Out of the NPL Market
Colony Starwood Homes (merged endpoint of Starwood Waypoint Residential Trust and Colony American Homes, 2014) has announced its plans to sell 1,675 of its non-performing loans, totaling $265 million. The NPLs will reportedly be sold to an affiliate of Starwood Capital Group after Colony Starwood and Prime Asset Fund VI, with whom Starwood Capital does its NPL business, hosted a “comprehensive and broadly marketed” auction process. Colony Starwood’s predecessor, Starwood Waypoint, which branched from Starwood Property Trust, was once a frequent buyer of NPLs, but according to the company, this package sale marks the trust’s exit from the NPL market. Company information concludes that the joint venture that manages the trust’s NPLs has generated over $330 million in loan and REO sales proceeds since July 2016. This will result in a net proceed of $140 million after the payoff of associated debts. Once this sale is finalized, Colony Starwood will own approximately $120 million in book value of assets through its joint venture with Prime, which is almost completely REO, and carries about $60 million in debt. Colony Starwood expects to liquidate all of its remaining joint venture assets, and pay all associated debts by June 2017. The company plans to use the net funds acquired in the discontinuance of the NPL division for general corporate purposes, including acquisition and renovation of single-family rentals.
Silver Bay is Expanding its Reach
Silver Bay Realty Trust, one of the country’s largest single-family rental operators, is expanding. The company plans to acquire 320 rentals in Tampa, Atlanta, and Orlando, at a price of $41.5 million cash. According to Silver Bay, the deal is expected to close within 15-30 days. The contracted rentals are 95 percent occupied, and hold an average existing rent of $1,215 per month. “We believe this portfolio is an attractive investment opportunity that will increase density in our existing markets and leverage our infrastructure,” said Thomas Brock, Silver Bay’s chief executive officer. “We will continue to seek ways to optimize our portfolio in our core markets to improve our overall yield and drive increased cash flow.”
Talk of Going Public at Invitation Homes
Invitation Homes, a subsidiary of Blackstone, will be going public within the first half of 2017, according to two people familiar with the plan. The company is the largest single-family rental operator in the country, boasting over 50,000 single-family rentals, and will be publicly traded as a Real Estate Investment Trust. The company has been streamlining and fine tuning operations for a couple of years, including more targeted acquisitions, selling off homes that do not fit the business model, and being the first to offer renters a chance at owning their own homes. The company has taken its time going public after a few single-family landlords struggled with shareholder returns after going public with unoccupied homes. “Companies should be built privately,” John Bartling, chief executive officer of Invitation Homes, said last August. “Unless you can communicate it and forecast it well, you’re going to struggle with investors.” Now, as apartments are becoming less attractive to investors, single-family rentals are surging, creating favorable conditions for Invitation Homes’ entrance into the public marketplace. The No. 2 single-family landlord, American Homes For Rent (48,000 homes) increased 26 percent this year. The third, Colony Starwood (31,100 homes) gained 44 percent this year, and the fourth largest and first group to go public, Silver Bay Realty Trust Corp., is up 12 percent.