Recorded 54% Year-Over-Year Increase in Fourth
Quarter Core Funds from Operations to $0.20 per Share
Silver Bay Realty Trust Corp. (NYSE:SBY) (“the Company” or
“Silver Bay”) today announced its financial results for the quarter
ended December 31, 2015.
Highlights
- Total revenue of $30.6 million for the
fourth quarter of 2015, an increase of 48% compared to the fourth
quarter of 2014
- Net operating income of $17.8 million
for the fourth quarter of 2015, an increase of 64% compared to the
fourth quarter of 2014
- Core Funds from Operations of $0.20 per
share, an increase of 54% compared to the fourth quarter of
2014
- Increased aggregate occupancy to 96% on
portfolio of 9,022 single-family properties
- Estimated net asset value per share of
$22.03, a 10.5% increase compared to the fourth quarter of
2014
- Achieved rental increases of 4.1% on
new move-ins and 3.5% on renewals
“We are pleased by our 2015 financial results which demonstrate
the healthy progress we have made by focusing on operations,” said
Thomas W. Brock, Silver Bay’s Interim Chief Executive Officer.
“Rental growth and increased occupancy levels along with steady
development of our operational initiatives delivered the best
quarter we have seen yet. Looking ahead, we believe continuing
to refine our operations will drive further value creation for our
stockholders.”
Financial Results
Silver Bay reported total revenue of $30.6 million for the
fourth quarter of 2015, a 48% increase compared to total revenue of
$20.7 million for the fourth quarter of 2014. This increase was due
primarily to the increase in the number of leased properties
generating rental income, and to a lesser extent, rental growth.
The Company owned 8,645 leased properties as of December 31,
2015 as compared to 5,812 leased properties as of December 31,
2014. Net loss attributable to common stockholders for the fourth
quarter of 2015 was $0.8 million, or $(0.02) per common share,
compared to net loss attributable to common stockholders for the
fourth quarter of 2014 of $2.4 million, or $(0.08) per common
share.
The Company reported net operating income (“NOI”) of $17.8
million for the fourth quarter of 2015, a 64% increase compared to
NOI of $10.9 million for the fourth quarter of 2014. Core Funds
From Operations (“Core FFO”) for the fourth quarter of 2015 was
$7.6 million, or $0.20 per share(1), a 54% increase on a per share
basis compared to Core FFO for the fourth quarter of 2014 of $4.9
million, or $0.13 per share. NOI and Core FFO are non-GAAP(2)
financial measures. Reconciliations of net loss to NOI and Core FFO
are included in the financial and operating tables accompanying
this press release.
(1) Per share means per weighted average common shares and
common units of the operating partnership. (2) GAAP is defined in
accordance with accounting principles generally accepted in the
United States.
Portfolio, Financial and Operating Metrics Summary
Silver Bay owned a portfolio of 9,022 single-family properties
as of December 31, 2015. The following table provides a
summary of Silver Bay’s portfolio, financial and operating metrics
for the fourth quarters of 2015 and 2014, respectively:
PORTFOLIO, FINANCIAL AND OPERATING SUMMARY
As of December 31, 2015 As of December 31,
2014 Estimated net asset value per share $ 22.03 $ 19.93 Book
value per share $ 14.67 $ 15.43
Three Months Ended
December 31, 2015 Three Months Ended December 31, 2014
Net operating income as a percentage of total revenue 57.9 % 52.5 %
Core FFO per share $ 0.20 $ 0.13 Net loss attributable to common
shares $ (0.02 ) $ (0.08 )
As of December 31, 2015
As of December 31, 2014 Occupancy Rate Stabilized properties
96 % 94 % Aggregate portfolio 96 % 86 % Average monthly rent on the
aggregate portfolio $ 1,167 $ 1,194 Trailing Twelve Month Turnover
27.6 % 30.2 %
Estimated Net Asset Value
Silver Bay reported an estimated net asset value (“Estimated
NAV”) per share of $22.03, based on an estimated fair market value
(“Estimated Portfolio Value”) of the Company’s properties of $1.4
billion as of December 31, 2015. The Company’s book value per
share was $14.67 as of December 31, 2015. The difference
between Estimated NAV and book value per share is attributable to
multiple factors, including aggregate home price appreciation in
Silver Bay markets, purchasing at discounts to market prices, value
created by the Company’s renovations in excess of the cost of the
renovations, and the exclusion of accumulated depreciation in the
calculation of Estimated Portfolio Value.
The Estimated Portfolio Value of the Company’s properties is
calculated by Silver Bay’s proprietary automated valuation model
(“AVM”), which estimates the value of the Company’s properties on
an individual basis based on comparable sales in the residential
real estate market, without reference to the intended use for the
properties. Estimated NAV does not ascribe any value to in-place
leases or to the portfolio as a whole (as compared to the sum of
the values of the individual properties), nor does it consider cash
flow or other yield metrics or the estimated costs of selling its
properties. Estimated NAV and Estimated Portfolio Value are
non-GAAP financial measures. A reconciliation of book value to
Estimated NAV is included in the financial and operating tables
accompanying this press release.
Operating Metrics
Silver Bay reported an occupancy rate of 96% on both the
stabilized and aggregate portfolio of properties as of
December 31, 2015, an increase from 94% and 86%, respectively,
in the fourth quarter 2014. A summary of Silver Bay’s occupancy
rates is included in the financial and operating tables
accompanying this press release.
Silver Bay reported an average monthly rent for the aggregate
portfolio of $1,167 for the fourth quarter of 2015, compared to an
average monthly rent of $1,194 for the fourth quarter of 2014. The
change in average monthly rent is primarily due to portfolio mix
related to The American Home portfolio acquisition (“the
Portfolio”), which was slightly offset by rental growth.
The trailing twelve month turnover improved 260 basis points to
27.6% as of December 31, 2015 from 30.2% as of
December 31, 2014.
Dividend Declaration
The Company’s Board of Directors declared a quarterly dividend
of $0.13 per share of common stock for the quarter ended
December 31, 2015. The dividend was paid January 8, 2016
to common stockholders of record at the close of business on
December 28, 2015.
Liquidity and Capital Resources
The Company's liquidity and capital resources as of
December 31, 2015 consisted of cash of $29.0 million, escrow
deposits of $15.5 million and $73.5 million borrowing capacity on
its revolving credit facility.
Conference Call
Silver Bay will host a conference call on February 25, 2016 at
10:00 a.m. EST to discuss fourth quarter 2015 financial results and
business highlights. To participate in the teleconference, please
call toll-free (888) 338-9509 (or (412) 902-4187 for international
callers and (855) 669-9657 for Canadian callers) approximately 10
minutes prior to the above start time. You may also listen to the
teleconference live via the internet on the Company's website at
www.silverbayrealtytrustcorp.com in the Investor Relations section
under the Events Calendar link. For those unable to attend, a
telephone playback will be available beginning at 1:00 p.m. EST on
February 25, 2016 through 9:00 a.m. EST on March 25, 2016. The
playback can be accessed by calling (877) 344-7529 (or (412)
317-0088 for international callers and (855) 669-9658 for Canadian
callers) and providing Conference Number 10079428. The call will
also be archived on the Company's website in the Investor Relations
section under the Events Calendar link.
Silver Bay Realty Trust Corp.
Silver Bay Realty Trust Corp. is an internally managed Maryland
corporation focused on the acquisition, renovation, leasing and
management of single-family properties for rental income and
long-term capital appreciation. Silver Bay owns single-family
properties in Arizona, California, Florida, Georgia, Nevada, North
Carolina, Ohio, South Carolina and Texas. Silver Bay has elected to
be taxed as a Real Estate Investment Trust (“REIT”) for U.S.
federal tax purposes.
Forward-Looking Statements
This press release and related conference call contain
forward-looking statements within the meaning of the federal
securities laws. Forward-looking statements relate to expectations,
beliefs, projections, future plans and strategies, anticipated
events or trends and similar expressions concerning matters that
are not historical facts. In some cases, readers can identify
forward-looking statements by the use of forward-looking
terminology such as “may,” “will,” “should,” “expects,” “intends,”
“plans,” “anticipates,” “believes,” “estimates,” “predicts,” or
“potential” or the negative of these words and phrases or similar
words or phrases which are predictions of or indicate future events
or trends and which do not relate solely to historical matters.
Readers can also identify forward-looking statements by discussions
of strategy, plans or intentions. Examples of forward-looking
statements include statements about: the search for and
qualifications of a permanent chief executive officer; our
projected financial and operating results; our ability to lease and
operate acquired properties and to improve our operating
performance, including our abilities and projections related to
turnover rates and timeframes, operating costs, rent increases, and
occupancy rates; intentions related to asset sales, including
pricing, volume and identity of such assets; our intentions related
to our capital allocation strategy, including through the use of
share repurchases; expectations of portfolio size; the impact of
seasonality on Silver Bay’s results; estimates relating to Silver
Bay’s ability to make distributions to its stockholders in the
future; market trends in Silver Bay’s industry, such homeownership
rates and the impact of such trends on its operations; future real
estate values and prices; and the general economy and its impact on
Silver Bay’s results.
The forward-looking statements contained in this press release
and related conference reflect Silver Bay’s current views about
future events and are subject to numerous known and unknown risks,
uncertainties, assumptions and changes in circumstances that may
cause Silver Bay’s actual results to differ significantly from
those expressed or implied in any forward-looking statement. Silver
Bay is not able to predict all of the factors that may affect
future results. Readers should not rely on any of these
forward-looking statements. They are neither statements of
historical fact nor guarantees or assurances of future performance.
Important factors that could cause actual results to differ
materially from those in the forward-looking statements include
national, regional or local economic, business, competitive, market
and regulatory conditions and the following: those factors
described in the discussion on risk factors in Part I, Item 1A,
“Risk Factors,” Part II, Item 7A "Quantitative and Qualitative
Disclosures about Market Risk" and Part II, Item 7 “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” in Silver Bay’s Annual Report on Form 10-K and
other risks and uncertainties detailed in Silver Bay’s other
reports and filings with the Securities and Exchange Commission
("SEC"); defaults on, early terminations of or non-renewal of
leases by residents; resident turnover or turnover costs; Silver
Bay’s ability to maintain occupancy levels and leasing traffic or
to attract and retain qualified residents in light of increased
competition in the leasing market for quality residents, the
relatively short duration of leases, inadequate marketing,
reputational damage or other reasons; Silver Bay’s ability to
control or reduce operating expenses, including repairs and
maintenance expense and other costs such as real estate taxes,
homeowners’ association fees, insurance and other costs outside the
Company’s control for reasons including damage to properties due to
storms, other natural causes or residents and other reasons; Silver
Bay’s ability to successfully operate its properties; Silver Bay’s
ability to maintain rents at levels that are sufficient to keep
pace with rising costs of operations; Silver Bay’s ability to
dispose of assets at attractive pricing levels; the amount of
capital available for share repurchases and other purposes; Silver
Bay’s ability to implement its service technician initiatives or
the impact of such initiatives to reduce maintenance, turnover and
other expenses as predicted; Silver Bay’s ability to obtain
financing arrangements; Silver Bay’s failure to meet the conditions
to draw under the revolving credit facility; maintenance or capital
improvement costs related to the portfolio acquired from The
American Home (the “Portfolio”) that exceed Silver Bay's
assumptions, defaults among residents of the Portfolio that exceed
Silver Bay's assumptions; the Company’s ability to hire and retain
skilled managerial, investment, financial and operational
personnel; the Company’s ability to perform under the covenants of
its revolving credit facility and securitization loan; general
volatility of the markets in which it participates; interest rates
and the market value of Silver Bay’s assets; the impact of changes
in governmental regulations, tax law and rates, and similar
matters; difficulties in identifying properties to acquire and
completing acquisitions; increased time and/or expense to gain
possession and renovate properties; Silver Bay’s dependence on key
personnel to carry its business and investment strategies and its
ability to hire and retain skilled managerial, investment,
financial, and operational personnel, and the performance of
third-party vendors and service providers, including third party
management professionals, maintenance providers, leasing agents,
and property managers; and Silver Bay’s ability to remain qualified
as a REIT.
The forward-looking statements in this press release and related
conference call represent Silver Bay’s views as of the date of this
press release. Subsequent events and developments could cause these
views to change. However, while Silver Bay may elect to update
these forward-looking statements at some point in the future,
Silver Bay has no current intention of doing so except to the
extent required by applicable laws. Readers should, therefore, not
rely on these forward-looking statements as representing Silver
Bay’s views as of any date subsequent to the date of this press
release. All subsequent written and oral forward looking statements
concerning Silver Bay or matters attributable to Silver Bay or any
person acting on its behalf are expressly qualified in their
entirety by the cautionary statements above.
Additional Information
Stockholders of Silver Bay, and other interested persons, may
find additional information regarding the Company at the SEC's
website at www.sec.gov or by directing requests to: Silver Bay
Realty Trust Corp., Attn: Investor Relations, 3300 Fernbrook Lane
North, Suite 210, Plymouth, MN 55447, telephone (952) 358-4400.
Unaudited Supplemental Financial and
Operating DataFourth Quarter 2015
SILVER BAY REALTY TRUST CORP.
CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS EXCEPT
SHARE DATA) December 31, December 31,
2015 2014 Assets Investments in real estate:
Land and land improvements $ 220,110 $ 167,780 Building and
improvements 989,574 780,590 1,209,684 948,370
Accumulated depreciation (74,907 ) (43,150 ) Investments in real
estate, net 1,134,777 905,220 Assets held for sale 11,184 2,010
Cash 29,028 49,854 Escrow deposits 15,472 20,211 Resident security
deposits 12,521 8,595 In-place lease and deferred lease costs, net
689 688 Deferred financing costs, net 13,075 11,960 Other assets
7,673 3,842
Total assets $ 1,224,419 $
1,002,380
Liabilities and Equity
Liabilities: Securitization loan, net of unamortized
discount of $1,086 and $1,387, respectively $ 303,880 $ 310,665
Revolving credit facility 326,472 67,096 Accounts payable and
accrued expenses 16,752 13,090 Resident prepaid rent and security
deposits 14,462 9,634
Total liabilities
661,566 400,485 10% cumulative redeemable preferred
stock, $0.01 par; 50,000,000 authorized, 1,000 issued and
outstanding 1,000 1,000
Equity: Stockholders’ equity: Common
stock $0.01 par; 450,000,000 shares authorized; 36,063,187 and
36,711,694, respectively, shares issued and outstanding 359 366
Additional paid-in capital 651,987 660,776 Accumulated other
comprehensive loss (1,613 ) (86 ) Cumulative deficit (121,620 )
(94,593 ) Total stockholders’ equity 529,113 566,463 Noncontrolling
interests - Operating Partnership 32,740 34,432
Total equity 561,853 600,895
Total
liabilities and equity $ 1,224,419 $ 1,002,380
SILVER BAY REALTY TRUST CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(AMOUNTS IN THOUSANDS EXCEPT SHARE DATA) Three
Months Ended Year Ended December 31, December
31, 2015 2014 2015
2014 Revenue: Rental income $ 29,975 $ 20,089 $
111,159 $ 75,910 Other income 666 584 2,535
2,020 Total revenue 30,641 20,673 113,694 77,930
Expenses: Property operating and maintenance 5,627 4,737
22,106 17,274 Real estate taxes 3,983 3,031 15,847 11,042
Homeowners’ association fees 447 267 1,912 1,260 Property
management 2,831 1,841 11,093 9,401 Depreciation and amortization
10,115 6,823 35,189 25,623 Advisory management fee - affiliates — —
— 6,621 Management internalization — 194 — 39,373 Portfolio
acquisition expense 18 — 2,064 — General and administrative 3,991
3,016 15,915 10,334 Share-based compensation 718 292 2,613 1,022
Interest expense 5,968 2,876 21,275 11,586
Total expenses 33,698 23,077 128,014
133,536
Loss before other income (expense),
income taxes and non-controlling interests
(3,057 ) (2,404 ) (14,320 ) (55,606 )
Other income
(expense): Net gain on disposition of real estate 1,724 13
4,044 174 Ineffectiveness of interest rate cap agreements (51 ) —
(51 ) (480 ) Other expense (319 ) (101 ) (383 ) (785 ) Total other
income (expense) 1,354 (88 ) 3,610 (1,091 )
Loss
before income taxes and non-controlling interests (1,703 )
(2,492 ) (10,710 ) (56,697 ) Income tax benefit, net 905 —
758 —
Net loss (798 ) (2,492 ) (9,952 )
(56,697 ) Net loss attributable to noncontrolling interests -
Operating Partnership 46 143 577 143
Net loss attributable to controlling interests (752 ) (2,349
) (9,375 ) (56,554 ) Preferred stock distributions (25 ) (25 ) (100
) (100 )
Net loss attributable to common stockholders $ (777
) $ (2,374 ) $ (9,475 ) $ (56,654 )
Loss per share - basic and
diluted: Net loss attributable to common shares $ (0.02 ) $
(0.08 ) $ (0.26 ) $ (1.49 ) Weighted average common shares
outstanding 36,069,198 37,169,071 36,209,999
38,119,971
Comprehensive Loss: Net loss $ (798
) $ (2,492 ) $ (9,952 ) $ (56,697 )
Other comprehensive
loss: Change in fair value of interest rate cap agreements (84
) (83 ) (1,587 ) (291 ) Losses reclassified into earnings from
other comprehensive (loss) income 60 — 60 481
Other comprehensive (loss) income (24 ) (83 ) (1,527 ) 190
Comprehensive loss (822 ) (2,575 ) (11,479 ) (56,507
)
Less comprehensive loss attributable to
noncontrollinginterests - Operating Partnership
138 143 669 143
Comprehensive loss
attributable to controlling interests $ (684 ) $ (2,432 ) $
(10,810 ) $ (56,364 )
SILVER BAY REALTY TRUST CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN
EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2015
AND 2014
(AMOUNTS IN THOUSANDS EXCEPT SHARE
DATA)
Common Stock Accumulated
Noncontrolling
Additional
Other
Total
Interests -
Par Value
Paid-In
Comprehensive
Cumulative
Stockholders
’
Operating
Total
Shares Amount Capital Loss
Deficit Equity Partnership Equity
Balance at January 1, 2014 38,561,468 $ 385 $ 689,646 $ (276
) $ (31,795 ) $ 657,960 $ — $ 657,960 Non-cash equity awards, net
68,062 — 1,002 — — 1,002 — 1,002 Repurchase and retirement of
common stock (1,917,836 ) (19 ) (31,470 ) — — (31,489 ) — (31,489 )
Dividends declared — — — — (6,244 ) (6,244 ) — (6,244 ) Net loss —
— — — (56,554 ) (56,554 ) (143 ) (56,697 ) Issuance of common
Operating Partnership units in connection with management
internalization — — — — — — 36,173 36,173 Other comprehensive loss
— — — (291 ) — (291 ) — (291 ) Losses reclassified into earnings
from other comprehensive loss — — — 481 — 481 — 481 Adjustment to
noncontrolling interests - Operating Partnership — —
1,598 — — 1,598 (1,598 ) —
Balance at December 31, 2014 36,711,694 366 660,776 (86 )
(94,593 ) 566,463 34,432 600,895 Non-cash equity awards, net
132,932 1 2,522 — — 2,523 — 2,523 Repurchase and retirement of
common stock (781,439 ) (8 ) (12,426 ) — — (12,434 ) — (12,434 )
Dividends declared — — — — (17,652 ) (17,652 ) — (17,652 ) Net loss
— — — — (9,375 ) (9,375 ) (577 ) (9,952 ) Other comprehensive loss
— — — (1,587 ) — (1,587 ) — (1,587 ) Losses reclassified into
earnings from other comprehensive loss — — — 60 — 60 — 60
Adjustment to noncontrolling interests - Operating Partnership —
— 1,115 — — 1,115 (1,115
) —
Balance at December 31, 2015 36,063,187 $
359 $ 651,987 $ (1,613 ) $ (121,620 ) $ 529,113
$ 32,740 $ 561,853
SILVER BAY REALTY TRUST CORP.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(AMOUNTS IN THOUSANDS)
Year Ended December 31, 2015
2014 Cash Flows From Operating Activities: Net loss $ (9,952
) $ (56,697 ) Adjustments to reconcile net loss to net cash
provided by operating activities: Depreciation and amortization
35,189 25,623 Non-cash management internalization — 36,173 Non-cash
share-based compensation 2,523 1,002 Losses reclassified into
earnings from other comprehensive loss 60 481 Amortization and
write-off of deferred financing costs 4,668 3,613 Amortization of
discount on securitization loan 301 116 Bad debt expense 1,426 671
Net gain on disposition of real estate (4,044 ) (174 ) Income tax
valuation allowance reversal 941 — Other 566 840 Net change in
assets and liabilities: Decrease (increase) in escrow cash for
operating activities 3,766 5,062 (Increase) decrease in deferred
lease fees and other assets (7,505 ) (2,184 ) Increase in accounts
payable, accrued property expenses, and prepaid rent 3,208 1,799
Decrease in related party payables, net — (7,611 ) Net cash
provided by operating activities 31,147 8,714
Cash Flows From Investing Activities: Purchase of investments in
real estate (273,266 ) (136,045 ) Capital improvements of
investments in real estate (25,651 ) (37,846 ) Decrease (increase)
in escrow cash for investing activities 972 (731 ) Proceeds from
sale of real estate 29,223 5,979 Cash acquired in management
internalization — 2,069 Other (43 ) (295 ) Net cash used by
investing activities (268,765 ) (166,869 ) Cash Flows From
Financing Activities: Proceeds from securitization loan — 311,164
Payments on securitization loan (7,085 ) (615 ) Proceeds from
revolving credit facility 281,963 137,779 Payments on revolving
credit facility (22,587 ) (235,508 ) Deferred financing costs paid
(5,783 ) (12,348 ) Purchase of interest rate cap agreements (2,250
) (393 ) Repurchase and retirement of common stock (12,434 )
(31,489 ) Dividends paid (15,032 ) (4,298 ) Net cash provided by
financing activities 216,792 164,292 Net
change in cash (20,826 ) 6,137 Cash at beginning of year 49,854
43,717 Cash at end of year
$
29,028 $ 49,854
Supplemental disclosure of cash flow
information:
Cash paid for interest, net of amounts capitalized
$
15,974
$
7,690
Cash paid for taxes
$
181
$
—
Decrease in fair value of interest rate cap agreements
$
1,587
$
291
Non-cash investing and financing activities: Common stock and unit
dividends declared, but not paid
$
4,978
$
2,331
Capital improvements in accounts payable
$
597
$
1,950
Non-cash management internalization transaction: Issuance of units
to noncontrolling interests
$
—
$
36,173
Other liabilities acquired in management internalization
$
—
$
(2,067)
SILVER BAY REALTY TRUST CORP.
PORTFOLIO SUMMARY OF SINGLE-FAMILY
PROPERTIES
AS OF DECEMBER 31, 2015
Market Number of Properties
(1)
Aggregate Cost
Basis(2) (thousands)
Average Cost Basis Per Property
(thousands)
Average Age (in
years)(3)
Average Square Footage Atlanta 2,723 $ 316,287
$ 116 22.0 1,799 Phoenix 1,424 202,811 142 27.2 1,636 Tampa 1,113
159,426 143 27.6 1,623 Charlotte (4) 686 84,597 123 15.7 1,644
Dallas 504 67,648 134 24.0 1,618 Orlando 496 66,122 133 28.6 1,498
Jacksonville 452 59,652 132 27.4 1,537 Southeast FL (5) 384 76,589
199 44.6 1,494 Northern CA (6) 382 72,662 190 47.4 1,399 Las Vegas
290 41,270 142 19.7 1,717 Columbus 284 33,136 117 38.6 1,414 Tucson
209 17,485 84 43.0 1,330 Southern CA (7) 75 11,999
160 46.8 1,366
Totals 9,022 $ 1,209,684
$ 134 27.0 1,641 (1) Total properties
exclude properties reflected as assets held for sale on the
Company's consolidated balance sheets and any properties previously
acquired in purchases that have been subsequently rescinded or
vacated. (2) Aggregate cost basis includes all capitalized costs,
determined in accordance with GAAP, incurred through December 31,
2015 for the acquisition, stabilization, and significant
post-stabilization renovation of properties, including land,
building, possession costs and renovation costs. Aggregate cost
basis includes $14.7 million in capital improvements, incurred from
the Company's formation through December 31, 2015, made to
properties that had been previously renovated, but does not include
accumulated depreciation. (3) As of December 31, 2015,
approximately 4% of the Company's properties were less than 10
years old, 38% were between 10 and 20 years old, 19% were between
20 and 30 years old, 19% were between 30 and 40 years old, 10% were
between 40 and 50 years old, and 10% were more than 50 years old.
Average age is an annual calculation. (4) Charlotte market includes
properties in South Carolina due to its proximity to Charlotte,
North Carolina. (5) Southeast Florida market currently consists of
Miami-Dade, Broward and Palm Beach counties. (6) Northern
California market currently consists of Contra Costa, Napa and
Solano counties. (7) Southern California market currently consists
of Riverside and San Bernardino counties.
SILVER BAY REALTY TRUST CORP.
PORTFOLIO SUMMARY OF LEASING STATUS OF
PROPERTIES
AS OF DECEMBER 31, 2015
Market Number ofProperties
Number of Stabilized
Properties(1) PropertiesLeased
Properties Vacant
AggregatePortfolio Occupancy
Rate StabilizedOccupancy Rate
Average Monthly Rent(2) Atlanta
2,723 2,723 2,629 94 96.5 % 96.5 % $ 1,060 Phoenix 1,424 1,424
1,347 77 94.6 % 94.6 % 1,102 Tampa 1,113 1,113 1,062 51 95.4 % 95.4
% 1,298 Charlotte 686 685 658 28 95.9 % 96.1 % 1,063 Dallas 504 504
481 23 95.4 % 95.4 % 1,297 Orlando 496 496 481 15 97.0 % 97.0 %
1,155 Jacksonville 452 452 436 16 96.5 % 96.5 % 1,133 Southeast FL
384 383 356 28 92.7 % 93.0 % 1,650 Northern CA 382 382 372 10 97.4
% 97.4 % 1,609 Las Vegas 290 290 285 5 98.3 % 98.3 % 1,189 Columbus
284 284 276 8 97.2 % 97.2 % 1,072 Tucson 209 209 200 9 95.7 % 95.7
% 844 Southern CA 75 75 62 13 82.7 %
82.7 % 1,225 Totals 9,022 9,020 8,645 377
95.8 % 95.8 % $ 1,167 (1) The Company considers a
property stabilized at the earlier of (a) its first authorized
occupancy or (b) 90 days after the renovations for such property
are complete regardless of whether the property is leased.
Properties acquired with an in-place lease are considered
stabilized even though such properties may require future
renovation to meet the Company's standards and may have existing
residents who would not otherwise meet the Company's resident
screening requirements. (2) Average monthly rent for leased
properties was calculated as the average of the contracted monthly
rent for all leased properties as of December 31, 2015 and reflects
rent concessions amortized over the life of the related lease.
SILVER BAY REALTY TRUST CORP.
DEFINITIONS AND RECONCILIATIONS OF
NON-GAAP FINANCIAL MEASURES
(AMOUNTS IN THOUSANDS EXCEPT SHARE
DATA)
Automated Valuation Model or AVM
AVM refers to Silver Bay’s proprietary automated valuation
model. The AVM estimates the value of a subject property using
comparable sales analysis based on sales data, without reference to
the intended use for the subject or comparable properties. The AVM
does not consider cash flow or other yield metrics. The values
derived by the AVM have not been audited and are not net of any
estimated selling costs for the subject property, and there is no
assurance that the Company’s estimates of value calculated by use
of the AVM are indicative of the amounts that would be realized on
the ultimate sale or exchange of these assets.
The AVM uses a number of assumptions in calculating the value of
the Company's properties. For any property, the ideal comparable
would be an identical property next door, sold recently. Because
such a comparable is rarely available, the AVM makes adjustments to
the value of comparable sales to account for the differences
between a given comparable and the subject property. The AVM
calculates an adjustment factor based on a regression analysis of
the history of sales in the geographic area, which in economics is
known as a hedonic price equation. AVM assumes that only the finite
list of factors (gross living area, age of the property, lot size,
number of bathrooms, location fixed effect (on the level of census
block group or census tract), time fixed effect (measured in three
month periods counting back from the estimation date), type of sale
fixed effect (normal versus distressed sale, which captures the
maintenance condition and a possible discount associated with REO
or a distressed seller) and above average condition effect (which
attempts to capture properties determined to be in above average
condition in the market)) influence the sales price of a property
despite additional factors that could actually impact the pricing
of a particular property. This assumption limits the reliability of
the AVM when valuing a single property because it may not capture
the unique character of that particular property. The Company does
not believe this assumption materially impedes calculating the
value of a larger group of properties. The AVM also assumes a
logarithmic relation between the factors used in the regression
analysis, as is common in models of this type, and assumes that the
Company's properties have been fully renovated to above-average
condition. The AVM also relies on the accuracy of the data
regarding the Company’s homes and properties used in sales
comparisons, which is provided by an independent third party. The
potential for inaccurate data limits the reliability of the AVM
when valuing a single property where a data error has a more
pronounced effect, but the Company does not believe it materially
impacts reliability when calculating the value of a larger
portfolio of properties.
The Company employs multiple validation measures to assess the
reasonableness of the AVM calculations, including comparisons to
published home price indices and broker price opinions obtained for
Company properties. Additionally, the Company uses the AVM to
calculate the value of a random sample of properties purchased in
its markets by third parties and then compares this result to the
actual sales price for such properties. The calculation performed
in January 2016 covered 57,391 comparable sales transactions in
November and December 2015 and the aggregate AVM derived value was
0.2% above the aggregate actual sales prices. The Company believes
these validation measures provide a reasonable basis for
determining the AVM is a fair assessment of the value of the
Company’s portfolio.
Estimated Net Asset Value or NAV
Estimated NAV is intended to be an estimate of the value of all
of the Company’s assets net of its liabilities. To calculate
Estimated NAV, the Company starts with its historical book value,
subtracts its historical net investments in real estate and adds
its Estimated Portfolio Value (defined below).
Estimated NAV is a non-GAAP financial measure. Silver Bay
provides the Estimated NAV and believes such metric is useful as an
additional tool for investors seeking to value the Company. This
metric should be considered along with other available information
in valuing and assessing Silver Bay, including the Company’s GAAP
financial measures or other cash flow or yield metrics and should
not be viewed as a substitute for book value, net investments in
real estate, equity, net income (loss) or cash flows from
operations prepared in accordance with GAAP, or as a measure of the
Company’s profitability or liquidity.
The following is a reconciliation of the Company’s book value to
Estimated NAV:
(amounts in thousands except share data) December
31, 2015 December 31, 2014 Amount
Per Share(1) Amount Per
Share(2) Book value(3) $ 561,853 $ 14.67 $ 600,895 $
15.43 Less: Investments in real estate, net (1,134,777 ) (29.63 )
(905,220 ) (23.24 ) Add: Estimated Portfolio Value 1,416,511
36.99 1,080,240 27.74 Estimated Net Asset
Value $ 843,587 $ 22.03 $ 775,915 $ 19.93
(1) Per share amounts are based upon common shares
outstanding of 36,063,187 plus 2,231,511 common units for a total
of 38,294,698 fully diluted shares outstanding as of December 31,
2015. (2) Per share amounts are based upon common shares
outstanding of 36,711,694 plus 2,231,511 common units for a total
of 38,943,205 fully diluted shares outstanding as of December 31,
2014. (3) Book value as defined by GAAP represents total assets
less total liabilities and less preferred stock in mezzanine or
total equity.
Estimated Portfolio Value
Estimated Portfolio Value refers to the estimated fair market
value of the Company’s properties, excluding properties reflected
as assets held for sale on the Company's balance sheets. The
Estimated Portfolio Value reflects the aggregated values of Silver
Bay’s properties as calculated by the AVM less the Estimated
Renovation Reserve. For purposes of calculating Estimated Portfolio
Value, Silver Bay does not deduct the estimated costs of selling
the properties in its portfolio, including commissions and costs,
ascribes no value to existing leases or to the portfolio as a whole
(as compared to the sum of the values of the individual properties)
and does not consider cash flow or other yield metrics.
Estimated Portfolio Value is a non-GAAP financial measure.
Silver Bay believes Estimated Portfolio Value is useful as an
additional tool for investors seeking to value the Company. This
metric should be considered along with other available information
in valuing and assessing Silver Bay, including the Company’s GAAP
financial measures or other cash flow or yield metrics and should
not be viewed as a substitute for book value, net investments in
real estate, equity, net income (loss) or cash flows from
operations prepared in accordance with GAAP, or as a measure of the
Company’s profitability or liquidity. The difference between the
Company’s Estimated Portfolio Value and net investments in real
estate as of December 31, 2015 and 2014 is attributable to multiple
factors, including aggregate home price appreciation in the
Company’s markets, its purchasing at discounts to market prices,
value created by its renovations in excess of the cost of the
renovations, and the exclusion of accumulated depreciation in the
calculation of Estimated Portfolio Value.
The following is a reconciliation of the Company’s investments
in real estate to Estimated Portfolio Value:
(amounts in thousands except share data) December
31, 2015 December 31, 2014 Amount
Per Share(1) Amount Per
Share(2) Investments in real estate, gross $ 1,209,684 $
31.59 $ 948,370 $ 24.35 Accumulated depreciation (74,907 ) (1.96 )
(43,150 ) (1.11 ) Investments in real estate, net 1,134,777 29.63
905,220 23.24 Add: Increase in estimated fair market value of
investments in real estate(3) 300,407 7.85 180,535 4.64 Less:
Estimated Renovation Reserve (18,673 ) (0.49 ) (5,515 ) (0.14 )
Estimated Portfolio Value $ 1,416,511 $ 36.99 $
1,080,240 $ 27.74 (1) Per share amounts are
based upon common shares outstanding of 36,063,187 plus 2,231,511
common units for a total of 38,294,698 fully diluted shares
outstanding as of December 31, 2015. (2) Per share amounts are
based upon common shares outstanding of 36,711,694 plus 2,231,511
common units for a total of 38,943,205 fully diluted shares
outstanding as of December 31, 2014. (3) Difference between AVM
derived value of the Company's portfolio of properties of $1.4
billion and $1.1 billion as of December 31, 2015 and 2014,
respectively, which assumes all properties are fully renovated, and
net investments in real estate.
Estimated Renovation Reserve
Estimated Renovation Reserve is the estimated renovation cost
for properties in the portfolio for which an initial renovation has
not been completed by the Company, including properties acquired
with an in-place lease. Silver Bay prepares an Estimated Renovation
Reserve to account for the AVM assumption that all Silver Bay
properties have been fully renovated to above average condition. To
calculate the Estimated Renovation Reserve, the Company identifies
each property that is either (1) not stabilized and for which an
initial renovation has not yet been completed or (2) was acquired
with an in-place lease and has not yet undergone an initial
renovation performed by the Company (including the recently
acquired properties from The American Home Real Estate Investment
Trust ("TAH")). The Company then estimates the remaining renovation
expenditures for these properties using historical renovation
averages to determine the reserve for properties acquired with an
in-place lease and renovation bids, or, if a bid is not yet known,
historical averages, for non-stabilized properties, in each case
adjusted for the amount of actual renovation expenditures incurred
to date. During the fourth quarter of 2015, the Company increased
the renovation reserve related to the estimated cost of completing
the initial renovation on certain properties acquired from TAH
based upon a change in estimate using actual experience to date on
this portfolio. After completing an initial renovation, the Company
does not make additional adjustments to reflect changes to the
condition of a property. If the Company does not accurately
estimate renovation costs, the Estimated Renovation Reserve may
differ materially from the costs actually incurred in renovating
its properties, which would have a corresponding impact on the
Estimated Portfolio Value and Estimated NAV.
Net Operating Income
Net operating income (“NOI”) is a non-GAAP financial measure
defined by the Company as total revenue less property operating and
maintenance, real estate taxes, homeowners’ association fees, and
property management expenses. NOI excludes depreciation and
amortization, the former advisory management fees, management
internalization, portfolio acquisition expense, general and
administrative expenses, share-based compensation, interest
expense, net gain on disposition of real estate, ineffectiveness of
interest rate cap agreements, income tax benefit, net and other
non-comparable items as applicable. Additionally, NOI excludes
certain property management add backs, such as the former 5%
property management fee payable prior to the management
internalization because it more closely represents additional
advisory management fee, expensed acquisition fees and costs, and
certain other property management costs.
The Company considers NOI to be a meaningful financial measure
when considered with the financial statements determined in
accordance with GAAP. The Company believes NOI is helpful to
investors in understanding the core performance of the Company's
real estate operations.
The following is a reconciliation of the Company's NOI to net
loss as determined in accordance with GAAP for the three months and
years ended December 31, 2015 and 2014 (amounts in
thousands):
Three Months Ended Year Ended December
31, December 31, 2015 2014
2015 2014 Net loss $ (798 ) $ (2,492 ) $
(9,952 ) $ (56,697 ) Depreciation and amortization 10,115 6,823
35,189 25,623 Advisory management fee - affiliates — — — 6,621
Management internalization — 194 — 39,373 Portfolio acquisition
expense 18 — 2,064 — General and administrative 3,991 3,016 15,915
10,334 Share-based compensation 718 292 2,613 1,022 Interest
expense 5,968 2,876 21,275 11,586 Net gain on disposition of real
estate (1,724 ) (13 ) (4,044 ) (174 ) Ineffectiveness of interest
rate cap agreements 51 — 51 480 Other expense 319 101 383 785
Income tax benefit, net (905 ) — (758 ) — Property operating and
maintenance add back: Market ready costs prior to initial lease and
other — 58 169 278 Property management add backs — —
— 478 Net operating income $ 17,753 $ 10,855
$ 62,905 $ 39,709 Net operating income as a
percentage of total revenue 57.9 % 52.5 % 55.3 % 51.0 %
NOI should not be considered an alternative to net loss or net
cash flows from operating activities, as determined in accordance
with GAAP, as indications of Silver Bay’s performance or as
measures of liquidity. Although the Company uses this non-GAAP
measure for comparability in assessing its performance against
other REITs, not all REITs compute this non-GAAP measure in the
same manner. Accordingly, there can be no assurance that the
Company’s basis for computing this non-GAAP measure is comparable
with that of other REITs.
Funds From Operations and Core Funds From Operations
Funds From Operations ("FFO") is a non-GAAP financial measure
that the Company believes, when considered with the financial
statements determined in accordance with GAAP, is helpful to
investors in understanding performance because it captures features
particular to real estate performance by recognizing that real
estate generally appreciates over time or maintains residual value
to a much greater extent than do other depreciable assets. The
National Association of Real Estate Investment Trusts ("NAREIT")
defines FFO as net income (loss), computed in accordance with GAAP,
excluding gains or losses from sales of, and impairment losses
recognized with respect to, depreciable property, plus depreciation
and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures are calculated on the same basis to
determine FFO.
Core Funds From Operations ("Core FFO") is a non-GAAP financial
measure that the Company uses as a supplemental measure of
performance. The Company believes that Core FFO is further helpful
to investors as it provides a more consistent measurement of
performance across reporting periods by removing the impact of
certain items that are not comparable from period to period. The
Company adjusts FFO for expensed acquisition fees and costs,
including those associated with the portfolio of properties
acquired from TAH, certain fees and expenses related to the
securitization transaction, share-based compensation, costs
associated with the management internalization, write-offs of
expenses associated with changes in debt structure, income tax
(benefit) on the disposition of real estate and certain other
non-cash or non-comparable costs to arrive at Core FFO.
FFO and Core FFO should not be considered alternatives to net
income (loss) or net cash flows from operating activities, as
determined in accordance with GAAP, as indications of the Company's
performance or as measures of liquidity. These non-GAAP measures
are not necessarily indicative of cash available to fund future
cash needs. In addition, although the Company uses these non-GAAP
measures for comparability in assessing performance against other
REITs, not all REITs compute the same non-GAAP measures.
Accordingly, there can be no assurance that the Company's basis for
computing these non-GAAP measures is comparable with that of other
REITs. This is due in part to the differences in capitalization
policies used by different companies and the significant effect
these capitalization policies have on FFO and Core FFO. Real estate
costs which are accounted for as capital improvements are added to
the carrying value of the property and depreciated over time,
whereas real estate costs that are expenses are accounted for as a
current period expense. This impacts FFO and Core FFO because costs
that are accounted for as expenses reduce FFO and Core FFO.
Conversely, real estate costs associated with assets that are
capitalized and then subsequently depreciated are excluded from the
calculation of FFO and Core FFO.
FFO and Core FFO are calculated on a gross basis and, as such,
do not reflect adjustments for the noncontrolling interests -
Operating Partnership. The following table sets forth a
reconciliation of the Company's net loss as determined in
accordance with GAAP and calculations of FFO and Core FFO for the
three months and years ended December 31, 2015 and 2014. Also
presented is information regarding the weighted-average number of
shares of the Company's common stock and common units of the
Operating Partnership outstanding used for the computation of FFO
and Core FFO per share (amounts in thousands, except share and per
share amounts):
Three Months Ended Year Ended December
31, December 31, 2015 2014
2015 2014 Net loss(1) $ (798 ) $ (2,492 ) $
(9,952 ) $ (56,697 ) Depreciation and amortization 10,115 6,823
35,189 25,623 Net gain on disposition of real estate (1,724 ) (13 )
(4,044 ) (174 ) Other expense (income) 49 10 (190 )
731 Funds from operations $ 7,642 $ 4,328 $
21,003 $ (30,517 ) Adjustments: Portfolio acquisition
expense(2) $ 18 $ — $ 2,064 $ — Acquisition fees and costs expensed
and other(3) — — — 815 Securitization fees and costs expensed(4) —
— — 801 Share-based compensation 718 292 2,613 1,022 Market ready
costs prior to initial lease and other — 58 169 278 System
implementation costs — — — 139 Management internalization(1) — 194
— 39,373 Write-off of deferred financing fees — — 31 1,058
Ineffectiveness of interest rate cap agreements 51 — 51 480
Amortization of discount on securitization loan 76 75 301 116
Income tax (benefit) on disposition of real estate (941 ) — (941 )
— Other (income) expense(5) — (6 ) 114 — Core
funds from operations $ 7,564 $ 4,941 $ 25,405
$ 13,565 FFO $ 7,642 $ 4,328 $ 21,003 $ (30,517 ) Preferred
stock distributions (25 ) (25 ) (100 ) (100 ) FFO available to
common shares and units $ 7,617 $ 4,303 $ 20,903
$ (30,617 ) Core FFO $ 7,564 $ 4,941 $ 25,405 $ 13,565
Preferred stock distributions (25 ) (25 ) (100 ) (100 ) Core FFO
available to common shares and units $ 7,539 $ 4,916
$ 25,305 $ 13,465 Weighted average common shares and
units outstanding(6) 38,300,709 39,400,582 38,441,510
38,688,548 FFO per share $ 0.20 $ 0.12
$ 0.54 $ (0.79 ) Core FFO per share $ 0.20 $ 0.13
$ 0.66 $ 0.35 (1) Includes costs to
internalize the former advisory manager of $39.4 million, primarily
related to issuance of common units of the operating partnership
and to a lesser extent, certain transaction costs and assumption of
certain liabilities during the year ended December 31, 2014. (2)
Includes a one-time expense for costs related to TAH portfolio
acquisition. (3) Includes a one-time expense reflected in general
and administrative expense to acquire the former Tampa third-party
property manager. (4) Represents non-capitalizable costs related to
the Company's securitization transaction for personnel and other
matters. (5) Non-comparable costs from prior periods. (6)
Represents the weighted average of common shares and common units
in the operating partnership outstanding for the periods presented.
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version on businesswire.com: http://www.businesswire.com/news/home/20160224006220/en/
Silver Bay Realty Trust Corp.Anh Huynh, 952-358-4400Director of
Investor Relationsahuynh@silverbaymgmt.com
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