Investments

Starwood Waypoint just grew its non-performing loan holdings

REIT purchased $268.3 million in NPLs in third quarter

Starwood Waypoint Residential Trust (SWAY) has increased its delinquent loan holdings with a $73.3 million purchase of 430 non-performing loans and 81 REO homes.

The $73.3 million deal is the latest from Starwood Waypoint, which was spun off of Starwood Property Trust (STWD) in January as a real estate investment trust. When Starwood Waypoint was established, its parent company said that the REIT’s business plan would be built on owning and operating single-family rental homes and investing in NPLs.

The REIT said that $58.7 million of the $73.3 million in the most recent purchase was for the NPLs and represents 69.6% of the estimated broker price opinion value of $84.4 million at the time of purchase.

“Our NPL business is the direct result of our partnership with Starwood Capital Group, which provides SWAY with proprietary deal flow to help us buy at attractive prices,” said Gary Beasley, Co-CEO of Starwood Waypoint.

“This deal and others we’ve closed during the third quarter support our view that plentiful opportunities continue to be available in the marketplace that meet our strict underwriting criteria for portfolio composition and pricing.”

Starwood Waypoint did not disclose the seller of the portfolio, but Brendan Brogan, senior vice president of acquisitions at Starwood Capital, said that the deal required several maneuvers to complete.

“We were able to execute a complex transaction for the purchase of a unique portfolio which involved collapsing the seller’s securitization, paying off two mezzanine notes and partially paying down the seller’s debt facility,” Brogan said.

In a release, the company stated that this most recent purchase increases its third-quarter total for NPL investments to $308.7 million, which includes 1,800 NPLs and more than 300 REO homes.

The company also stated that $268.3 million of the total third-quarter outlay went NPLs. That represents approximately 71.5% of the estimated BPO value of $375.2 million at the time of each purchase, the company said.

Earlier in the third quarter, the REIT also purchased two separate pools of non-performing loans for $218.7 million. That total purchase included 1,294 non-performing loans and 146 REO homes.

In March, the REIT joined Colony American Homes, Invitation Homes, and American Homes 4 Rent in forming the National Rental Home Council.

The new group is a non-partisan coalition focused on increasing education about the professionally managed single-family rental industry and advocating for the benefits brought by the sub-sector of today’s estimated billion-dollar rental market.

Throughout 2014, Colony American Homes, Invitation Homes and American Homes have all securitized pools of single-family rental homes. 

When Starwood Waypoint launched in January, sources told HousingWire that the REIT would not be securitizing its investments. 

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