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EQUITY AND EARNINGS PER SHARE
 12 Months Ended
Dec. 31, 2021
Earnings Per Share [Abstract]  
EQUITY AND EARNINGS PER SHARE EQUITY AND EARNINGS PER SHARE
Equity and Dividends

New Residential’s certificate of incorporation authorizes 2.0 billion shares of common stock, par value $0.01 per share, and 100.0 million shares of preferred stock, par value $0.01 per share.

On February 11, 2020, the Company priced its underwritten public offering of 14,000,000 of its 6.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, par value $0.01 per share, with a liquidation preference of $25.00 per share for net proceeds of approximately $389.5 million. The offering closed on February 14, 2020. In connection with the offering, the underwriters exercised an option to purchase up to an additional 2,100,000 shares of preferred stock. To compensate the Manager for its successful efforts in raising capital for New Residential, in connection with this offering, New Residential granted options to the Manager relating to 1.6 million shares of New Residential’s common stock at the closing price per share of common stock on the pricing date, which had a fair value of approximately $1.0 million as of the grant date.

On November 2, 2020, New Residential announced that its board of directors had authorized the repurchase of up to $100.0 million of its preferred stock, which includes its 7.500% Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, 7.125% Series B Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock and 6.375% Series C Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock, through December 31, 2021. Repurchases may be made from time to time through open market purchases or privately negotiated transactions, pursuant to one or more plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934 or by means of one or more tender offers, in each case, as permitted by securities laws and other legal requirements. The amount and timing of the purchases will depend on a number of factors including the price and availability of New Residential’s shares, trading volume, capital availability, New Residential’s performance and general economic and market conditions. The share repurchase program may be suspended or discontinued at any time. During 2020, the Company repurchased 1.0 million shares at a weighted average price of $7.46 per share. No share repurchases were made for the year ended December 31, 2021.

On April 14, 2021, the Company priced its underwritten public offering of 45,000,000 shares of its common stock at a public offering price of $10.10 per share. In connection with the offering, the Company granted the underwriters an option for a period of 30 days to purchase up to an additional 6,750,000 shares of common stock at a price of $10.10 per share. On April 16, 2021, the underwriters exercised their option, in part, to purchase an additional 6,725,000 shares of common stock. The offering closed on April 19, 2021. To compensate the Manager for its successful efforts in raising capital for New Residential, the Company granted options to the Manager relating to 5.2 million shares of New Residential’s common stock at $10.10 per share.

On May 19, 2021, New Residential entered into a Distribution Agreement to sell shares of its common stock, par value $0.01 per share (the “ATM Shares”), having an aggregate offering price of up to $500.0 million, from time to time, through an “at-the-market” equity offering program (the “ATM Program”). During the year ended December 31, 2021, New Residential issued an aggregate of 178 thousand shares of our common stock at an average price of $11.51 per share, net of fees.

On September 14, 2021, the Company priced its underwritten public offering of 17,000,000 of its 7.00% Fixed-Rate Reset Series D Cumulative Redeemable Preferred Stock, par value $0.01 per share, with a liquidation preference of $25.00 per share for net proceeds of approximately $449.5 million. The offering closed on September 17, 2021. In connection with the offering, New Residential granted the underwriters an option for a period of 30 days to purchase up to an additional 2,550,000 shares of preferred stock at a price of $24.2125 per share. On September 22, 2021, the underwriters exercised their option, in part, to purchase an additional 1,600,000 shares of preferred stock. To compensate the Manager for its successful efforts in raising capital for New Residential, the Company granted options to the Manager relating to approximately 1.9 million shares of New Residential’s common stock at $10.89 per share.

In December 2021, New Residential’s board of directors authorized the repurchase of up to $200.0 million of its common stock and $100.0 million of its preferred stock through December 31, 2022. Repurchases may be made from time to time through open market purchases or privately negotiated transactions, pursuant to one or more plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934 or by means of one or more tender offers, in each case, as permitted by securities laws and other legal requirements. No share repurchases have been made as of the date of issuance of these Consolidated Financial Statements. The share repurchase programs may be suspended or discontinued at any time.
The table below summarizes preferred shares:
Number of Shares
Liquidation Preference(A)
Dividends Declared per Share
December 31,Year Ended December 31,
Series2021202020212020Issuance Discount
Carrying Value(B)
202120202019
Series A, 7.50% issued July 2019(C)
$6,210 $6,210 $155,250 $155,250 3.15 %$150,026 $1.88 $1.88 $1.16 
Series B, 7.125% issued August 2019(C)
11,300 11,300 282,500 282,500 3.15 %273,418 1.78 1.78 0.89 
Series C, 6.375% issued February 2020(C)
16,100 16,100 402,500 402,500 3.15 %389,548 1.59 1.60 — 
Series D, 7.00% issued September 2021(D)
18,600 — 465,000 — 3.15 %449,489 0.72 — — 
Total$52,210 $33,610 $1,305,250 $840,250 $1,262,481 $5.97 $5.26 $2.05 
(A)Each series has a liquidation preference of $25.00 per share.
(B)Carrying value reflects par value less discount and issuance costs.
(C)Fixed-to-floating rate cumulative redeemable preferred.
(D)Fixed-rate reset cumulative redeemable preferred.

On December 15, 2021, New Residential’s board of directors declared fourth quarter 2021 preferred dividends of $0.47 per share of Preferred Series A, $0.45 per share of Preferred Series B, $0.40 per share of Preferred Series C, and $0.44 per share of Preferred Series D or approximately $2.9 million, $5.0 million, $6.4 million, and $8.1 million, respectively.

Common dividends have been declared as follows:
Per Share
Declaration DatePayment DateQuarterly DividendTotal Amounts Distributed (millions)
March 25, 2019April 2019$0.50 $207.7 
June 18, 2019July 20190.50 207.8 
September 23, 2019October 20190.50 207.8 
December 16, 2019January 20200.50 207.8 
March 31, 2020April 20200.05 20.8 
June 22, 2020July 20200.10 41.6 
September 23, 2020October 20200.15 62.4 
December 16, 2020January 20210.20 82.9 
March 24, 2021April 20210.20 82.9 
June 16, 2021August 20210.20 93.3 
August 23, 2021October 20210.25 116.6 
December 15, 2021January 20220.25 116.7 

Approximately 2.4 million shares of New Residential’s common stock were held by Fortress, through its affiliates, and its principals at December 31, 2021.

Common Stock Purchase Warrants

During the second quarter of 2020, the Company issued warrants (the “2020 Warrants”) in conjunction with the issuance of a term loan, which was fully repaid in the third quarter of 2020, that provide the holders the right to acquire, subject to anti-dilution adjustments, up to 43.4 million shares of the Company’s common stock in the aggregate. The 2020 Warrants are exercisable in cash or on a cashless basis and expire on May 19, 2023 and are exercisable, in whole or in part, at any time or from time to time after September 19, 2020 at the following prices (subject to certain anti-dilution adjustments): approximately 24.6 million shares of common stock at $6.11 per share and approximately 18.9 million shares of common stock at $7.94 per share.

The 2020 Warrants were valued using a Black-Scholes option valuation model that resulted in a fair value of approximately $53.5 million on the Issuance Date and is not subject to subsequent remeasurement. The Company used the following
assumptions in the application of the Black-Scholes option valuation model: an exercise price ranging between $6.11 and $7.94, a term of 3.0 years, a risk-free interest rate of 0.24%, and volatility of 35%. The 2020 Warrants met the definition of derivatives under the guidance in ASC 815, Derivatives and Hedging; however, because these instruments are determined to be indexed to the Company’s own stock and met the criteria for equity classification under ASC 815, the 2020 Warrants are accounted for as an equity transaction and recorded in Additional Paid-in-Capital. The 2020 Warrants have a dilutive effect on net income per share and book value to the extent that the market value per share of the Company’s common stock at the time of exercise exceeds the strike price of the 2020 Warrants.

The table below summarizes the 2020 Warrants:
Number of Warrants
(in millions)		Weighted Average Exercise Price
(per share)
Outstanding warrants - December 31, 2020
43.4 $6.79 
Granted— — 
Exercised— — 
Expired— — 
Outstanding warrants - December 31, 2021
43.4 $6.49 
(A)
(A)Reflects a reduction in weighted average exercise price due to anti-dilution adjustments effective for dividends in excess of $0.10 a share.

Option Plan

New Residential has a Nonqualified Stock Option and Incentive Award Plan, as amended (the “Plan”) which provides for the grant of equity-based awards, including restricted stock, options, stock appreciation rights, performance awards, tandem awards and other equity-based and non-equity based awards, in each case to the Manager, and to the directors, officers, employees, service providers, consultants and advisor of the Manager who perform services for New Residential, and to New Residential’s directors, officers, service providers, consultants and advisors. New Residential initially reserved 15,000,000 shares of its common stock for issuance under the Plan; on the first day of each fiscal year beginning during the 10-year term of the Plan in and after calendar year 2014, that number will be increased by a number of shares of New Residential’s common stock equal to 10% of the number of shares of common stock newly issued by New Residential during the immediately preceding fiscal year (and, in the case of fiscal year 2013, after the effective date of the Plan). No adjustment was made on January 1, 2014. Increases of 5,190,335, 9,739 and 4,600,000 were made on January 1, 2022, 2021 and 2020, respectively. New Residential’s board of directors may also determine to issue options to the Manager that are not subject to the Plan, provided that the number of shares underlying any options granted to the Manager in connection with capital raising efforts would not exceed 10% of the shares sold in such offering and would be subject to NYSE rules. Upon exercise, all options will be settled in an amount of cash equal to the excess of the fair market value of a share of common stock on the date of exercise over the exercise price per share unless advance approval is made to settle options in shares of common stock.

Upon joining the board, non-employee directors were, in accordance with the Plan, granted options relating to an aggregate of 7,000 shares of common stock. The fair value of such options was not material at the date of grant.

The following table summarizes outstanding options for the periods presented:
December 31,
20212020
Held by the Manager19,877,843 11,991,622 
Issued to the Manager and subsequently assigned to certain of the Manager’s employees
1,594,147 2,430,033 
Issued to the independent directors7,000 7,000 
Total21,478,990 14,428,655 
The following table summarizes outstanding options as of December 31, 2021. The last sales price on the New York Stock Exchange for New Residential’s common stock for the year ended December 31, 2021 was $10.71 per share.
Recipient
Date of
Grant/
Exercise(A)
Number of Unexercised Options
Options
Exercisable
as of
December 31, 2021
Weighted
Average
Exercise
Price(B)
Intrinsic Value of Exercisable Options as of December 31, 2021
DirectorsVarious7,000 7,000 $13.08 $— 
Manager(C)
20171,130,916 1,130,916 13.78 — 
Manager(C)
20185,320,000 5,320,000 16.50 — 
Manager(C)
20196,351,000 6,000,800 15.93 — 
Manager(C)
20201,619,739 1,187,809 17.23 — 
Manager(C)
20217,050,335 1,565,928 10.19 810 
Outstanding21,478,990 15,212,453 14.17
(A)Options expire on the tenth anniversary from date of grant.
(B)The exercise prices are subject to adjustment in connection with return of capital dividends.
(C)The Manager assigned certain of its options to its employees as follows:
Date of Grant to ManagerRange of Exercise PricesTotal Unexercised
Inception to Date
2019
$14.96 to $16.50
1,270,200 
2020
$16.84 to $17.23
323,947 
2021
$10.10 to $11.51
— 
Total1,594,147 
 
The following table summarizes activity related to outstanding options for the periods presented:
AmountWeighted Average Exercise Price
Outstanding options - December 31, 2019
12,808,916 
Granted1,619,739 $17.41 
Exercised— — 
Expired— — 
Outstanding options - December 31, 2020
14,428,655 
Granted7,051,335 10.31 
Exercised— — 
Expired(1,000)12.36 
Outstanding options - December 31, 2021
21,478,990 See table above

Earnings Per Share

New Residential is required to present both basic and diluted earnings per share (“EPS”). Basic EPS is calculated by dividing net income by the weighted average number of shares of common stock outstanding. Diluted EPS is computed by dividing net income by the weighted average number of shares of common stock outstanding plus the additional dilutive effect, if any, of common stock equivalents during each period.
The following table summarizes the basic and diluted earnings per share calculations:
Year Ended December 31,
202120202019
Net income (loss)$805,582 $(1,357,684)$605,933 
Noncontrolling interests in income of consolidated subsidiaries
33,356 52,674 42,637 
Dividends on preferred stock66,744 54,295 13,281 
Net income (loss) attributable to common stockholders$705,482 $(1,464,653)$550,015 
Basic weighted average shares of common stock outstanding451,276,742 415,513,187 408,789,642 
Dilutive effect of stock options and common stock purchase warrants(A)
16,388,264 — 200,465 
Diluted weighted average shares of common stock outstanding467,665,006 415,513,187 408,990,107 
Basic earnings per share attributable to common stockholders$1.56 $(3.52)$1.35 
Diluted earnings per share attributable to common stockholders$1.51 $(3.52)$1.34 
(A)Stock options and common stock purchase warrants that could potentially dilute basic earnings per share in the future were not included in the computation of diluted earnings per share for the periods where a loss has been recorded because they would have been anti-dilutive for the period presented.

The Company excluded the following weighted-average potential common shares from the calculation of diluted net income (loss) per share during the applicable periods because their inclusion would have been anti-dilutive:
Year Ended December 31,
202120202019
Stock options and common stock purchase warrants— 7,328,961 — 

Noncontrolling Interests

Noncontrolling interests is comprised of the interests held by third parties in consolidated entities that hold New Residential’s Servicer Advance Investments (Note 7), Shelter JVs (Note 9) and Consumer Loans (Note 10).