Newcastle Announces Closing of Interest in Consumer Loan Portfolio from HSBC
NEW YORK -- April 1, 2013
Newcastle Investment Corp. (NYSE: NCT) announced today that it has acquired
from HSBC Finance Corporation (“HSBC”) a 30% equity interest in a consumer
loan portfolio with an unpaid principal balance (“UPB”) of $4.2 billion as of
December 31, 2012. Newcastle invested alongside Springleaf Finance, Inc.
(“Springleaf”), a Fortress affiliate who will also be responsible for
servicing the loans, and Blackstone Tactical Opportunities Advisors L.L.C.
The total purchase price for the portfolio is approximately $3.0 billion,
inclusive of closing costs, fees and adjustments related to estimated net cash
flows received by HSBC between December 31, 2012 and March 31, 2013. The
investment is financed using $2.2 billion of asset backed notes and the
balance of the purchase price is funded with approximately $800 million of
equity. Newcastle’s initial equity investment is approximately $250 million.
The portfolio consists of over 400,000 loans originated through subsidiaries
of HSBC, of which approximately 70% are personal unsecured loans and 30% are
personal homeowner loans. The average loan balance of the portfolio is about
$9,500, the average seasoning is 93 months and the expected average life of
the loans is 3 years.
After a servicing transition period, Springleaf will be the servicer of the
loans and will provide all servicing for the portfolio. Newcastle will not own
any of the servicing rights and will not have any servicing duties,
liabilities or obligations associated with the servicing of the portfolio.
Ken Riis, CEO, commented, “We are excited to close on this strategic consumer
loan transaction and believe this investment has the potential to generate
very attractive risk-adjusted returns for our shareholders.”
Newcastle Investment Corp. focuses on opportunistically investing in, and
actively managing, real estate related assets. The Company primarily invests
in two distinct areas: (1) Residential Servicing and Securities and (2)
Commercial Real Estate Debt and Other Assets. The Company is organized and
conducts its operations to qualify as a real estate investment trust (REIT)
for federal income tax purposes. The Company is managed by an affiliate of
Fortress Investment Group LLC, a global investment management firm.
Certain statements in this press release may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995, including, but not limited to, statements relating to the offering
and intended use of proceeds. These statements are based on management’s
current expectations and beliefs and are subject to a number of trends and
uncertainties that could cause actual results to differ materially from those
described in the forward-looking statements, many of which are beyond our
control. The Company can give no assurance that its expectations will be
attained. Factors that could cause actual results to differ materially from
the Company’s expectations include, but are not limited to, the risk that
market conditions cause downgrades of a significant number of our securities
or the recording of additional impairment charges or reductions in
shareholders’ equity; the risk that we can find additional suitably priced
investments; the risk that investments made or committed to be made cannot be
financed on the basis and for the term at which we expect; the relationship
between yields on assets which are paid off and yields on assets in which such
monies can be reinvested; actual recapture rates with respect to any excess
mortgage servicing rights investment; and the relative spreads between the
yield on the assets we invest in and the cost and availability of debt and
equity financing. Accordingly, you should not place undue reliance on any
forward-looking statements contained in this press release. For a discussion
of some of the risks and important factors that could affect such
forward-looking statements, see the sections entitled “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and Results of
Operation” in the Company’s Annual Report on Form 10-K, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K, as filed with the Securities and
Exchange Commission. In addition, new risks and uncertainties emerge from time
to time, and it is not possible for the Company to predict or assess the
impact of every factor that may cause its actual results to differ from those
contained in any forward-looking statements. Such forward-looking statements
speak only as of the date of this press release. The Company expressly
disclaims any obligation to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in the
Company’s expectations with regard thereto or change in events, conditions or
circumstances on which any statement is based.
Newcastle Investment Corp.
Investor Relations, 212-479-3195
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