Main Street Renewals (MSR), the asset rehab arm of Amherst Holdings, was all aglow this February when word on the bricks had it they were getting a new family member, Front Yard. Front Yard is one of those weird companies which is based out of the US Virgin Islands and managed by a foreign Industry firm — Altisource. The deal was valued at $2.3 Billion and would have brought another 15,000 homes under Amherst’s roof. Matter of fact, the deal was hopped up by all the intra-company pundits like below,
“Scale in this industry is very important,” said Drew Flahive, president of Amherst Residential, a subsidiary of Amherst Holdings. “It has a lot of knock-on benefits in terms of our cost to deliver services, which ultimately means we can deliver better products inside the home and better customer service to the tenant.”
And if you recall, during that same period of time, Foreclosurepedia was the first and only Mortgage Field Services media outlet reporting upon the ghastly effects of COVID. In fact, Foreclosurepedia began reporting on the matter when there were only 11 cases in the US. We also estimated the deaths to predictably hit over a quarter of a million by fall. Turns out we were right. This brings me back to the Amherst deal and a discussion I had virtually that same day. So, I remember the discussion quite well. I had just advised the International Association of Field Service Technicians (IAFST) that all in person engagements were to cease. That decision was met with skepticism; however, it is the prerogative of the founder to make such decisions — and I founded the IAFST.
That same day, I had a call with a fairly high ranking individual over at MSR. I had been digging around to take the pulse of precisely how bad things were and whether or not anyone even realized it. I was told that COVID was having zero impact on business and in fact MSR was soon to have a new child in the house. When I retorted that the deal would never hold water, I was informed that COVID was an overseas problem and the Trump Administration would never let it hit our shores.
It turns out that my opinion was prescient. Weeks later, the deal collapsed and Front Porch was sent back out to lie on their mooring to await the picking apart of their corpse. Amherst had finally come to the realization that buying a debt ridden company while rapidly approaching a global pandemic was two barrels too many to stare down. Amherst was hit with a $25 Million termination fee for backing out of the deal.
Things are looking up, somewhat, for Front Yard, though. It was announced by Globe Street that Front Yard had a new purchaser,
Front Yard Residential Corp., a provider of single-family rental housing, is being taken private by alternative investment management firm Pretium and a group of its investors and funds managed by the Real Estate Equity and Alternative Credit strategies of Ares Management Corp. The all cash transaction values Front Yard at $2.4 billion.
When the deal closes, Pretium says it will be the second-largest owner and operator of SFR properties in the US with a portfolio of more than 55,000 rentals. It also notes that this is the industry’s first public-to-private transaction.
How all of this will ultimately play out is anyone’s guess. What is known, though, is that there is more money on the street than Carter has liver pills. The ship has sailed weeks ago and even some mid level hedge funds have yet to even know the ship was even there.
