Silver Bay Realty to Pay $263M for Southeast Residential Portfolio

ATLANTA—Silver Bay Realty Trust Corp. has entered into a definitive agreement to acquire a portfolio of about 2,460 homes primarily located here and in the cities of Charlotte, NC and Tampa and Orlando, FL for approximately $263 million in cash.

The deal with The American Home, the owner and operator of the portfolio, is targeted to close in the next 45 to 60 days. Two-thirds of the residential portfolio is located in the Atlanta area, which is one of Silver Bay's largest markets. Silver Bay owns single-family properties in Arizona, California, Florida, Georgia, Nevada, North Carolina, Ohio and Texas. The transaction, when closed would increase Silver Bay's home portfolio to approximately 9,000 units.

“We view this transaction as another transformational milestone for Silver Bay,” says David N. Miller, Silver Bay's president and CEO. “The American Home Portfolio consists of high-quality, strategically located single-family rental homes with over 90% occupancy that is highly complementary to our business. The transaction will significantly expand Silver Bay's presence in Atlanta, Tampa, Charlotte, and Orlando—key growth markets that exhibit strong economics and long-term rental demand. This acquisition will accelerate Silver Bay's growth strategy, leverage our operating platform and allow us to capture scale efficiencies leading to increased cash flow for our stockholders.”

The leased portion of the American Home portfolio exceeds 90% with average existing rents of approximately $960 per month and the purchase price per square foot of the portfolio is approximately $66.

Silver Bay reports it executed an amendment to its credit facility that increases its borrowing capacity to $400 million. The company says it intends to utilize the credit facility to fund the transaction.

The amended credit facility bears interest at a varying LIBOR rate, plus 300 basis points and is not subject to a LIBOR floor. BofA Merrill Lynch and J.P. Morgan acted as joint lead arrangers. Jefferies LLC acted as financial advisor to The American Home.

“The alignment of rigorous resident underwriting processes, initial renovation standards, and asset preservation philosophies was a significant factor in evaluating The American Home Portfolio. We believe that the similarities in how our companies approach these business practices will be essential to a successful integration,” says Lawrence B. Shapiro, Silver Bay's COO.