Colony Starwood Homes (NYSE:SFR) (the “Company”), a leading
single-family rental real estate investment trust (“REIT”), today
announced operating and financial results for the three and twelve
months ended December 31, 2016. Capitalized terms used herein have
the meanings set forth in the Appendix.
Fourth Quarter 2016 Highlights
- Total revenues increased to $146.4
million in Q4 2016, driven by Quarterly Same Store revenue growth
of 5.4%
- Occupancy was 95.5% for the Quarterly
Same Store cohort of 28,146 homes
- Net loss of $10.5 million or ($0.10)
per share; Core FFO of $51.0 million or $0.47 per share for the
three months ended December 31, 2016
- Quarterly Same Store NOI increased
15.5% over Q4 2015; Quarterly Same Store Core NOI margin was
66.2%
Full Year 2016 Highlights
- Total revenues increased to $575.7
million in 2016, driven by Full Year Same Store revenue growth of
6.2%
- Occupancy was 95.9% for the Full Year
Same Store cohort of 22,363 homes
- Net loss of $81.3 million or ($0.80)
per share; Core FFO of $182.8 million or $1.69 per share
- Full Year Same Store NOI increased
11.0% over 2015; Full Year Same Store Core NOI margin was
63.8%
- Company substantially exited from the
non-performing loan (“NPL”) business through portfolio sale with
total proceeds of $265.3 million
- Reduced total debt in FY16 by $354.0
million with NPL proceeds, non-core asset disposition activity and
cash from operations
- Exceeded target of $50 million in
annualized Merger synergies
“Fourth quarter Core FFO of $0.47 per share, supported by our
Same Store Core NOI margin of 66.2%, caps a year of tremendous
accomplishments for Colony Starwood Homes,” stated Fred Tuomi, the
Company’s CEO. “Demand for our high-quality, well-located
single-family rental homes and operational efficiencies from market
density produced Full Year Same Store NOI growth of 11.0%. Since
completing our merger in early 2016, we have strengthened our
balance sheet by reducing outstanding debt, extending maturities
and increasing fixed rate debt from 10% to over 80% today. Having
met or exceeded our stated goals for our first full year as Colony
Starwood Homes, we are highly confident in our ability to continue
delivering superior results. Our 2017 full-year growth expectations
reflect strong fundamentals in our high growth markets, the
underlying strength of our existing portfolio, and the additional
growth opportunities we are pursuing.”
The 2016 financial results of the Company (other than Quarterly
Same Store or Full Year Same Store results) include the historical
financial results of Starwood Waypoint Residential Trust (“SWAY”)
beginning on January 5, 2016, which was the date of the merger
between Colony American Homes (“CAH”) and SWAY (the “Merger”).
Historical financial results (other than Same Store results) as of
dates or for periods prior to January 5, 2016 represent only the
pre-Merger financial results of CAH and do not reflect what the
financial results would have been had the Merger been complete
during such periods.
Fourth Quarter 2016 Operating Results
Total revenues were $146.4 million for the three months ended
December 31, 2016, and net loss attributable to common shareholders
was approximately $10.5 million, or ($0.10) per share, driven by
depreciation and amortization expense.
NAREIT FFO was $40.0 million for the three months ended December
31, 2016, or $0.37 per share, and Core FFO was $51.0 million, or
$0.47 per share. NAREIT FFO and Core FFO are common supplemental
measures of operating performance for a REIT, and the Company
believes both are useful to investors as a complement to GAAP
measures because they facilitate an understanding of the operating
performance of the Company’s properties.
Same Store Results
For the Company’s Quarterly Same Store portfolio of 28,146
homes, revenue for the three months ended December 31, 2016 was
$131.4 million, a 5.4% increase in those homes’ revenues as
compared to the three months ended December 31, 2015. For the
Company’s Full Year Same Store portfolio of 22,363 homes, revenue
for the twelve months ended December 31, 2016 was $402.7 million, a
6.2% increase in those homes’ revenues as compared to the twelve
months ended December 31, 2015. For the Quarterly Same Store
portfolio, property operating expenses were down by 8.8% from the
three months ended December 31, 2015, resulting in an 15.5% growth
of Quarterly Same Store NOI for the three months ended December 31,
2016 as compared to the three months ended December 31, 2015. For
the Full Year Same Store portfolio, property operating expenses
were down 0.7% from the twelve months ended December 31, 2015,
resulting in an 11.0% increase of Full Year Same Store NOI for the
twelve months ended December 31, 2016 as compared to the twelve
months ended December 31, 2015. Quarterly and Full Year Same Store
Core NOI margins were 66.2% and 63.8%, respectively. The table
below summarizes Quarterly and Full Year Same Store operating
results.
Quarterly Same Store Full Year Same
Store Homes as of December 31, 2016 28,146
22,363 Occupancy as of December 31, 2016 95.5% 95.9% Revenue
Growth (December 31, 2016 as compared to December 31, 2015)(1) 5.4%
6.2% Operating Expense Growth (December 31, 2016 as compared to
December 31, 2015) (1) -8.8% -0.7% NOI Growth (December 31, 2016 as
compared to December 31, 2015) (1) 15.5% 11.0% Core NOI Margin(1)
66.2% 63.8%
(1) Quarterly Same Store and Full Year Same Store results
reflect the three months and twelve months ended December 31, 2016,
respectively.
Investments
During the three months ended December 31, 2016, the Company
acquired 549 homes for an aggregate estimated total investment of
approximately $132.0 million, or approximately $240,000 per home,
including estimated investment costs for renovation. The Company
sold 228 single-family rental homes for gross sales proceeds of
$38.2 million, resulting in a gain of approximately $1.3
million.
For the twelve months ended December 31, 2016, the company
acquired 1,079 homes for an aggregate estimated total investment of
approximately $262.8 million, or $244,000 per home, including
estimated investment costs for renovation. The Company sold 976
single-family rental homes for gross sales proceeds of $167.4
million, resulting in a gain of approximately $4.7 million.
NPL/REO Discontinued Operations
On May 4, 2016, the Company’s board of trustees (the “Board”)
authorized the exit of the non-performing loan (“NPL”) business.
The remaining operations of the NPL business segment are recorded
as discontinued operations, net for the three and twelve months
ended December 31, 2016 and all comparable periods.
In Q4 the Company sold 220 real estate owned (“REO”) homes in
the NPL business segment for $31.4 million of total cash proceeds,
of which $14.4 million was used to pay down associated debt. As of
December 31, 2016 there was $19.3 million of outstanding associated
debt; subsequent to December 31, 2016 this debt was paid in full
and the warehouse line was extinguished.
Balance Sheet and Capital Markets Activities
As of December 31, 2016, the Company had $3.8 billion of debt
outstanding and approximately $492.0 million of undrawn commitments
on its credit facilities. Since the Merger closed on January 5,
2016 through December 31, 2016, the Company reduced its outstanding
debt by approximately $354.0 million.
Subsequent to December 31, 2016, the Company sold $345.0 million
of 3.50% convertible senior notes due 2022. The Company used the
net proceeds from the new convertible offering to repurchase, in
privately negotiated transactions, substantially all of its 4.50%
convertible senior notes due in 2017. Remaining proceeds from the
note issuance were used to repay amounts drawn on the Company’s
credit facilities, to fund ongoing asset acquisitions and for
general corporate purposes.
The Company did not repurchase any shares in the fourth quarter
of 2016 under its $250.0 million repurchase program, which is
authorized through May 6, 2017. To date, the Company has purchased
2.4 million shares for an aggregate purchase price of $52.8 million
at an average of $22.19 per share under the program.
On February 22, 2017, the Board declared a dividend of $0.22 per
common share for the first quarter of 2017, which will be paid on
April 14, 2017 to shareholders of record on March 31, 2017.
Full Year 2017 Financial Guidance
The Company does not provide forward-looking guidance for
certain financial measures on a GAAP basis because it is unable to
reasonably predict certain items contained in the GAAP measures,
including one-time and infrequent items that are not indicative of
the Company’s ongoing operations. Such items include, but are not
limited to, discontinued operations, share-based compensation and
other items not reflective of the Company's ongoing operations.
2017 Guidance Core FFO/Share $1.85 -
$1.95 Same Store Revenue Growth (1) 4 – 5% Same Store
Expense Growth (1) 2 – 3% Same Store Core NOI Margin
(1) 63 – 65% Same Store Occupancy (1)
95 – 96% Same Store Turnover (1) 34 – 36%
(1) 2017 Full Year Same Store property count is expected to be
approximately 28,850, subject to dispositions throughout the
year.
This outlook is based on a number of assumptions, many of which
are outside the Company’s control and all of which are subject to
change. This outlook reflects the Company’s expectations on (1)
existing investments and (2) yield on incremental investments
inclusive of the Company’s existing pipeline. All guidance is based
on current expectations of future economic conditions and the
judgment of the Company’s management team. Please refer to the
Forward Looking Statement disclosure on page 8.
Fourth Quarter 2016 Conference Call
A conference call is scheduled on Tuesday, February 28, 2017, at
10:00 a.m. Eastern Time to discuss the Company’s financial results
for the three and twelve months ended December 31, 2016. The
domestic dial-in number is 1-877-407-9039 (for U.S. and Canada) and
the international dial-in number is 1-201-689-8470 (passcode not
required). An audio webcast may be accessed at
www.colonystarwood.com in the investor relations section. A replay
of the call will be available through March 31, 2017 and can be
accessed by calling 1-844-512-2921 (U.S. and Canada) or
1-412-317-6671 (international), replay pin number 13653043, or by
using the link at www.colonystarwood.com, in the investor relations
section.
About Colony Starwood Homes
Colony Starwood Homes (NYSE: SFR) is one of the largest publicly
traded owners and operators of single-family rental homes in the
United States. Colony Starwood Homes acquires, renovates, leases,
maintains and manages single-family homes in markets that exhibit
favorable demographics and long-term economic trends, as well as
strengthening demand for rental properties. Colony Starwood Homes
is building its business upon a foundation of respect for its
residents and the communities in which it operates. Additional
information can be found at www.colonystarwood.com.
Additional information
A copy of the Fourth Quarter 2016 Supplemental Information
Package (“Q4 2016 Supplement”) and this press release are available
on the Company’s website at www.colonystarwood.com.
Notice Regarding Non-GAAP Financial Measures
This press release and the Q4 2016 Supplement contain and may
refer to certain non-GAAP financial measures and terms that
management believes are helpful in understanding our business, as
further set forth in the definitions, explanations and
reconciliations of each non-GAAP financial measure to its most
comparable GAAP financial measures included in the Appendix. These
measures and terms are in addition to, not a substitute for or
superior to, measures of financial performance prepared in
accordance with GAAP and should be read together with the most
comparable GAAP measures.
Forward-Looking Statements
Certain statements in this press release and the quarterly
supplement/presentation are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and
other federal securities laws and are based on certain assumptions
and discuss future expectations, describe future plans and
strategies and contain financial and operating projections or state
other forward-looking information. The Company’s ability to predict
results or the actual effect of future events, actions, plans or
strategies is inherently uncertain. Although the Company believes
that the expectations reflected in such forward-looking statements
are based on reasonable assumptions, the Company’s actual results
and performance could differ materially from those set forth in, or
implied by, the forward-looking statements. Factors that could
materially and adversely affect the Company’s business, financial
condition, liquidity, results of operations and prospects, as well
as the Company’s ability to make distributions to its shareholders,
include, but are not limited to: the factors referenced in the
Company’s Annual Report on Form 10-K; unanticipated increases in
financing and other costs, including a rise in interest rates; the
availability, terms and the Company’s ability to effectively deploy
short-term and long-term capital; the possibility that unexpected
liabilities may arise from the Company’s merger (the “Merger”) with
Colony American Homes (“CAH”), including the outcome of any legal
proceedings that have been or may be instituted against the
Company, CAH or others in connection with the Merger and the
associated transactions; changes in the Company’s business and
growth strategies; the Company’s ability to hire and retain highly
skilled managerial, investment, financial and operational
personnel; volatility in the real estate industry, interest rates
and spreads, the debt or equity markets, the economy generally or
the rental home market specifically, whether the result of market
events or otherwise; events or circumstances that undermine
confidence in the financial markets or otherwise have a broad
impact on financial markets, such as the sudden instability or
collapse of large financial institutions or other significant
corporations, terrorist attacks, natural or man-made disasters, or
threatened or actual armed conflicts; declines in the value of
single-family residential homes, and macroeconomic shifts in demand
for, and competition in the supply of, rental homes; the
availability of attractive investment opportunities in homes that
satisfy the Company’s investment objective and business and growth
strategies; the Company’s ability to convert the properties it
acquires into rental homes generating attractive returns and to
effectively control the timing and costs relating to the renovation
and operation of the properties; the Company’s ability to complete
its exit from the non-performing loan (“NPL”) (and related real
estate owned) business in the anticipated time period on acceptable
terms and to re-deploy net cash proceeds therefrom; the Company’s
ability to lease or re-lease its rental homes to qualified
residents on attractive terms or at all; the failure of residents
to pay rent when due or otherwise perform their lease obligations;
the Company’s ability to effectively manage its portfolio of rental
homes; the concentration of credit risks to which the Company is
exposed; the rates of default or decreased recovery rates on the
Company’s target assets; the adequacy of the Company’s cash
reserves and working capital; potential conflicts of interest with
Starwood Capital Group, Colony Capital, LLC (“Colony Capital”),
Colony NorthStar, Inc. (“Colony NorthStar”) and their affiliates
and managed investment activities; the timing of cash flows, if
any, from the Company’s investments; the Company’s expected
leverage; financial and operating covenants contained in the
Company’s credit facilities and securitizations that could restrict
its business and investment activities; effects of derivative and
hedging transactions; the Company’s ability to maintain effective
internal controls as required by the Sarbanes-Oxley Act of 2002 and
to comply with other public company regulatory requirements; the
Company’s ability to maintain its exemption from registration as an
investment company under the Investment Company Act of 1940, as
amended; actions and initiatives of the U.S., state and municipal
governments and changes to governments’ policies that impact the
economy generally and, more specifically, the housing and rental
markets; changes in governmental regulations, tax laws (including
changes to laws governing the taxation of real estate investment
trusts (“REITs”)) and rates, and similar matters; limitations
imposed on the Company’s business and its ability to satisfy
complex rules in order for the Company and, if applicable, certain
of its subsidiaries to qualify as a REIT for U.S. federal income
tax purposes and the ability of certain of the Company’s
subsidiaries to qualify as taxable REIT subsidiaries for U.S.
federal income tax purposes, and the Company’s ability and the
ability of its subsidiaries to operate effectively within the
limitations imposed by these rules; and estimates relating to the
Company’s ability to make distributions to its shareholders in the
future.
You should not place undue reliance on any forward-looking
statement and should consider all of the uncertainties and risks
described above, as well as those more fully discussed in the
reports and other documents filed by the Company with the
Securities and Exchange Commission from time to time. Except as
required by law, the Company is under no duty to, and the Company
does not intend to, update any of the forward-looking statements
appearing herein, whether as a result of new information, future
events or otherwise.
Consolidated Financials
Balance Sheet (Condensed)As of December 31,
2016(Unaudited)Dollars in thousands
Assets Liabilities
Investments in real estate properties: Accounts payable and accrued
expenses $ 88,140 Land and land improvements $ 1,584,533 Resident
prepaid rent and security deposits 57,823 Buildings and building
improvements 4,403,871 Secured credit facilities 108,501 Furniture,
fixtures and equipment 131,502 Mortgage loans, net
3,333,241
Total investments in real estate properties
6,119,906 Convertible senior notes, net 356,983 Accumulated
depreciation (370,394 ) Liabilities related to assets held
for sale 25,495
Investments in real estate
properties, net 5,749,512 Total liabilities
3,970,183 Real estate held for sale, net
22,201 Cash and cash equivalents 109,097
Equity Restricted
cash 155,194 Common shares, at par 1,015 Investments in
unconsolidated joint ventures 34,384 Additional paid-in capital
2,734,034 Asset-backed securitization certificates 141,103
Accumulated deficit (319,828 ) Assets held for sale 76,870
Accumulated other comprehensive loss 23,667 Goodwill
260,230
Total shareholders' equity 2,438,888 Other
assets, net 66,585 Non-controlling interests
206,105
Total equity 2,644,993
Total assets $ 6,615,176 Total
liabilities and equity $ 6,615,176
Statements of
Operations(Unaudited)Dollars in thousands
Three Months Ended December 31,
Twelve Months Ended December 31, 2016
2015(1) 2016 2015(1)
Revenues Rental income $ 137,725 $ 75,633 $ 538,191 $
283,635 Other property income 6,014 2,298 25,844 17,167 Other
income 2,625 2,934 11,647 2,934
Total revenues 146,364 80,865
575,682 303,736 Expenses
Property operating and maintenance 19,225 19,036 83,451 62,349 Real
estate taxes, insurance and HOA costs 26,973 10,433 110,112 53,894
Property management expenses 8,276 4,635 34,736 18,422 Interest
expense 37,430 17,324 152,167 65,034 Depreciation and amortization
42,945 28,007 178,763 108,307 Impairment of real estate assets 220
10,724 750 11,780 Share-based compensation 931 - 2,853 - General
and administrative 11,932 7,483 54,332 34,251 Merger and
transaction-related expenses (562 ) 4,692
29,496 7,112
Total expenses 147,370
102,334 646,660 361,149
Net gain on sale of real estate owned 1,309 730 4,673 1,133 Equity
in income from unconsolidated joint ventures 199 115 738 266 Other
income (expense), net (1,016 ) (975 ) (2,395 )
(3,607 )
Loss before income taxes (514
) (21,599 ) (67,962 )
(59,621 ) Income tax (expense) benefit (249 )
235 (736 ) (816 )
Net loss from continuing
operations (763 ) (21,364 )
(68,698 ) (60,437 ) Income (loss) from
discontinued operations, net (10,419 ) 2,200
(17,787 ) (1,578 )
Net loss (11,182 )
(19,164 ) (86,485 ) (62,015
) Net loss attributable to non-controlling interests
689 7,026 5,218 23,152
Net loss
attributable to Colony Starwood Homes (10,493 )
(12,138 ) (81,267 ) (38,863
) Net income attributable to preferred shareholders -
(4 ) - (16 )
Net loss available to common
shareholders $ (10,493 ) $
(12,142 ) $ (81,267 ) $
(38,879 ) Net loss per common share - basic
and diluted Net loss attributable to common shareholders $
(0.10 ) $ (0.19 ) $ (0.80 ) $ (0.60 )
(1) For GAAP purposes, the Merger resulted in a reverse
acquisition of SWAY by CAH. Historical financial statements for
periods prior to the Merger include only the results of operations
and financial position of CAH.
Reconciliation to FFO and Core
FFODollars in thousands, except share and per share data
Three Months EndedDecember 31,
2016
Twelve Months EndedDecember 31,
2016
Reconciliation of
net loss to NAREIT FFO
Net loss attributable to common shareholders $ (10,493 ) $
(81,267 ) Adjustments: Depreciation and amortization on real estate
assets 41,889 176,811 Impairment of real estate assets 220 750 Net
gain on sale of real estate (1,309 ) (4,673 ) Non-controlling
interests (689 ) (5,218 ) Discontinued operations, net (NPL/REO)
10,419 17,787
NAREIT FFO
$ 40,037 $ 104,190
NAREIT FFO per share (1) $ 0.37
$ 0.96
Adjustments for
Core FFO
NAREIT FFO $ 40,037 $ 104,190
Amortization of deferred financing costs,
debt premium discounts and non-cashinterest expense from interest
rate caps
10,344 38,290 Merger and transaction-related expenses (562 ) 29,496
Integration Costs (2) 294 7,971 Share-based compensation 931
2,853
Core FFO $ 51,044
$ 182,800 Core FFO per
share (1) $ 0.47 $
1.69 (1) Weighted-average common shares total
108,032,444 and 108,265,578 for the three and twelve month periods,
respectively. These share counts are comprised of 101,492,960 and
101,633,326 weighted-average common shares outstanding and 139,484
and 232,252 unvested RSUs for the three and twelve month periods
ended, respectively, and outstanding OP units exchangeable for
6,400,000 common shares.
(2) Please see Appendix A for a definition
of Integration Costs, and Appendix B for a summary of Integration
Costs through the three and twelve months ended December 31, 2016.
We believe that identifying Integration Costs is useful for
investors as it allows investors to separate these costs from the
core operating performance of our Single-Family Rental
business.
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version on businesswire.com: http://www.businesswire.com/news/home/20170227006587/en/
For Colony Starwood HomesInvestor RelationsJohn
Christie, 510-982-5470IR@colonystarwood.comorMedia
RelationsJason Chudoba,
646-277-1249Jason.chudoba@icrinc.com
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