Leading Proxy Advisory Firms Together Recommend Stockholders Vote
the BLUE Proxy Card FOR Lazar Nikolic,
Leland Abrams and Jeffrey Pierce
Glass Lewis Believes There is Clear Cause for Stockholders to
Support Board-Level Change At This Time Based on the Company’s Poor
Execution, Substantial Debt and Peer-Worst Cost Structure
ISS Also Believes Change is Warranted on Front Yard’s Board Given
the Company’s Long-Term Underperformance, Ineffective Strategy and Weak
Corporate Governance
Snow Park Urges Stockholders Seeking Checks-and-Balances and a
Path to NAV Realization to Vote FOR All Three of Its Highly-Qualified,
Independent Nominees on the BLUE Proxy Card
NEW YORK–(BUSINESS WIRE)–Snow Park Capital Partners, LP (together with its affiliates, “Snow
Park” or “we”) today announced that Glass, Lewis & Co., LLC (“Glass
Lewis”), a leading proxy advisory firm, has endorsed its case for change
at Front Yard Residential Corporation (NYSE: RESI) (“Front Yard” or the
“Company”). Glass Lewis recommends that stockholders vote the BLUE
proxy card FOR the election of Snow Park’s highly-qualified and
independent nominees – Leland Abrams and Lazar Nikolic – to Front Yard’s
Board of Directors (the “Board”) at the Company’s upcoming annual
meeting on May 23, 2019. This comes on the heels of Institutional
Shareholder Services Inc. (“ISS”) already endorsing a majority of Snow
Park’s nominees – including Jeffrey Pierce – and recommending that
stockholders vote the BLUE proxy
card.
Stockholders who agree that greater urgency is needed to effect change
at Front Yard should vote the BLUE
proxy card to elect all three of Snow Park’s full slate of nominees.
Our nominees – stockholders Leland Abrams, Lazar Nikolic and Jeffrey
Pierce – possess strong real estate pedigrees, robust mortgage and
financial services experience, and deep knowledge of effective corporate
governance practices in the Real Estate Investment Trust (“REIT”)
sector. Our nominees also understand the fundamentals and operating
realities of the single-family residential market due to their
respective experiences analyzing, investing in, and overseeing the
management of individual properties across various markets. These are
the types of qualifications that Front Yard’s current Board lacks, in
our view, as evidenced by its track record of approximately $500 million
in value destruction since 2015 and recent approval of the amended
external management agreement with Altisource Asset Management
Corporation (“AAMC”). If elected, our nominees will be laser-focused on
bringing independent ownership perspectives to the boardroom and helping
implement a credible business plan for finally realizing management’s
stated Net Asset Value (“NAV”) of $17.50 per share.1
In its full report, Glass Lewis joined ISS in reaffirming Snow Park’s
criticisms of Front Yard’s poor long-term performance, numerous
strategic lapses, and weak corporate governance. Glass Lewis concluded
that stockholders should vote on the BLUE
proxy card:2
-
“On the whole, we believe Snow Park ultimately presents a much
more compelling case, as Front Yard has, in our view, failed
to complete its transition to an SFR focused REIT in a manner that
supports meaningful revenue growth, without also incurring
disproportionately substantial debt and creating a peer-worst cost
structure.” -
“The adverse implications of this effort are readily reflected in Front
Yard’s demonstrably laggard trading price, a central
consideration which Front Yard makes no substantive effort to
address across its extensive materials. In lieu thereof, the
sitting board has arguably exacerbated the divide by executing a new
five-year contract with its underperforming manager —
an entity conspicuously lead and overseen by Front Yard’s CEO —
which includes no fee-based connection to total shareholder returns,
but which does determine to include a new termination provision at the
very time AAMC’s value to investors has been publicly called into
question.” -
“Against this backdrop, we believe there is clearly sufficient
cause for investors to support incremental change at the board level
at this time.”
Glass Lewis’ report highlights that Front Yard would benefit from the
inclusion of new members with industry exposure and a focus on
preserving and enhancing shareholder returns:
-
“Abrams and Nikolic bring relevant industry experience
— principally residential mortgage backed securities in the case of
Mr. Abrams and exposure to single-family property investment for Mr.
Nikolic — and, as an extension of their respective firms’ exposure to
Front Yard’s common shares, an ownership and shareholder value
mentality which seems to be nearly vacant within the current board
group.”
Glass Lewis is aligned with Snow Park in its assessment of Front Yard’s
performance factors:
-
“Among other things, we note Front Yard fails to substantively
benchmark or contextualize any of its reported performance figures
across its materials, essentially leaving shareholders to assume the
disclosed operational and financial metrics — for instance,
those report on slide 17 of the Company’s principal investor deck —
are compelling.” -
“Conspicuously absent from this discussion — in many
cases despite frequent overarching references to delivering or
protecting shareholder value — is any analysis of Front Yard’s
TSR or even a modest rebuttal to Snow Park’s repeated, pointed
critiques of Front Yard’s returns.” -
“A standard review of this summary metric indicates what we expect is
the likely reason for the omission of TSR from management’s case: Front
Yard is clearly a heavy laggard relative to its closest peers.”
As previously disclosed, ISS concluded that stockholders should vote on
the BLUE proxy card and laid
out in its report a number of Front Yard’s long-term performance issues,
strategic lapses, and governance weaknesses:3
-
“The dissident has presented a compelling case that board change is
warranted. Since [George] Ellison’s succession as CEO, the board has
overseen value destruction driven by RESI’s transition to a fully
single-family rental-focused REIT, a process in which it has been
unable to gain sufficient scale, has taken on too much debt, and has
been unable to derive a sufficient return on acquisitions. These
factors, along with a governance structure that is disconnected from
the interests of shareholders, justifies the addition of at least two
dissident nominees.” -
“ISS measured TSR from Ellison’s succession as CEO in mid-2015 (which
will also approximate initiation of the strategy shift for purposes of
this analysis) through March 29, 2019 (the unaffected date), as well
as over the trailing one, three, and five years. ISS compared the
returns to the FTSE NAREIT All Equity REITs Index and to those of
peers (AMH and INVH – identified by both RESI and the dissident as
RESI’s closest public peers) […] RESI delivered negative returns
and underperformed the comparators over all four measurement periods.” -
“That RESI has contended with four activist situations over the period
is emblematic of the disconnect between the board and the investor
base. It is clear from this alone that the actions of the board
have been misaligned with the priorities of shareholders.”
Jeffrey Pierce, Founder and Managing Partner of Snow Park, commented:
“We are very pleased that Glass Lewis has joined ISS in supporting Snow
Park’s case for change and are recommending Front Yard stockholders vote
on the BLUE proxy card.
Between the two leading proxy advisory firms, all three of our
highly-qualified and independent nominees have now received
recommendations — reinforcing Snow Park’s view that they possess the
right experience and expertise to help unlock the tremendous untapped
value that remains embedded in the Company’s underperforming shares. If
elected, our nominees will bring ownership perspectives to the boardroom
and stand for increased accountability, improved strategic thinking and
execution, and stockholder-friendly governance policies. We will also
install checks and balances to ensure stockholders’ interests always
come first. If elected, our nominees look forward to working
cooperatively with the remaining incumbent directors to help drive these
achievable and practical improvements.
As stockholders assess the findings of both Glass Lewis and ISS, we
believe it is important to focus on the irrefutable facts related to
Front Yard’s years of value destruction, poor strategic execution,
unsustainable debt and excessively high costs. By objectively evaluating
the past and present, we believe stockholders will conclude that the
future envisioned by our slate is a far superior one that can be
realized with the right Board.”
We urge Front Yard stockholders to vote FOR all three of Snow Park’s
highly-qualified, independent nominees – stockholders Leland Abrams,
Lazar Nikolic and Jeffrey Pierce – on the BLUE
proxy card and to return it in your postage-paid envelope provided. If
you have already voted Front Yard’s proxy card, you can change your vote
by providing a later dated BLUE proxy card.
Should you have any questions or need assistance with voting, please
contact Saratoga Proxy Consulting LLC at (888) 368-0379 or (212)
257-1311 or by email at [email protected].
PROTECT YOUR INVESTMENT. PLEASE SIGN, DATE, AND MAIL
THE BLUE PROXY CARD TODAY!
VISIT WWW.RENEWRESI.COM
TODAY.
About Snow Park
Snow Park Capital Partners, LP is a privately-held investment manager
that specializes in investing in publicly-traded real estate securities
across the capital structure. Based in New York City and founded by
Jeffrey Pierce, the firm focuses on producing strong risk-adjusted
returns for a diverse investor base of public institutions, private
entities and qualified individual clients.
1 A NAV of $17.50 was set forth in Front Yard’s February 2019
earnings call transcript.
2 Permission to quote Glass
Lewis was neither sought nor obtained. Emphases added.
3
Permission to quote ISS was neither sought nor obtained. Emphases added.
Contacts
For Investors:
Saratoga Proxy Consulting LLC
John Ferguson /
Joe Mills, 212-257-1311
[email protected]
/ [email protected]
For Media:
Profile
Greg Marose / Charlotte Kiaie, 347-343-2999
[email protected]
/ [email protected]
