Colony Starwood Homes, a single-family rental real estate investment trust (REIT), has recently announced that it has completed the sale of a portfolio of 1,675 non-performing loans. These sales finished with a total sale price of $265 million.
The report from the company states that with the sale, Colony Starwood Homes has substantially completed its exit from the non-performing loans business. This is consistent with the company’s previously communicated strategic plan to do so. Colony Starwood Homes’ book value for the non-performing loans included in this sale was approximately $259 million as of June 30, 2016.
The sale was completed after the joint venture between Colony Starwood Homes and Prime Asset Fund VI, LLC, through which Colony Starwood Homes conducts its non-performing loans operations, successfully concluded a comprehensive and broadly marketed auction process with Credit Suisse Securities (USA) LLC as sale advisor. Additionally, the report states that the portfolio was sold to an affiliate of Starwood Capital Group.
Likewise, according to Colony Starwood Homes, the joint venture has generated over $330 million of loan and real estate owned (REO) sales proceeds since June 30, 2016. The report states that this has resulted in cash proceeds of approximately $140 million after associated debt pay down. In addition, after the non-performing loans sale announced today, Colony Starwood Homes indirectly owns approximately $120 million in book value of assets through its joint venture with Prime Asset Fund VI, LLC. The report states that substantially all of these assets are REO, on which the joint venture owes approximately $60 million of indebtedness.
Colony Starwood Homes reports that they expect to dispose of the remaining joint venture assets and repay all associated debt by the end of the first half of 2017. Colony Starwood Homes also states that they intend to use the net cash proceeds generated from the wind-down of the non-performing loans business for general corporate purposes. These include the acquisition and renovation of single-family rental homes. Colony Starwood Homes records the operations of the non-performing loans business segment as discontinued operations as of the second quarter of 2016.