Front Yard Residential Pressed for Review by Snow Park

(Bloomberg) -- Activist investor Snow Park Capital Partners has nominated five directors to the board of Front Yard Residential Corp. and is urging the real estate company to launch a strategic review, including exploring a sale of all or part of the company. Its shares rose.

The New York-based hedge fund, which owns a 2 percent stake in Front Yard, said in a letter to shareholders that the company’s unwillingness to explore alternatives was “confounding” given its own net asset value estimates of $17.50 a share.

“After years of value erosion, Snow Park feels it is time that stockholders have a say in electing fellow owners to the board to finally unlock the tremendous value that remains unrealized in Front Yard’s share price,” Snow Park Managing Partner Jeffrey Pierce said in the letter, which was reviewed by Bloomberg.

Front Yard rose as much as 4.6 percent Tuesday before settling at $9.80 at 9:48 a.m. in New York, up 4.1 percent, giving the company a market value of about $526 million.

Snow Park believes the company is plagued by poor decision making and a lack of initiative to address its “existential” issues. It said that insufficient shareholder oversight has also led to stagnation, poor stockholder relations, and a sub-optimal balance sheet.

“Although Snow Park prefers to collaborate in a constructive and private manner with the companies it invests in, Front Yard’s years of underperformance has led us to believe that actual change in the boardroom is needed and warranted,” Pierce said. “We believe that adding true ownership perspectives in the boardroom can ensure that all strategic alternatives and paths to value creation are explored without bias.”

Front Yard’s shares had fallen about 5.3 percent in the past year and were down 28 percent from their peak in August through Monday’s close.

A representative for Front Yard wasn’t immediately available for comment.

Snow Park’s slate of nominees includes Pierce, Khalil Kanaan, the founder of distressed credit firm One William Street Capital, and George Lucaci, a partner and senior adviser at Mercury Capital Advisors. Snow Park also nominated Leland Abrams, a Wynkoop LLC fund manager, and Lazar Nikolic, a managing member of JPL Advisors.

Front Yard, based in the U.S. Virgin Islands, acquires and owns single-family rental assets across the U.S. In a filing Monday, it put forth is own slate of seven directors, which includes six incumbent directors, plus Leslie B. Fox, the former chief operating officer at Invitation Homes Inc., the largest owner and operator of single family housing rentals in the U.S.

The company hasn’t determined when its annual general meeting will be held but urged investors to support its slate at the meeting, the filing shows.

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