Attached files
file | filename |
---|---|
8-K - FORM 8-K - Starwood Waypoint Homes | d107387d8k.htm |
Exhibit 99.1
COLONY STARWOOD HOMES ANNOUNCES
PRELIMINARY FINANCIAL AND OPERATING RESULTS FOR
QUARTER ENDED DECEMBER 31, 2015
Expands Buyback Authorization to $250 Million
Provides Fourth Quarter Earnings Release and Conference Call Date
Scottsdale, Arizona (January 28, 2016) Colony Starwood Homes (NYSE: SFR) (the Company), a leading single-family rental real estate investment trust (REIT), today announced preliminary unaudited financial and operating results for the three months and year ended December 31, 2015. The Company plans to release its full financial results on February 29, 2016.
Additionally, the Companys Board of Trustees (the Board) authorized a $100 million increase and an extension to the Companys share repurchase program. The Company is now authorized to purchase up to $250 million of its outstanding common shares through May 6, 2017, of which approximately $242 million of capacity is currently available.
On January 5, 2016, the Company completed the merger between Starwood Waypoint Residential Trust (SWAY) and Colony American Homes (CAH) (the Merger) and the internalization of SWAYs manager (the Internalization), forming a company with a combined asset value of approximately $7.7 billion and over 30,000 homes. In connection with the merger, SWAY was renamed Colony Starwood Homes and began trading under the ticker symbol SFR on the New York Stock Exchange.
Given the current valuation of our shares, we are pre-announcing our fourth quarter and full year 2015 results, which puts us in a position to repurchase shares under an increased share repurchase program, said Fred Tuomi, the Companys Chief Executive Officer. Further, the sizeable increase in our stabilized home portfolio created by the Merger supports our intent to propose to the Board an increase in our annual dividend to $0.88 per share, an increase of 14% from SWAYs pre-Merger rate.
A summary of preliminary financial results for SWAY and CAH is provided below:
SELECTED FINANCIAL RESULTS
(UNAUDITED)
Three Months Ended December 31, 2015 |
Year Ended December 31, 2015 | |||||||
(in millions, except per share data) | SWAY |
CAH |
SWAY |
CAH | ||||
Total Revenue |
$64.4 65.4 | $80.4 81.4 | $271.3 272.3 | $303.2 304.2 | ||||
Net Loss Attributable to Common Shareholders |
$(29.2) (26.0) | $(13.8) (11.8) | $(43.8) (40.6) | $(37.3) (35.3) | ||||
Core FFO as Adjusted |
$6.6 8.4 | $22.3 24.1 | $63.3 65.1 | $66.1 67.9 | ||||
Core FFO as Adjusted per common share |
$0.17 0.22 | $1.67 1.72 |
SWAYs Preliminary Core FFO as Adjusted for the three months and year ended December 31, 2015 excludes an expense of approximately $2.0 million and $0.9 million, respectively, for real estate taxes related to prior periods. Results for CAH do not include results for Colony American Finance, LLC, which was not acquired by the Company as part of the Merger.
As of December 31, 2015, SWAY and CAH had aggregate cash and cash equivalents of approximately $220 million and aggregate borrowings of approximately $4.1 billion. The Company expects remaining transaction expenses
related to the Merger and the Internalization of approximately $25 million to $30 million, which includes severance, retention and other transaction-related expenses.
A summary of preliminary operating results for SWAY, CAH, and the combined Company is provided below:
SELECTED OPERATING RESULTS
(UNAUDITED)
As of December 31, 2015 | Three Months Ended December 31, 2015 |
|||||||||||||||||||||||
SWAY | CAH | Combined Company |
SWAY | CAH | Combined Company |
|||||||||||||||||||
SFR Portfolio Homes(1) |
12,881 | 17,796 | 30,677 | |||||||||||||||||||||
Average monthly rent per home(1) |
$ | 1,510 | $ | 1,503 | $ | 1,506 | ||||||||||||||||||
Total portfolio occupancy(1)(2) |
89.5 | % | 94.9 | % | 92.6 | % | ||||||||||||||||||
Stabilized occupancy(1)(3) |
93.2 | % | 95.5 | % | 94.6 | % | ||||||||||||||||||
Renewal rent growth(1)(4) |
3.5 | % | 5.7 | % | 4.9 | % | ||||||||||||||||||
Replacement rent growth(1) |
2.1 | % | 4.1 | % | 3.4 | % | ||||||||||||||||||
Blended rent growth(1) |
2.6 | % | 5.0 | % | 4.2 | % | ||||||||||||||||||
Retention(1) |
72.3 | % | 76.8 | % | 75.0 | % |
(1) | Excludes 1,218 and 106 homes SWAY and CAH did not intend to hold for the long term as of December 31, 2015, respectively. |
(2) | Represents number of homes occupied as of the last day of the period, divided by total SFR portfolio homes. |
(3) | Occupied homes as of the last day of the period divided by homes that are currently occupied or have been occupied in prior periods. |
(4) | Renewal rent growth includes rent growth from renewals and escalation clauses on multi-year leases. |
Earnings Release and Conference Call
The Company will release full financial results for the three months and year ended December 31, 2015 before the market opens on February 29, 2016. A conference call will be held that same day at 11:00 a.m. Eastern Time to review the Companys results for the three months ended December 31, 2015, discuss recent events and conduct a question-and-answer session.
Webcast:
A link to access the conference call will be available in the investor relations section of the Companys website at www.colonystarwood.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software.
To Participate in the Telephone Conference Call:
Dial in at least 5 minutes prior to start time:
Domestic: 1-877-407-4018
International: 1-201-689-8471
Conference Call Playback:
Domestic: 1-877-870-5176
International: 1-858-384-5517
Passcode: 13629574
The playback will be available through March 29, 2016
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
2
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.
Definitions and Reconciliations: NAREIT FFO and Core FFO as Adjusted
Funds From Operations (FFO) as defined by the National Association of Real Estate Investment Trusts (NAREIT) (NAREIT FFO) is used by industry analysts and investors as a supplemental performance measure of an equity REIT. NAREIT FFO is defined by NAREIT as net income or loss (computed in accordance U.S. generally accepted accounting principles (GAAP) excluding gains or losses from sales of previously depreciated real estate assets, plus depreciation and amortization of real estate assets and adjustments for unconsolidated partnerships and joint ventures. The Companys Core FFO as Adjusted begins with NAREIT FFO as defined by the NAREIT White Paper and is adjusted for: non-cash items, transaction related expenses and out of period items.
NAREIT FFO/Core FFO as Adjusted does not represent net income or cash flows from operations as defined by GAAP and is not intended to indicate whether cash flows will be sufficient to fund cash needs. It should not be considered an alternative to net income as an indicator of the Companys operating performance or to cash flows as a measure of liquidity. The Companys NAREIT FFO/Core FFO as Adjusted may not be comparable to the NAREIT FFO of other REITs due to the fact that not all REITs use the NAREIT or similar Core FFO as Adjusted definition. For a reconciliation of NAREIT FFO and Core FFO as Adjusted to net loss attributable to the Companys shareholders, please see below.
NAREIT FFO AND CORE FFO AS ADJUSTED
(UNAUDITED)
Three Months Ended December 31, 2015 |
Year Ended December 31, 2015 |
|||||||||||||||
(in millions, except share and per share data) |
SWAY | CAH | SWAY | CAH | ||||||||||||
(unaudited) (ranges) | (unaudited) (ranges) | |||||||||||||||
Reconciliation of net loss to NAREIT FFO, Core FFO and Core FFO as Adjusted(1) |
| |||||||||||||||
Net loss attributable to common shareholders |
$ | (29.2) $(26.0 | ) | $ | (13.8) $(11.8 | ) | $ | (43.8) $(40.6 | ) | $ | (37.3) $(35.3 | ) | ||||
Add (deduct) adjustments from net loss to derive NAREIT FFO: |
||||||||||||||||
Depreciation and amortization on real estate assets |
21.3 20.8 | 28.2 27.8 | 78.0 77.5 | 108.5 108.1 | ||||||||||||
Impairment and gain on sales of depreciated real estate investments |
(1.1) (1.3 | ) | 10.1 9.9 | (3.3) (3.5 | ) | 10.7 10.5 | ||||||||||
Non-controlling interests |
0.0 0.0 | (6.5) (5.9 | ) | 0.3 0.3 | (22.1) (21.5 | ) | ||||||||||
FFO adjustments from unconsolidated joint ventures |
| 0.0 0.0 | | 0.2 0.2 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Subtotal NAREIT FFO(1) |
$ | (9.0) $ (6.5 | ) | $ | 18.0 $ 20.0 | $ | 31.2 $ 33.7 | $ | 60.0 $ 62.0 | |||||||
Add (deduct) adjustments to NAREIT FFO to derive Core FFO: |
||||||||||||||||
Non-cash items(2) |
5.9 5.4 | 0.0 0.0 | 19.2 18.7 | 0.2 0.2 | ||||||||||||
Transaction-related expenses |
7.7 7.5 | 3.5 3.3 | 12.0 11.8 | 5.9 5.7 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Core FFO(1) |
$ | 4.6 $ 6.4 | $ | 21.5 $ 23.3 | $ | 62.4 $ 64.2 | $ | 66.1 $ 67.9 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Add (deduct) adjustments to Core FFO to derive Core FFO as Adjusted for out of period items: |
||||||||||||||||
Real estate taxes and insurance(3) |
2.0 2.0 | 0.8 0.8 | 0.9 0.9 | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Core FFO as Adjusted for out of period items(1) |
$ | 6.6 $ 8.4 | $ | 22.3 $ 24.1 | $ | 63.3 $ 65.1 | $ | 66.1 $ 67.9 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted average shares basic and diluted |
37,972,792 | 37,933,431 | ||||||||||||||
Total Core FFO as Adjusted per common share |
$ | 0.17 $ 0.22 | $ | 1.67 $ 1.72 |
(1) | NAREIT FFO, Core FFO and Core FFO as Adjusted are non-GAAP measures. |
(2) | For the three months and year ended December 31, 2015, SWAY non-cash interest excludes amortization of deferred financing cost of approximately $2.1 million and $7.4 million, respectively. CAH non-cash interest excludes amortization of deferred financing cost of approximately $3.4 million and $16.0 million, respectively, for the same periods. |
(3) | For the year ended December 31, 2015, SWAY recorded $0.9 million of real estate tax expense which related to the year ended December 31, 2014. In the three months ended December 31, 2015, SWAY recorded $2.0 million of real estate tax expense which related to periods prior to the three months ended December 31, 2015. These adjustments were primarily the result of tax assessment increases from the prior year by certain jurisdictions, and concentrated in the states of Texas and Florida. The Company has excluded the impact of these out-of-period tax expenses from results for the three months and year ended December 31, 2015. |
3
Important Notes Regarding Preliminary Information
The Companys management has prepared the preliminary estimates set forth herein for the three months and year ended December 31, 2015 based upon the most recent information available to the Companys management from the Companys internal reporting procedures as of the date of this release. The preliminary estimates set forth herein are preliminary, unaudited, subject to further completion and reflect the Companys current good faith estimates, are subject to additional financial closing procedures and may be revised as a result of the Company managements further review of SWAYs and CAHs results and any adjustments that may result from the completion of the audits of the fiscal 2015 financial statements. The Company and its auditors have not completed their normal quarterly review or annual audit procedures as of and for the three months and year ended December 31, 2015, and there can be no assurance that SWAYs and CAHs final results for this quarterly and annual period will not differ from these estimates. Any such changes could be material. Accordingly, you should not place undue reliance on these preliminary estimates. These estimates should not be viewed as a substitute for full audited or interim financial statements prepared in accordance with GAAP and are not necessarily indicative of the results to be achieved for any future period. They should be read together with the Risk Factors sections of the Companys Definitive Proxy Statement on Schedule 14A, filed on November 13, 2015 (the Merger Proxy), and the Companys Annual Report on Form 10-K for the year ended December 31, 2014. Factors that could cause these preliminary estimates to differ include, but are not limited to discovery of new information that alters expectations about fourth quarter and year end results or impacts valuation methodologies underlying these results.
All future dividends are subject to the determination, in its sole discretion, of the Board.
Forward-Looking Statements
This presentation may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements, which are based on current expectations, estimates and projections about the industry and markets in which the Company operates and beliefs of and assumptions made by the Companys management, involve uncertainties that could significantly affect the financial results of the Company. Words such as may, will, should, might, could, expects, anticipates, intends, plans, believes, seeks, estimates, preliminary, potential, continue, predicts, variations of such words, the negative of such words and similar expressions are intended to identify such forward-looking statements, which generally are not historical in nature. Such forward-looking statements include, but are not limited to, statements about the anticipated benefits of the recently closed business combination transaction involving the Company, including future financial and operating results (such as NAREIT FFO and Core FFO), and the Companys plans, objectives, expectations and intentions. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future including statements relating to expected synergies, improved liquidity and balance sheet strength are forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Although we believe the expectations reflected in any forward-looking statements are based on reasonable assumptions, we can give no assurance that our expectations will be attained and therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Some of the factors that may affect outcomes and results include, but are not limited to: (i) national, regional and local economic climates; (ii) changes in financial markets and interest rates, or to the business or financial condition of either company or business; (iii) changes in market demand for single-family rental homes and competitive pricing; (iv) risks associated with acquisitions, including the integration of the combined companies businesses; (v) maintenance of REIT status; (vi) availability of financing and capital; (vii) risks associated with achieving expected revenue synergies or cost savings; and (viii) those additional risks and factors discussed in reports filed with the Securities and Exchange Commission by the Company from time to time, including those discussed under the heading Risk Factors in its Merger Proxy and most recently filed reports on Forms 10-K and 10-Q. Neither the Company nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. The forward-looking statements speak only as of the date of this communication, and the Company anticipates that subsequent events and developments will cause their views to change.
4
Contacts:
Investor Relations
John Christie
Phone: 510-982-5470
Email: IR@colonystarwood.com
Media Relations
Jason Chudoba
Phone: 646-277-1249
Email: Jason.chudoba@icrinc.com
5