|Shares Out. (in M):||59||P/E||0||0|
|Market Cap (in $M):||500||P/FCF||0||0|
|Net Debt (in $M):||1,500||EBIT||0||0|
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Front Yard Residential (RESI)
PT: $12.50ps (+50%)
Front Yard Residential is a sub-scale SFR REIT (single family rental real estate investment trust), owning 15,000 houses, largely across the Southeast. Less than two months ago, it was under contract to be taken private for $12.50 per share; in the wake of COVID, that deal blew up, and the stock fell by half. However, the company received a material breakup fee, its assets are performing better than ever, and the would-be buyer now has a 6% toehold equity stake. We expect RESI to be sold soon after financing conditions stabilize, for a price at or above where it was recently under contract.
The thesis has four key points: (1) RESI is an attractive business facing multiple tailwinds; (2) several parties have tried buying RESI over the past few years at prices much higher than the current; (3) RESI is worth MORE today than it was then; and (4) all stakeholders’ interests are aligned for RESI to be sold in the next 18 months. Consider the following:
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