale of the company over the next year? And regarding AAMC, is the Board evaluating the management agreement in G&A post the deal termination?

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George G. Ellison, Front Yard Residential Corporation - CEO & Director [17]

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Well, in terms of -- as you know, in May, the Board initiated a strategic review, which is sort of how the whole merger process was initiated or started. But what I would say is, we have always been open to any ideas, suggestions, proposals. Anyone who has approached us over the last 5.5 years who was serious and strategic, we've always listened to. So I'll leave it to the Board. That's their call as to whether the strategic review is to continue. But in some sense, it doesn't matter. We've always listened to anybody who is serious, has a constructive idea that we think will help our shareholders and increase shareholder value. So that's -- strategic review or not, that has always been our stance, and it will always be our stance. We will always listen to all serious people who have ideas how to increase shareholder value.

As it relates to AAMC, clearly, the merger falling away changed a lot of things, not just for us at RESI, but also for those of us at AAMC. And so it's very early days, obviously. This is about a week old. And so forgive us, we had to scramble to kind of pull everything together in terms of speaking to all of you. But as it relates to the AAMC Board and the RESI Board, both of them are obviously aware of this new situation. And we're talking to both of them about it, and we'll have to revisit where that whole situation stands because the merger was obviously taking that down one path, and that's come to a screeching halt. So we're very pleased with the relationship and had no intention of terminating it anytime soon. But obviously, a lot has changed. And both boards will be reviewing the relationship.

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Ryan John Tomasello, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [18]

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Okay. And Robin, inclusive of the termination payment and the Amherst investment, can you clarify what the post 1Q liquidity position is, including cash on hand and available borrowing capacity?

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Robin Neil Lowe, Front Yard Residential Corporation - CFO [19]

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Sure. So as I said, basically, the Amherst termination arrangement adds about $100 million of liquidity, $20 million of that is unsecured borrowing, $80 million is equity. So just adding that to the cash and cash equivalents that we reported at the end of the quarter, which was $32.3 million, you're getting to that kind of $130-plus million range.

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Ryan John Tomasello, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [20]

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Okay, great. And then regarding the current credit facility borrowings, can you clarify if there's any margin call risk there today and what the triggers for that would be if there are?

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Robin Neil Lowe, Front Yard Residential Corporation - CFO [21]

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Yes. Most of our debt is termed out, as you know. In fact, apart from the repo line, the earliest maturity we have on any of our debt is 2022, April 2022. The -- what do you call that, the possibility of margin calls on those facilities, the structure facilities is very, very low for various different reasons, just the way they're structured. The repo facility is obviously a little more exposed, as you'd expect. So there's potentially something there. But I will also say that the leverage on that line is quite low compared to the rest of our portfolio. It's only 64% right now. So again, I think there's a fair amount of cushion before we'd even be facing any kind of margin call.

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Ryan John Tomasello, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [22]

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And on the repo facility, is there any tangible net worth requirements or market capitalization requirements that would trigger that -- a margin call there?

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Robin Neil Lowe, Front Yard Residential Corporation - CFO [23]

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Not more than any of the other facilities. We have tangible net worth requirements in some of our facilities. Obviously, we have more than -- way more than enough liquidity to meet those. So I don't see any issues in that respect whatsoever.

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Ryan John Tomasello, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [24]

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Okay, great. And then just lastly, regarding the tenant profile, can you give any color on what the -- across the portfolio, the type of employment profile of tenants by potentially industry group, if you track that?

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Miles Adams, Front Yard Residential Corporation - SVP of Property Operations [25]

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Yes. This is Miles. So I'd just say that the majority of our folks work in essential business and office-based operations and in industrial type of businesses. And so there's not one industry that I would say that we're highly, highly concentrated in, but it's really reflective of the submarkets in which we are -- that we're operating. And the other thing I would just mention is that we're in -- our geographic dispersion provides some safety here, where we're not concentrated too heavily in any one given market. And so for that, I think that helps us as we go through this.

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Ryan John Tomasello, Keefe, Bruyette, & Woods, Inc., Research Division - Analyst [26]

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And just one last one, Miles, can you clarify if any of the April and May collections have been paid out of security deposits or if that's all true collections?

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Miles Adams, Front Yard Residential Corporation - SVP of Property Operations [27]

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Yes. We do not do -- we wouldn't do that. We're not applying security deposits to rent. So 0 is included in either of those months.

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Operator [28]

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Your next question is from the line of Mike Grondahl with Northland Securities.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [29]

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Two questions. One, it sounded like May's collections through day 8 was like 104% of the April level. Did you do anything to change the collection process or the outreach process to kind of improve it? Or what do you think led to the increase?

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Miles Adams, Front Yard Residential Corporation - SVP of Property Operations [30]

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Well, I would just say this, in early to mid-March, we became concerned, as everyone did, with what we were seeing going on. And we had lots of conversations internally about what we needed to do to get through this as best we could. So we changed literally everything. I think I told you, we suspended late fees. We suspended demands in April. But we also increased our outreach to residents. And that began in mid-March. And so whether it was through calls or texts or e-mails, we reached out to our residents very diligently and very often. And we ended up speaking to around 8% of them that had some concerns about April.

And ultimately, less than 1% needed any sort of payment plan or accommodation beyond April. So I think that dialogue really helped and made them even more open to communication with us and working with us. And so I think that that led to an improvement in May. And then I think there has to be some impact to the stimulus and other government support that took a little bit of time to get in place there in April.

So those 2 factors, I think, contributed greatly to the improvement we're seeing in May. But yes, we think we're really pleased, as George mentioned in his remarks. Our residents have been very resilient and we're thankful for that.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [31]

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Got it. Then secondly, when I look at Slide 15, leased percent everywhere is pretty good, except maybe Houston. And then from a stabilized rental core NOI margin, it looks like Dallas, Houston and Miami could use a little bit of lift to maybe get up to the average. What's sort of the plan for those 3 MSAs?

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Miles Adams, Front Yard Residential Corporation - SVP of Property Operations [32]

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Yes. So I would say, on Houston and Dallas, we had tremendous improvement in their lease percentage in both February and March, and that continued into April. And so you're not really -- for the quarter, you're not really getting the benefit of that full uplift in the revenues falling down into the NOI. So I think that's a little bit of timing. We also had a little bit of additional turn cost volume that was impacted there as we ran through a lot of that during the quarter in Texas. So I think that in going into Q2, we'll have the benefit of that being behind us, higher occupancy and less turn volume in Q2 for Texas.

On Miami, in Florida in general and then Texas as well, I mean, I would just say that fixed cost, property taxes, insurance are a little higher than some of our other markets. So on average, those markets are going to tend to run a little lower on nominal NOI margins just as a rule.

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Operator [33]

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At this time, there are no further questions. I'll turn it back to the company for any closing remarks.

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George G. Ellison, Front Yard Residential Corporation - CEO & Director [34]

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Great. Thanks, Stephanie. Thank you, everyone. We will enjoy speaking with all of you throughout today and tomorrow, and I hope everyone stays safe. And thank you very much for your interest and your time.

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Operator [35]

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Thank you. This does conclude today's conference call, you may now disconnect.