Business Context and Reporting Period
This Form 8-K is filed by New Residential Investment Corp. (Registrant) on March 24, 2014, reporting events that occurred on March 18, 2014. The filing details the entry into a new private label servicer advance master trust financing facility (the "NRART Facility") by Advance Purchaser LLC, a joint venture capitalized by New Residential and third-party co-investors, with Nationstar Mortgage LLC.
Key Financial Metrics and Transaction Details
The filing describes the issuance of asset-backed notes secured by rights to reimbursement for advances made by Nationstar and deferred servicing fees. The total capital raised through the NRART Facility includes:
- Series 2014-VF1: $900,000,000 in floating-rate variable funding notes and $41,500,000 in fixed-rate term notes.
- Series 2014-VF2: $200,000,000 in floating-rate variable funding notes.
- Series 2014-T1: $508,600,000 in fixed-rate term notes.
- Series 2014-T2: $511,600,000 in fixed-rate term notes (of which $13,800,000 is held by Advance Purchaser).
The filing text does not provide specific revenue, profit, cash flow, margin, or overall debt figures for the company, as this is a current report focused on a specific transaction rather than a periodic financial statement.
Material Changes and Agreements
On March 18, 2014, the company executed several material definitive agreements to establish the NRART Facility, including a Base Indenture, multiple indenture supplements, a receivables pooling agreement, and a receivables sale agreement. Simultaneously, the company terminated a prior financing facility governed by an Amended and Restated Indenture dated December 17, 2013, involving NRZ Servicer Advance Receivables Trust BC.
Outlook, Risks, and Unusual Items
Use of Proceeds: The proceeds from the new note issuances were used, among other things, to repay other indebtedness of subsidiaries of Advance Purchaser.
Structure and Recourse: The financing vehicles (NRART Issuer and NRART Depositor) are structured as bankruptcy-remote special purpose entities (SPVs). Creditors of these SPVs have no recourse to the assets or revenues of Advance Purchaser or New Residential, except to the limited extent contemplated by the financing documents. Conversely, creditors of Advance Purchaser and New Residential generally have no recourse to the assets of the SPVs.
Related Parties: Several initial purchasers and managers of the notes (including Credit Suisse, Morgan Stanley, Barclays, Merrill Lynch, Wells Fargo, Natixis, and RBS) also provide other lending, financing, and underwriting services to New Residential and its subsidiaries.
Key Facts for Investor Verification
- Verify the total aggregate principal amount of the new financing facility ($2.16 billion approximately) and the specific interest rate terms for the floating and fixed-rate notes.
- Confirm the specific amount of prior indebtedness repaid using the proceeds from this transaction.
- Review the full text of the Base Indenture and supplements to understand the specific covenants and recourse limitations.
- Assess the impact of the termination of the December 2013 financing facility on the company's overall liquidity position.
- Monitor the relationship and ongoing services provided by the initial purchasers who also act as lenders to the company.