OAKLAND, CA—Locally-based Starwood Waypoint ResidentialTrust has picked up another pool of non-performing loansfor $73.3 million. The total purchase priceincludes 430 NPLs and 81 REO homes.

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The $58.7 million total purchase price of the NPLs representsapproximately 69.6% of the estimated broker price opinion value of$84.4 million at the time of purchase.

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This deal follows Starwood's acquisition in August of twoseparate pools of nonperforming loans for $218.7million. That deal consisted of 1,294 nonperforming loansand 146 REO homes.

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All told, during the third quarter to date the company hasinvested $308.7 million to acquire four pools consisting of 1,800NPLs and over 300 REO homes.

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This most recent transaction was complex, requiring Starwood tocollapse the seller's securitization, pay off two mezzanine notesand partially pay down the seller's debt facility.

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Nonetheless its relatively smaller size begs the question ofwhether the NPL loan market is getting too competitive. This was anissue addressed last month during the company's earnings call. Theanswer, in short, was yes the market was getting increasinglycompetitive – but Starwood plans to stay with it.

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"We plan to stay close to this market, and come in and out, asopportunities present themselves," Doug Brien,co-CEO said during the call.

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He pointed to research from John Burns, which found that thenumber of NPLs in excess of the 20-year average is about $1.7million, and the top nine banks alone have over $100 billion inNPLs, leading Starwood to conclude there is at least several moreyears of opportunity.

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"We like the business," Brien said. "We have the infrastructureto underwrite and manage large loan pools, and Starwood Capitalprovides SWAY with proprietary deal flow to help us buy atattractive prices."

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The company's NPL book is performing, according to its recentearnings report. It is estimating current NPL pools are achieving amidteen unlevered IRR, and an equity multiple of between 1.2 and1.3. There is also nearly $100 million in UPB of re-performingloans on the books that are generating high single-digit unleveredreturns, according to Brien.

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