Oakland, California-based single-family rental real estate investment trust Starwood Waypoint Residential Trust (SWAY) announced a successful third quarter with re-performing loan net sale proceeds of $78.2 million and a merger with Colony American Homes to create a combined portfolio of 30,000 SFR homes.
As of September 30, 2015, Starwood Waypoint owned approximately 17,100 SFR homes and non-performing loans. The company acquired 496 of those homes during Q3 at a combined purchase price of $94.5 million, which included renovation costs. Starwood Waypoint's rental revenue generated from those 17,100 homes totaled $49.2 million in Q3, up by 5.4 percent from Q2.
The company sold a pool of 461 re-performing loans during Q3 for net sale proceeds totaling $78.2 million, and the net operating income (NOI) margin on the company's stabilized home portfolio for Q3 was 64.8 percent, according to the company's announcement.
The big news for Starwood Waypoint during Q3 was the announcement of the historic merger with Colony American Homes (CAH), which will give the company an SFR portfolio of more than 30,000 homes. The merger is a stock-for-stock transaction that is expected to close in the first quarter of 2016.
“With our pending merger with CAH, we can now take our business to the next level by creating a premier SFR REIT of over 30,000 homes with substantial scale and strategic market density.”
Doug Brien, CEO of SWAY
“Our third quarter results reflect continued solid operating performance highlighted by our 64.8 percent stabilized NOI margin,” said Doug Brien, Starwood Waypoint’s CEO. “With our pending merger with CAH, we can now take our business to the next level by creating a premier SFR REIT of over 30,000 homes with substantial scale and strategic market density. We expect the operational and cost of capital advantages from the merger, driven by $40.0 to $50.0 million in annual savings from unique synergies, will put our combined company in a competitive position to generate very attractive returns on shareholder equity.”
Chairman of the Board of Trustees Barry Sternlicht noted that Brien intends to resign his position as CEO upon completion of the merger with CAH and thanked the CEO for his leadership at SWAY. Fred Tuomi, currently the chief operating officer with CAH, will assume the CEO role of SWAY once the merger is complete.
“We’re pleased to announce that Charles Young, currently SWAY’s Chief Operating Officer, will assume the COO role for Colony Starwood Homes,” Sternlicht said. “Charles and Fred will be the foundation of a tremendous leadership team for the company post-merger.”