Get Premium Data for Cyber Monday: Up to 55% Off InvestingProCLAIM SALE

Starwood Expands In Florida With Multifamily Housing Buyout

Published 01/08/2018, 08:33 PM
Updated 07/09/2023, 06:31 AM
STWD
-
HTA
-
CORRQ
-
LFT
-

Starwood Property Trust’s (NYSE:STWD) focus on expansion of multi-family housing portfolio is highlighted in its recent attempt to buy a portfolio of 28 properties in Florida. Notably, the company has entered into a definitive agreement to acquire the portfolio of institutional-quality multifamily affordable housing units for nearly $600 million.

The portfolio, which consists of 6,185 units, is 99% leased. These apartments are primarily located in Orlando and are also distributed in the West Palm Beach, Tampa, and Miami MSA's. The transaction represents management’s confidence in the Florida markets which exhibit strong fundamentals. In fact, when the company completes this transaction, its portfolio will comprise more than 15,000 residential units concentrated in Florida.

Per a costar article, to execute the transaction, Starwood will combine units of a recently-formed subsidiary called SPT Dolphin Intermediate LLC. These units can be exchanged into STWD common shares, cash and debt financing.

Due to the assumption of in-place financing and timing of regulatory approvals, the transaction is being closed in phases. In fact, the company has already closed eight properties, comprising 1,740 units in December 2017. The remaining phases of the transaction are anticipated to close by the end of second-quarter 2018, subject to customary closing conditions.

Management believes the inconsistency between demand and supply for rental housing, as well as the favorable financing options available to the company will likely provide high cash-on-cash returns over the long run.

Other than this acquisition, Starwood Capital Group, which manages the REIT's manager, has also invested in nearly 20,000 market rate units that complement the Florida markets. Per management, it will continue to leverage on its scale and industry relations to identify opportunities which offer attractive returns and drive shareholders’ value.

However, over the past year, shares of this Zacks Rank #3 (Hold) company have underperformed the industry. While the company’s shares have lost 5.5%, the industry has recorded growth of 1.3% during this period.


Better-ranked stocks in the REIT space include Five Oaks Investment (NYSE:OAKS) , Healthcare Trust of America (NYSE:HTA) and CorEnergy Infrastructure Trust (NYSE:CORR) . All three carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Five Oaks’ funds from operations (FFO) per share estimates for 2017 remained unchanged at $0.49 over the past month. Its share price has increased 24.8% in three months’ time.

Healthcare Trust FFO per share estimates for the current year has remained unchanged at $1.65 in a month’s time. Over the past three months, the stock has declined 3.1%.

CorEnergy‘s Zacks Consensus Estimate for 2017 FFO has remained unchanged at $4.21 in a month’s time. Also, its shares have gained 5.1% in three months’ time.

Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

Zacks’ Best Private Investment Ideas

While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.

Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.

Click here for Zacks' private trades >>



STARWOOD PROPERTY TRUST, INC. (STWD): Free Stock Analysis Report

Five Oaks Investment Corp. (OAKS): Free Stock Analysis Report

CorEnergy Infrastructure Trust, Inc. (CORR): Free Stock Analysis Report

Healthcare Trust of America, Inc. (HTA): Free Stock Analysis Report

Original post

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.