New Residential to buy mortgage platform Shellpoint

New Residential Investment Corp. has agreed to acquire New York City-based Shellpoint Partners LLC, a mortgage platform. The price of the transaction was about $190 million. Houlihan Lokey Capital Inc is advising Shellpoint on the deal.

PRESS RELEASE

NEW YORK–(BUSINESS WIRE)–New Residential Investment Corp. (NYSE:NRZ; together with its subsidiaries, “New Residential” or the “Company”) announced today that it has entered into definitive agreements to acquire Shellpoint Partners LLC (“Shellpoint”), a vertically integrated mortgage platform with established origination and servicing capabilities, for approximately $190 million, subject to certain adjustments, plus potential additional consideration pursuant to a three-year earnout based on the performance of Shellpoint after closing.

Shellpoint is an approved Fannie Mae and Freddie Mac seller and servicer and a Ginnie Mae issuer, with servicer ratings from S&P, Moody’s and Fitch. With a servicing portfolio totaling approximately $50 billion(1) and annual origination volume of approximately $6.6 billion(2), Shellpoint is an experienced, customer-centric mortgage operator positioned for growth.

The transactions have been approved by the board of directors of each company. Consummation of the Shellpoint acquisition is expected to occur in two stages:

I. Settlements on Approximately $8 Billion UPB of Fannie Mae & Freddie Mac Mortgage Servicing Rights (“MSRs”) – As part of the acquisition, New Residential will first settle on approximately $8 billion UPB of Fannie Mae and Freddie Mac MSRs from Shellpoint. Between such settlements and the closing of the corporate acquisition described below, the $8 billion UPB of Agency MSRs will be subserviced by Shellpoint. The MSR purchases are expected to close in January 2018 and are subject to GSE (Government-Sponsored Enterprise) and other regulatory approvals and other customary closing conditions.

II. Closing of Corporate Acquisition of Shellpoint – In the second stage of the acquisition, New Residential will acquire 100% of the outstanding equity interests of Shellpoint. The corporate acquisition is expected to close in the first half of 2018, subject to receipt of regulatory approvals and certain third party consents and satisfaction of certain other closing conditions.

“We are extremely pleased to announce the agreements to acquire Shellpoint” said Michael Nierenberg, Chief Executive Officer of New Residential. “Shellpoint’s origination and servicing platforms provide New Residential with recapture capabilities that can help enhance returns on our existing MSR portfolio and create new complementary revenue channels. In addition, as a rated servicer, we believe Shellpoint will provide added servicing capacity to further diversify our servicing relationships and help accelerate transfer timelines for our MSR purchases.

This is truly an exciting next step for New Residential and we look forward to working closely with the Shellpoint management team. We are optimistic that Shellpoint’s business will be a strong contributor to our existing investments and will further enhance our ability to continue generating attractive returns for our shareholders.”

Bruce Williams, Co-Chief Executive Officer of Shellpoint commented, “We are extremely excited to work with the New Residential team as Shellpoint embarks on this new chapter. We believe this is a very compelling transaction for Shellpoint, its employees and partners. Being part of the New Residential platform will present unique opportunities that allow us to further enhance our operations and scale our business with dedicated capital.”

Advising New Residential on the acquisition are Skadden, Arps, Slate, Meagher & Flom LLP, Bradley Arant Boult Cummings LLP and Hunton & Williams LLP as legal advisors. Advising Shellpoint on the transaction are Houlihan Lokey Capital, Inc. as financial advisor and Sheppard, Mullin, Richter & Hampton LLP, Dentons US LLP and Buckley Sandler LLP as legal advisors.

Conference Call & Additional Information
Management will host a conference call on Wednesday, November 29, 2017 at 10:00 A.M. Eastern Time to discuss the acquisition. All interested parties are welcome to participate on the live call. The conference call may be accessed by dialing 1-866-393-1506 (from within the U.S.) or 1-281-456-4044 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference “New Residential Investor Call.”

A telephonic replay of the conference call will also be available two hours following the call’s completion through 11:59 P.M. Eastern Time on Wednesday, December 13, 2017 by dialing 1-855-859-2056 (from within the U.S.) or 1-404-537-3406 (from outside of the U.S.); please reference access code “3899418.”

Prior to the conference call, the Company expects to post a presentation about the transaction in the Investor Relations section of its website, www.newresi.com.

(1) Shellpoint servicing portfolio as of October 31, 2017, and includes an owned portfolio of approximately $15 billion.

(2) Shellpoint’s annual origination volume is based on its last twelve months origination production.