OAKLAND, CA—Starwood Waypoint Residential Trust has closed on its seventh pool of non-performing loans, in this case a $117 million purchase of 1,441 loans. In addition, the company doesn't appear to think supply will be an issue: it just entered into an agreement to upsize its existing $350 million warehouse credit facility with Deutsche Bank to $500 million with the additional capacity meant to finance the acquisition of--you guessed it--non-performing loan pools.

"Despite increasing levels of competition in the NPL space, we continue to see plenty of interesting opportunities that meet our underwriting and return parameters, as evidenced by this pool and others in our pipeline," says Gary Beasley, Co-CEO of the company, in a prepared statement.

This extension follows a $500 million expansion of its revolving credit facility secured by single-family residences earlier this month, increasing the company's capacity on that line to $1 billion. Again, the NPL asset class was referenced, along with Starwood Waypoint's other main investment target of single-family homes. Said Nina Tran, CFO of Starwood Waypoint Residential Trust of the credit facility expansion: it "provides additional capacity … allowing us to continue to invest in attractively-priced single family rental homes and non-performing loan pools."

To be sure, the recently-formed REIT views the two categories—single-family rental homes and NPL pools—as integrated pieces on the same spectrum. As Beasley said during the REIT's recent, and first, earnings call, "We are simply moving upstream and either modifying the loan into a performer, doing a deed in lieu to convert the former borrower into a renter while keeping them in their home or when those outcomes are not viable taking over a property and converting it into a rental home if it meets our desired parameters."

He says that the company anticipates roughly a third of all of its NPL will convert to its rental pool over time and for the year, its NPL allocation will end up between one-third to one-half of its total purchases. "NPL acquisitions tend to be lumpy, so our quarterly deployments could vary widely," he said during the earnings call. "We will continue to be disciplined buyers. We know there are some big sales coming this summer and we are prepared to be active buyers provided we like the pool composition and the pricing."

The company didn't say where they purchased this latest pool but a distinct possibility is the $4.8-billion portfolio of NPLs DebtX marketed in two parts for the US Department of Housing and Urban Development on behalf of SEBA Professional Services this month.

On June 11, approximately 23,200 loans totaling $4 billion in unpaid principal balance was offered in 16 pools, ranging from $93 million to $1 billion.

On June 25, a Neighborhood Stabilization Outcomes Pool offering of approximately 4,800 loans in eight regions totaling $800 million in unpaid principal balance went to bid.

Instant Insights /

Starwood Waypoint Still Gobbling NPLs

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