XML 40 R30.htm IDEA: XBRL DOCUMENT v3.22.1
EQUITY AND EARNINGS PER SHARE
 3 Months Ended
Mar. 31, 2022
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 16, 2021, New Residential announced that its board of directors had authorized the repurchase of up to $200.0 million of its common 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. No share repurchases were made during 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”). No share issuances were made during the three months ended March 31, 2022.

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. The share repurchase programs may be suspended or discontinued at any time. During the three months ended March 31, 2022, the Company repurchased approximately $3.8 million of Preferred Series C at a weighted average price of $22.20 per share.

The table below summarizes preferred shares:
Dividends Declared per Share
Number of SharesThree Months Ended
March 31,
SeriesMarch 31, 2022December 31, 2021
Liquidation Preference(A)
Issuance Discount
Carrying Value(B)
20222021
Series A, 7.50% issued July 2019(C)
6,210 6,210 $155,250 3.15 %$150,026 $0.47 $0.47 
Series B, 7.125% issued August 2019(C)
11,300 11,300 282,500 3.15 %273,418 0.45 0.45 
Series C, 6.375% issued February 2020(C)
15,928 16,100 398,209 3.15 %385,734 0.40 0.40 
Series D, 7.00%, issued September 2021(D)
18,600 18,600 465,000 3.15 %449,489 0.44 — 
Total52,038 52,210 $1,300,959 $1,258,667 $1.76 $1.32 
(A)Each series has a liquidation preference or par value 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 March 21, 2022, New Residential’s board of directors declared first quarter 2022 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 $2.9 million, $5.0 million, $6.4 million, and $8.1 million, respectively.

Common dividends have been declared as follows:
Declaration DatePayment DatePer ShareTotal Amounts Distributed (millions)
Quarterly Dividend
March 24, 2021April 2021$0.20 $82.9 
June 16, 2021August 20210.20 93.3 
August 23, 2021October 20210.25 116.6 
December 15, 2021January 20220.25 116.7 
March 21, 2022April 20220.25 116.7 

Approximately 2.4 million shares of New Residential’s common stock were held by Fortress, through its affiliates, at March 31, 2022.

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 at March 31, 2022:
Number of Warrants
(in millions)		Weighted Average Exercise Price
(per share)
Outstanding warrants - December 31, 2021
43.4 $6.49 
Granted— — 
Exercised— — 
Expired— — 
Outstanding warrants - March 31, 2022
43.4 6.40 
(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
As of March 31, 2022, outstanding options were as follows:
Held by the Manager18,467,776 
Issued to the Manager and subsequently assigned to certain of the Manager’s employees
3,004,214 
Issued to the independent directors6,000 
Total21,477,990 

The following table summarizes outstanding options as of March 31, 2022. The last sales price on the New York Stock Exchange for New Residential’s common stock in the quarter ended March 31, 2022 was $10.98 per share.
Recipient
Date of
Grant/
Exercise(A)
Number of Unexercised
Options
Options
Exercisable
as of
March 31, 2022
Weighted
Average
Exercise
Price(B)
Intrinsic Value of Exercisable Options as of
March 31, 2022
(millions)
DirectorsVarious6,000 6,000 $12.85 $— 
Manager(C)
20171,130,916 1,130,916 13.43 — 
Manager(C)
20185,320,000 5,320,000 16.15 — 
Manager(C)
20196,351,000 6,351,000 15.54 — 
Manager(C)
20201,619,739 1,295,792 16.88 — 
Manager(C)
20217,050,335 2,270,961 9.88 2.5
Outstanding21,477,990 16,374,669 
(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
Prices		Total Unexercised
Inception to Date
2019
$14.61 to $15.84
1,270,200 
2020
$16.49 to $16.88
323,947 
2021
$9.75 to $11.16
1,410,067 
Total3,004,214 
 
The following table summarizes activity in outstanding options:
AmountWeighted Average Exercise Price
Outstanding options - December 31, 2021
21,478,990 $— 
Granted— — 
Exercised— — 
Expired(1,000)12.01 
Outstanding options - March 31, 2022
21,477,990 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:
Three Months Ended
March 31, 2022
20222021
Net income $689,931 $301,336 
Noncontrolling interests in income of consolidated subsidiaries
5,609 9,394 
Dividends on preferred stock22,461 14,358 
Net income attributable to common stockholders$661,861 $277,584 
Basic weighted average shares of common stock outstanding466,785,584 414,795,505 
Dilutive effect of stock options and common stock purchase warrants(A)
17,639,482 14,695,874 
Diluted weighted average shares of common stock outstanding484,425,066 429,491,379 
Basic earnings per share attributable to common stockholders$1.42 $0.67 
Diluted earnings per share attributable to common stockholders$1.37 $0.65 
(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.