Category Archives: Investing

Colony Starwood Homes rebranding as Starwood Waypoint Homes

For the second time in two days, a business that carries the “Colony” brand name announced that it plans to shed that name and begin operating under a new name.

On Tuesday, Fortress Investment Group announced that it acquired Colony American Finance, a lender that provides investor financing for single-family rental homes, townhomes, condos, and small multifamily properties.

According to a release, the company will be rebranded as CoreVest American Finance Lender.

And Wednesday, Colony Starwood Homes, an owner and operator of single-family rental homes that formed in 2016 when Starwood Waypoint Residential Trust merged with Colony American Homes, announced that it is rebranding as Starwood Waypoint Homes.

According to the company, its name change takes effect on July 28, 2017. The company will still be traded on the New York Stock Exchange under the ticker symbol “SFR.”

The company said that the name change “reflects the sale in March by Colony NorthStar, Inc. and affiliates of Colony Capital, LLC of their entire remaining ownership stake in the company.

The relationship between the various Colony companies is a bit convoluted, but it all started with Colony Capital, which merged earlier this year with NorthStar Realty Finance.

Thomas Barrack founded Colony Capital in 1991. Over the years, Colony Capital grew and eventually founded Colony American Homes in 2012 to serve as the company’s single-family rental arm. Colony American Finance operated as the “single family lending unit” of Colony American Homes, which, again, merged with Starwood Waypoint Residential Trust in 2016.

Barrack served as co-chairman of the board of trustees of Colony Starwood Homes from January 2016 through June 2017.

Now, Fortress is buying Colony American Finance and changing its name to CoreVest American Finance Lender and Colony Starwood Homes is rebranding as Starwood Waypoint Homes.

Colony Starwood Homes’ business model shifted a bit over the last few years.

Last year, Colony Starwood Homes exited the non-performing loans business, selling off 1,675 non-performing loans for $265 million.

At the time, the real estate investment trust said that it planned to use the funds from that sale to grow its portfolio of single-family rental homes.

And last month, that’s exactly what the company did, agreeing to buy 3,106 single-family rental homes from GI Partners, a private investment firm based in San Francisco, for $815 million.

And now, the company will be operating those single-family rental homes under a different brand name.

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Fortress acquires Colony American Finance

Fortress Investment Group is about to be acquired by SoftBank Group in a $3.3 billion deal, but Fortress isn’t done making its own acquisitions while that deal works its way through the legal process.

Fortress announced Tuesday that it is acquired Colony American Finance, a lender that provides financing for real estate investors who want to purchase single-family rental homes, townhomes, condos, and small multifamily properties.

Specifically, “certain funds managed by affiliates of Fortress Investment Group have purchased the equity and substantially all of the assets of Colony American Finance,” the companies said in a release.

The financial terms of the transaction were not disclosed.

According to the companies, Colony American Finance will be rebranded as CoreVest American Finance Lender.

Colony American Finance launched in 2014 and has closed more than $2.8 billion in loans since its inception.

The companies said that the Colony American Finance’s senior management team will remain in their current positions and help Fortress launch CoreVest.

Beth O’Brien, formerly the CEO of Colony American Finance and now the CEO of CoreVest, said that having Fortress’ financial backing will allow the company to grow significantly.

“We are excited to bring the same team and the same approach to the market under the CoreVest brand,” O’Brien said. “Our customers will continue to work with our people and experience our high level of service, while also benefiting from the strategic capital brought by the Fortress Funds.”

The deal increases Fortress’ already substantial real estate empire.

Fortress is the parent company for New Residential Investment, which has grown its market share in mortgage servicing rights substantially in the last few years.

At the end of last year, PHH announced that it planned to sell off its entire mortgage servicing rights portfolio in a massive deal with New Residential, while New Residential also bought nearly all of CitiMortgage’s mortgage servicing rights in a deal earlier this year.

New Residential is also buying $117 billion in MSRs from Ocwen Financial in a deal that also includes New Residential making an equity investment in Ocwen and becoming a 4.9% owner of the nonbank.

Fortress is also the majority shareholder in Nationstar Mortgagesoon to be known as Mr. Cooper.

Per the latest data from Nasdaq, Fortress owns nearly 70% of Nationstar. According to Fortress’ website, the company acquired Nationstar in 2006 and took the company public in 2012.

And now, Fortress owns the company formerly known as Colony American Finance.

“We see terrific synergies between CoreVest and Fortress,” said Christopher Hoeffel, chief financial officer of CoreVest. “The new relationship with the Fortress Funds, given their experience in the specialty finance area, will allow us to expand our market leading position in the growing, yet underserved, single-family rental finance market.”

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Foreign investment in U.S. real estate surges 49%

Foreign investment in the U.S. housing market saw an explosion of growth from last year as it surged to an all-new high.

This increase was fueled by an increase in sales dollar volume from Canadian buyers, but transactions grew in all five of the top countries, according to the 2017 Profile of International Activity in U.S. Residential Real Estate report from the National Association of Realtors.

This annual survey of residential real estate purchases from international buyers showed nearly half of all foreign sales were made in three states: Florida, California and Texas.

Between April 2016 and March 2017, foreign buyers and recent immigrants purchased $153 billion in residential property. This is an increase of 49% from 2016’s $102.6 billion, and surpasses 2015’s $103.9 billion as the new survey high.

Overall, foreign buyers purchased 284,455 residential properties, NAR’s report showed. This is up a significant 32% from 2016 and accounted for 10% of the dollar volume of existing home sales.

“The political and economic uncertainty both here and abroad did not deter foreigners from exponentially ramping up their purchases of U.S. property over the past year,” NAR Chief Economist Lawrence Yun said. “While the strengthening of the U.S. dollar in relation to other currencies and steadfast home-price growth made buying a home more expensive in many areas, foreigners increasingly acted on their beliefs that the U.S. is a safe and secure place to live, work and invest.”

China remained the top country for sales dollar volume for the fourth consecutive year. However, the reason for the sudden explosion in growth was a hike in activity from Canadian buyers. Transactions from Canadians increased from $8.9 billion last year to $19 billion in this survey, a new high for Canada.

“Inventory shortages continue to drive up U.S. home values, but prices in five countries, including Canada, experienced even quicker appreciation,” Yun said. “Some of the acceleration in foreign purchases over the past year appears to come from the combination of more affordable property choices in the U.S. and foreigners deciding to buy now knowing that any further weakening of their local currency against the dollar will make buying more expensive in the future.”

The median sales price among foreigners came in at $302,290, an increase of 9% from last year’s $277,380. This is more than the median home price of all existing homes, which stands at $235,792 for the same period. About 10% of foreign buyers paid more than $1 million, and 44% of sales were all-cash purchases.

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