SCOTTSDALE, AZ—Colony Starwood Homes, the single-family rental REIT created from the merger of Starwood Waypoint Residential Trust and Colony American Homes, began trading on the New York Stock Exchange Wednesday under the SFR symbol. The combined company said Tuesday evening that the merger had been finalized, creating a REIT with an asset value of approximately $7.7 billion.
First announced this past September, the merger "establishes Colony Starwood Homes as the premier single-family REIT, with the scale, balance sheet strength and operating capability to seek to deliver industry-leading returns on equity, supported by a stable and growing dividend, to our shareholders in the coming years," says Barry Sternlicht, CEO and chairman of Starwood Capital Group and co-chairman of SFR's board.
The board's other co-chair, Colony Capital founder Thomas J. Barrack Jr., says the combined organization expects "to unlock the strategic and operational benefits envisioned when we structured this transaction." SFR owns and manages more than 30,000 homes nationwide, 90% of which are concentrated in the combined organization's top 10 markets.
The combined company ranks third among institutional SFR owners behind the sector's largest player, the Blackstone Group's Invitation Homes, and an entity that will be created from the merger of two other REITs in the space, American Homes 4 Rent and American Residential Properties Inc. Already the largest publicly traded player in the space, the post-merger AMH will own more than 47,000 properties in 22 states when its union with ARPI is completed. Invitation Homes' portfolio runs to about 50,000 rental properties.
Last month, analysts at Keefe, Bruyette & Woods predicted more M&A activity in the SFR REIT sector. KBR analysts wrote that mergers structured on an NAV-for-NAV basis similar to the SWAY-CAH deal were a possibility, "given current valuation discounts and that existing shareholders may need to accept shares in other SFR REITs for companies to achieve the scale benefits that may eventually allow the names to trade closer to NAV."
SWAY was advised by Moelis & Co. and Sidley Austin LLP on the merger. CAH was advised by Morgan Stanley & Co. LLC and Skadden, Arps, Slate, Meagher & Flom LLP, with Clifford Chance US LLP serving as tax counsel to CAH. The SWAY board's special committee was advised by Wells Fargo Securities and Wachtell, Lipton, Rosen & Katz.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
