Front Yard Residential Corporation (NYSE:RESI) Q2 2018 Earnings Conference Call - Final Transcript

Aug 09, 2018 • 08:30 am ET

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Front Yard Residential Corporation (NYSE:RESI) Q2 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen and welcome to the Front Yard Residential Corporation Q2 2018. (Operator Instructions) I would now like to introduce your host for today's conference, Robin Lowe, CFO. You may begin.

Executive
Robin Lowe

Thank you, Dimitris. Good morning everyone and thank you for joining us today. My name is Robin Lowe and I'm the CFO of Front Yard Residential Corporation. Before we begin, I want to remind you that a slide presentation is available to accompany our remarks. To access the slides, please log onto our website at www.frontyardresidential.com. These slides provide additional information that investors may find useful. (Forward-Looking Cautionary Statements) If you would like to receive our news releases, SEC filings and other materials via e-mail, please register on the Investors page of our website using the e-mail alert button. Joining me for today's presentation is George Ellison, CEO of Front Yard Residential. I'll now turn the call over to George.

Executive
George Ellison

Thanks, Robin and good morning everyone. Today, we're pleased to announce several landmark transactions at Front Yard Residential. First, we have signed and closed an agreement to purchase HavenBrook Homes, both their property management platform as well as their portfolio of approximately 3,200 single-family rental homes that they currently manage. On previous calls, we were open about our intentions to begin the internalization of property management at Front Yard. Today, that process has begun. The deal we're announcing today will enable us to manage almost half of our entire portfolio internally within a few months. In addition to buying HavenBrook and its portfolio, we've also reached an agreement to acquire the resources that manage our 4,000 homes from Altisource Portfolio Solutions, ASPS. We'll be merging these two great teams into one. The transition should be complete by year-end. We're excited and optimistic about Front Yard Residential operating its own property management platform, which will maintain a first-class customer experience while achieving some of the best operating metrics in the industry. These extremely important transactions come on the heels of another quarter with strong operating results. Let's take a look at the second quarter and then spend a little more time on the HavenBrook acquisition.

If you please turn to page four, 94% of stabilized rentals were leased at quarter-end. Turnover for the stabilized portfolio was 8.7%. Blended rent increases were 4.2% for the second quarter. Rental revenue increased 36% versus the second quarter of last year. Stabilized rental NOI margin remains strong at 64.5%, 65% of funding was fixed, 79% had a maturity of over three years. Full company core FFO increased to $0.06 per share and 97% of the properties in the portfolio were rentals and virtually all of the rental portfolio is stabilized. On page five, we show important company data over the last five quarters. There continues to be some very good trend lines on this schedule, but I call your attention to the REO data specifically. As of quarter-end, we had only about 100 REO held-for-sale with 88 under review and as of