Citadel Advisors increases position in Starwood Waypoint Residential Trust
Kenneth Griffin’s Citadel Advisors’ latest 13G filings disclosed stake increases in Sunesis Pharmaceuticals, Inc. (SNSS), Acxiom Corporation (ACXM), Lennar Corporation (LEN), Liberty Interactive (QVCA), and Starwood Waypoint Residential Trust (SWAY) in 3Q14.
Citadel added to its position in Starwood Waypoint Residential Trust (SWAY). A 13G filing in October noted that the fund owns 2,074,917 shares of SWAY stock, up from 313,064 shares in the 2Q14 portfolio. The filing said the fund owns a passive stake of 5.4% in Starwood Waypoint Residential Trust.
Overview of Starwood Waypoint Residential Trust
Based in Oakland, California, Starwood Waypoint Residential Trust is a real estate investment trust (or REIT) that acquires, renovates, leases, maintains, and manages single family homes. Starwood Property Trust formed the company with the aim of owning single-family residential (or SFR) rental homes and distressed and non-performing residential mortgage loans.
On January 31, 2014, Starwood Property Trust completed the spinoff of Starwood Waypoint Residential Trust to its shareholders. Citadel Advisors also owns 934,361 shares of Starwood Property Trust as per its 2Q14 13F.
Starwood Waypoint Residential Trust gains revenue primarily from collecting rent under lease agreements for its homes, sales or liquidations of non-performing loans (or NPLs), and the conversion of loans into rental real estate. The most important drivers of revenue, apart from portfolio growth, are rental and occupancy rates.
The company said in its 10Q that several factors impact rental and occupancy rates, including macroeconomic factors and local and property-level factors, including market conditions, seasonality and resident defaults, the amount of time that it takes to renovate homes upon acquisition, and the amount of time it takes to renovate and re-lease vacant homes.
Starwood posts revenue increase in 2Q14
Starwood said its total 2Q14 revenue grew $12.8 million or 60% to $34.3 million. The increase in revenue resulted from improved operating metrics within the stabilized portfolio, significant growth in its portfolio of homes during the quarter, and gains on its NPL portfolio. The company’s net loss was $12.1 million, or $0.31 per share, down from a net loss of $15.3 million for the first quarter of 2014, or $0.39 per share.
During 2Q14, Starwood Waypoint Residential Trust acquired 1,943 homes for an aggregate estimated total investment of $303.6 million, or approximately $156,230 per home after including estimated investment costs for renovation. As of June 30, 2014, Starwood’s portfolio consisted of 12,600 owned homes and homes underlying NPLs.
The company’s Core Funds From Operations (Core FFO) was $3 million or $0.08 per diluted share. The company’s net asset value (or NAV) per share grew from $30.21 to $31.84, representing a 5.4% increase from March 31, 2014.
Starwood will use net proceeds from convertible notes to acquire additional homes
Earlier this month, Starwood announced the pricing of its $150 million of 4.50% convertible senior notes due 2017. The company said it will use the net proceeds from this offering to acquire additional homes and distressed and non-performing residential mortgage loans, to repurchase its common shares, and to support general corporate purposes.