$263 Million Acquisition Boosts Silver
Bay’s Size 35%
REIT Agrees To Buy The
American Homes’ 2,460 Single Family Rentals in Atlanta, Charlotte, Orlando and
Tampa
By Mark Heschmeyer
February 18, 2015
Silver Bay Realty Trust Corp. has struck a deal
to acquire a portfolio of 2,460 single-family rental homes owned and operated
by The American Home for $263 million in cash, or about $106,910 per home.
The transaction will significantly expand Silver Bay’s presence in Atlanta,
Tampa, Charlotte and expand its presence in Orlando - key growth markets that
exhibit strong economics and long-term rental demand.
The leased portion of the portfolio exceeds 90% with average existing rents of
$960 per month. The purchase price per square foot equates to about $66.
The transaction will boost Silver Bay’s holdings by more than 35%.
“We view this transaction as another transformational milestone for Silver
Bay,” said David N. Miller, Silver Bay’s president and CEO. “The American Home
Portfolio consists of high-quality, strategically located single-family rental
homes with over 90% occupancy that is highly complementary to our business.
In conjunction with the transaction, Silver Bay executed an amendment to its
credit facility that increases its borrowing capacity to $400 million. The
company intends to utilize the credit facility to fund the transaction.
The amended credit facility bears interest at a varying rate of the London
Interbank Offered Rate, or LIBOR, plus 300 basis points and is not subject to a
LIBOR floor.
Also late last summer, Silver Bay completed a $313 million securitization
transaction with a blended effective interest rate of LIBOR plus a 192 basis
points. The proceeds that securitization set the REIT up to increase
acquisitions.
The success of single-family rental securitizations is proving to be game changer
for the industry, by providing a lower cost of capital for institutions that
have achieved scale. Based on its current acquisition pace and pending market
conditions, Silver Bay has said it anticipates completing a second
securitization transaction sometime in the first half of this year.
The American Home transaction is targeted to close in approximately 45 to 60
days. Jefferies LLC acted as financial advisor to The American Home.
