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RECENT ACTIVITIES
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3 Months Ended |
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Mar. 31, 2013
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| Recent Activities | |
| RECENT ACTIVITIES |
15. RECENT ACTIVITIES
These financial statements include a discussion of material events that have occurred subsequent to March 31, 2013 (referred to as “subsequent events”) through the issuance of these consolidated financial statements. Events subsequent to that date have not been considered in these financial statements.
On March 5, 2013, Newcastle agreed to co-invest in a portfolio of consumer loans with a UPB of approximately $4.2 billion as of December 31, 2012. The portfolio includes over 400,000 personal unsecured loans and personal homeowner loans originated through subsidiaries of HSBC Finance Corporation. On April 1, 2013, Newcastle completed this co-investment through newly formed limited liability companies (collectively, “the consumer loan companies”). The consumer loan companies acquired the portfolio from HSBC Finance Corporation and its affiliates. Newcastle invested approximately $250 million for 30% membership interests in each of the consumer loan companies. Of the remaining 70% of the membership interests, Springleaf Finance, Inc. (“Springleaf”), which is majority-owned by Fortress funds managed by our Manager, acquired 47%, and an affiliate of Blackstone Tactical Opportunities Advisors L.L.C. acquired 23%. Springleaf will act as the managing member of the consumer loan companies. The consumer loan companies financed $2.2 billion of the approximately $3.0 billion purchase price with asset-backed notes. The consumer loan companies were formed on March 19, 2013, for the purpose of making this investment and commenced operations upon the completion of the investment. After a servicing transition period, Springleaf will be the servicer of the loans and will provide all servicing and advancing functions for the portfolio.
On April 9, 2013, Newcastle financed additional non-Agency RMBS with approximately $144 million of repurchase agreements, at a cost of one-month LIBOR plus 200 bps. The weighted average advance rate for these repurchase agreements is approximately 70%. These repurchase agreements, which contain customary margin call provisions, have an initial term ending on July 9, 2013.
On
April 26, 2013, Newcastle announced that its Board of Directors had formally declared the distribution of shares of
common stock of New Residential Investment Corp. (“New Residential”), a wholly owned subsidiary of Newcastle.
The distribution will complete the spin-off of New Residential from Newcastle. Following the distribution, New Residential
will be an independent, publicly-traded real estate investment trust (“REIT”) primarily focused on investing
in residential mortgage related assets. The distribution is expected to occur on May 15,
2013 to Newcastle stockholders of record as of 5:00 p.m., Eastern Time, on May 6, 2013 (see Note 16).
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