New Residential expects $433M in proceeds from common stock sale

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New Residential Investment Corp. expects to raise $433 million from a follow-on offering of 25 million shares of its common stock it priced on Nov 1.

The deal was priced at $17.32 per share; New Residential opened trading on Nov. 1 at that price before falling to a midmorning low of $17.16 per share. The previous day's closing price was $17.88 per share.

New Residential's stock traded at a high of $18.75 and a low of $15.24 in the past 52 weeks.

"We will use the net proceeds from any sale of securities for general corporate purposes, which may include funding one or more acquisitions in whole or in part," the offering's prospectus said. "We may provide additional information on the use of the net proceeds from any sale of securities in an applicable prospectus supplement or other offering materials relating to the securities."

The offering is expected to close on Nov. 5. Credit Suisse, Barclays, Goldman Sachs, BTIG and UBS Investment Bank are the joint book-running managers for the offering. B. Riley FBR, Piper Jaffray, Raymond James and Keefe, Bruyette & Woods are the co-managers.

The offering was priced a week after New Residential reported third-quarter net earnings attributable to common stockholders of $185 million a share, down from $226 million one year prior.

During the quarter, the company closed on the purchase of Shellpoint Partners, which was the parent company of New Penn Financial.

New Residential acquired $43 million of mortgage servicing rights, executed clean-up calls on 10 nonagency securitizations with an unpaid principal balance of $354 million and did a nonagency securitization of $658 million during the quarter.

After the quarter ended, it issued its first non-qualified mortgage securitization of $310 million.

"Investment activity for the quarter picked up a bit with capital deployment focused on more MSR acquisitions and more acquisition of nonagency mortgage securities where we own call rights," CEO Michael Nierenberg said on a conference call with analysts.

"We have grown our MSR investments and the growth in our bond portfolio this quarter around legacy nonagency RMBS will help us with our call strategy," he said, adding the current callable population is $46 billion. By calling more of this outstanding debt, New Residential can reduce delinquencies and servicing advances.

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