Starwood Waypoint expands SFR business with $219m NPL buy

Starwood Waypoint Residential Trust has ramped up its single-family rental and non-performing loan business with the $218.7m acquisition of two separate non-performing loan pools involving 1,294 NPR loans and 146 SFR homes. The SFR real estate investment trust funded the deals through a $500m warehouse credit facility with Deutsche Bank A.G. – $104m of which remained available […]

Starwood Waypoint Residential Trust has ramped up its single-family rental and non-performing loan business with the $218.7m acquisition of two separate non-performing loan pools involving 1,294 NPR loans and 146 SFR homes.

Gary Beasley
Gary Beasley

The SFR real estate investment trust funded the deals through a $500m warehouse credit facility with Deutsche Bank A.G. – $104m of which remained available as of 11 Aug.

“NPL purchases continue to be a great channel for acquiring single-family homes in our target markets at attractive discounts,” said Gary Beasley, Co-CEO of the company, in a statement.

Spun off from Starwood Property Trust in January, the company and its predecessor entities have purchased nine NPL pools for $692.3m and the REIT now owns circa 9,500 SFR homes.

About 30% of loans purchased will ultimately become SFR homes in the REIT’s portfolio, while the balance is either restructured into performing loans or sold off as a last resort, Beasley has said.

The company’s second quarter financial results revealed that during that quarter alone it increased the percentage of homes leased (among those it has owned 180 days or longer) from 90.4% to 94.9% and acquired 1,943 homes for $303.6m and 1,441 NPLs for $117m.

The strength of the SFR business is bolstered by homeownership rates that continue to decline, as more and more people across the country choose to rent. Homeownership rates (seasonally adjusted) have declined from a 69.2% peak in the first quarter of 2005 to 64.8% in the second quarter of this year, data from the U.S. Census Bureau shows. That’s the lowest rate since 1995.

In March, the Starwood Waypoint joined Colony American Homes, Invitation Homes, and American Homes 4 Rent in forming the National Rental Home Council (NRHC), which advocates the “benefits of large-scale, well-managed single-family rental housing platforms,” according to the group’s website.

But where Colony American Homes, Invitation Homes and American Homes 4 Rent have all gone on to securitise pools of single-family rental homes, Starwood Waypoint and Progress Residential, the fifth founding member of the NRHC, have not.

Starwood Waypoint has said in the past that it does not intend to enter the securitised SFR business. The firm declined to comment for this article.

The seller or sellers of the two new NPL acquisitions were not disclosed.

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