Professor Hodgdon
AC405
11 November 2015 On September 21, 2015, Starwood Waypoint Residential Trust (SWAY) announced that it would be merging with Colony American Homes Inc. (CAHS) in an all-stock deal. These two entities are among the biggest landlords in the single-family residence renting industry. All of the details of the acquisition are disclosed in the PREM14A form that Starwood Waypoint filed with the SEC on September 21st, which I was able to utilize for most of my research. This merger should be classified as a statutory consolidation. In the proposed deal, Starwood Waypoint will merge with Colony by acquiring all of its outstanding shares. Colony investors’ shares will be converted into an aggregate of 64,869,583 common shares of the combined company which will be named “Colony Starwood Homes.” The resulting company’s shares will be listed and traded on the New York Stock Exchange under the ticker symbol “SFR” (single-family rental). Colony investors will form the majority of ownership of the new entity, holding approximately 59%, on a fully diluted basis. I think this is a great deal for Colony’s investors, as Starwood proposes that the increased scale and density of the new company will allow it to optimize operations and result in a reduction of operating costs, as well as provide many beneficial strategic and financial opportunities in its industry. Altogether the company will own over 30,000 homes, among an estimated total assets of $7.7 billion, and expect to save between $40 and $50 million following the combination.
Their industry has offered good returns as demand for single-family rental homes increases, while home ownership has decreased in a tight mortgage market. According to Ankit Ajmera, in an online article published by Reuters about the merger, the median U.S. monthly home rent has risen to $1,376, the highest it has been in five