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Section 1: 10-Q (10-Q)

sfr-10q_20160630.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One) 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

or

o

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _______________

Commission File Number 001- 36163

 

Colony Starwood Homes

(Exact name of registrant as specified in its charter)

 

 

Maryland

 

80-6260391

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification Number)

 

 

 

8665 East Hartford Drive

Scottsdale, AZ

 

85255

(Address of principal executive offices)

 

(Zip Code)

(480) 362-9760

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x   No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  x    No  o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

x

 

 

Accelerated filer

¨

 

 

 

 

 

 

Non-accelerated filer

o

 

(Do not check if a smaller reporting company)

Smaller reporting company

¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  o    No  x

As of August 4, 2016, there were 101,489,794 of the registrant’s common shares, par value $0.01 per share, outstanding.

 

 

 

 


COLONY STARWOOD HOMES

FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2016

INDEX

 

Part I.

 

Financial Information

 

 

 

 

 

 

 

Item 1.

 

Financial Statements (Unaudited)

 

1

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets

 

1

 

 

 

 

 

 

 

Condensed Consolidated Statements of Operations

 

2

 

 

 

 

 

 

 

Condensed Consolidated Statements of Other Comprehensive Income (Loss)

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Equity

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows

 

5

 

 

 

 

 

 

 

Notes to the Condensed Consolidated Financial Statements

 

7

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

33

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

47

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

48

 

 

 

 

 

Part II.

 

Other Information

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

49

 

 

 

 

 

Item 1A.

 

Risk Factors

 

49

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

49

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

50

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

50

 

 

 

 

 

Item 5.

 

Other Information

 

50

 

 

 

 

 

Item 6.

 

Exhibits

 

50

 

 

 

 

 

Signatures

 

51

 

 

 

 

 

Index to Exhibits

 

52

 

 

 


CAUTIONARY STATEMENTS

Except where the context suggests otherwise, the terms “we,” “us,” and “our” refer to Colony Starwood Homes (formerly Starwood Waypoint Residential Trust (“SWAY”)), a Maryland real estate investment trust, together with its consolidated subsidiaries, including Colony Starwood Partnership, L.P. (formerly Starwood Waypoint Residential Partnership, L.P.), a Delaware limited partnership through which we conduct substantially all of our business, which we refer to as “our operating partnership”; the term “CAH” refers to Colony American Homes, Inc., our predecessor for accounting purposes; the term “the Manager” refers to SWAY Management LLC, a Delaware limited liability company, our former external manager; and the term “Starwood Capital Group” refers to Starwood Capital Group Global, L.P. (and its predecessors), together with all of its affiliates and subsidiaries, including the Manager prior to its internalization, other than us.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains, in addition to historical information, certain forward-looking statements that involve significant risks and uncertainties, which are difficult to predict, and are not guarantees of future performance. Such statements can generally be identified by words such as “anticipates,” “expects,” “intends,” “will,” “could,” “believes,” “estimates,” “continue,” and similar expressions. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are based on certain assumptions and discuss future expectations, describe future plans and strategies, and contain financial and operating projections or state other forward-looking information. Our ability to predict results or the actual effect of future events, actions, plans or strategies is inherently uncertain. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in, or implied by, the forward-looking statements. Factors that could materially and adversely affect our business, financial condition, liquidity, results of operations and prospects, as well as our ability to make distributions to our shareholders, include, but are not limited to:

 

·

the risk factors referenced in this Quarterly Report on Form 10-Q are set forth under Item 1A. Risk Factors in our Annual Report on Form 10-K filed on February 29, 2016 and should be read in conjunction with this Quarterly Report on Form 10-Q;

 

 

·

failure to manage the internalization (the “Internalization”) of the Manager or the merger (the “Merger”) with CAH effectively and efficiently under the Contribution Agreement dated as of September 21, 2015, as amended, among us, our operating partnership, the Manager and Starwood Capital Group (the “Contribution Agreement”), or the Agreement and Plan of Merger dated as of September 21, 2015, among us, and certain of our subsidiaries and CAH and certain of its subsidiaries and certain investors in CAH (the “Merger Agreement”);

 

 

·

the possibility that the anticipated benefits from the Internalization or the Merger may not be realized or may take longer to realize than expected;

 

 

·

unexpected costs or unexpected liabilities that may arise from the transactions contemplated by the Contribution Agreement or the Merger Agreement;

 

 

·

the outcome of any legal proceedings that have been or may be instituted against us, CAH or others following the announcement or the completion of the Internalization or the Merger;

 

 

·

expectations regarding the timing of generating additional revenues;

 

 

·

changes in our business and growth strategies;

 

 

·

volatility in the real estate industry, interest rates and spreads, the debt or equity markets, the economy generally or the rental home market specifically, whether the result of market events or otherwise;

 

 

·

events or circumstances that undermine confidence in the financial markets or otherwise have a broad impact on financial markets, such as the sudden instability or collapse of large financial institutions or other significant corporations, terrorist attacks, natural or man-made disasters, or threatened or actual armed conflicts;

 

 

·

declines in the value of homes, and macroeconomic shifts in demand for, and competition in the supply of, rental homes;

 

 

·

the availability of attractive investment opportunities in homes that satisfy our investment objectives and business and growth strategies;

 

 

·

the impact of changes to the value of and the returns on distressed and non-performing residential mortgage loans (“NPLs”);

i


 

 

·

our ability to convert the homes we acquire into rental homes generating attractive returns;

 

 

·

our ability to successfully modify or otherwise resolve or dispose of NPLs;

 

 

·

our ability to exit our NPL business in the anticipated time period on acceptable terms and to re-deploy net cash proceeds therefrom;

 

 

·

our ability to lease or re-lease our rental homes to qualified residents on attractive terms or at all;

 

 

·

the failure of residents to pay rent when due or otherwise perform their lease obligations;

 

 

·

our ability to effectively manage our portfolio of rental homes;

 

 

·

the concentration of credit risks to which we are exposed;

 

 

·

the rates of default or decreased recovery rates on our target assets;

 

 

·

the availability, terms and deployment of short-term and long-term capital;

 

 

·

the adequacy of our cash reserves and working capital;

 

 

·

potential conflicts of interest with Starwood Capital Group, Colony Capital, Inc. and their affiliates;

 

 

·

the timing of cash flows, if any, from our investments;

 

 

·

unanticipated increases in financing and other costs, including a rise in interest rates;

 

 

·

our expected leverage;

 

 

·

effects of derivative and hedging transactions;

 

 

·

our ability to maintain our exemption from registration as an investment company under the Investment Company Act of 1940, as amended;

 

 

·

actions and initiatives of the U.S., state and municipal government and changes to these governments’ policies that impact the economy generally and, more specifically, the housing and rental markets;

 

 

·

changes in governmental regulations, tax laws (including changes to laws governing the taxation of real estate investment trusts (“REITs”)) and rates, and similar matters;

 

 

·

limitations imposed on our business and our ability to satisfy complex rules in order for us and, if applicable, certain of our subsidiaries to qualify as a REIT for U.S. federal income tax purposes and the ability of certain of our subsidiaries to qualify as taxable REIT subsidiaries for U.S. federal income tax purposes, and our ability and the ability of our subsidiaries to operate effectively within the limitations imposed by these rules; and

 

 

·

estimates relating to our ability to make distributions to our shareholders in the future.

When considering forward-looking statements, keep in mind the risk factors and other cautionary statements contained in our Annual Report on Form 10-K for the year ended December 31, 2015 and other cautionary statements in this Quarterly Report on Form 10-Q. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this Quarterly Report on Form 10-Q. We recommend that readers read this document in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2015 and see the discussion on risk factors in Item 1A. Risk Factors, that was filed with the Securities and Exchange Commission (the “SEC”) on February 29, 2016. Our actual results and performance may differ materially from those set forth in, or implied by, our forward-looking statements. Accordingly, we cannot guarantee future results or performance. Furthermore, except as required by law, we are under no duty to, and we do not intend to, update any of our forward-looking statements after the date of this Quarterly Report on Form 10-Q, whether as a result of new information, future events or otherwise.

Merger and Internalization

On September 21, 2015, we and CAH announced the signing of the Merger Agreement to combine the two companies in a stock-for-stock transaction.  In connection with the transaction, we internalized the Manager. The Merger and the Internalization were completed on January 5, 2016.

Under the Merger Agreement, CAH shareholders received an aggregate of 64,869,526 of our common shares in exchange for all shares of CAH. Upon completion of the transaction, our existing shareholders and the former owner of the Manager owned approximately 41% of our common shares, while former CAH shareholders owned approximately 59% of our common shares. The

ii


share allocation was determined based on each company’s net asset value. The terms of the Internalization were negotiated and approved by a special committee of our board of trustees. Upon the closing of the Internalization and the Merger, we changed our name to Colony Starwood Homes and our common shares are listed and traded on the New York Stock Exchange under the ticker symbol “SFR.”  

Subsequent to the Internalization and the Merger, we own all material assets and intellectual property rights of the Manager and are managed by certain of the officers and employees who formerly managed our business through the Manager and certain of the officers and employees of CAH. The net effect is that, following the Internalization and the Merger, we have the benefit of being internally managed by both (1) officers and employees who formerly managed our business and who have industry expertise, management capabilities and a unique knowledge of our assets and business strategies and (2) officers and employees who managed CAH’s business and who have industry expertise, management capabilities and a unique knowledge of CAH’s assets and business strategies. In addition, we believe that we combine the best aspects of our and CAH’s sophisticated proprietary technology platforms and will retain the best employees from each company.

Since both SWAY and CAH had significant pre-combination activities, the Merger was accounted for as a business combination by the combined company in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 805, “Business Combinations.” Based upon consideration of a number of factors, CAH was designated as the accounting acquirer in the Merger. Since SWAY was the legal acquirer, the transaction resulted in a reverse acquisition of SWAY for accounting purposes. Consequently, the historical condensed consolidated financial statements included herein as of any date, or for any periods, prior to January 5, 2016, the closing date of the Merger, represent only the pre-Merger condensed consolidated financial position, results of operations, other comprehensive income and cash flows of CAH. SWAY’s assets, liabilities and non-controlling interests were recorded at fair value as of January 5, 2016, and its results of operations are included in our condensed consolidated statements of operations beginning on that date.  The historical financial information included herein as of any date, or for any periods, prior to January 5, 2016 do not reflect the consolidated financial position, results of operations, other comprehensive income or cash flows of the combined companies had the Merger been completed during the historical periods presented. In addition to the financial statements included herein, you should read and consider the audited financial statements and notes thereto of SWAY included in our Form 10-K for the year ended December 31, 2015 filed with the SEC on February 29, 2016 and the CAH audited financial statements and notes thereto and the unaudited pro forma financial information included in our Current Report on Form 8-K filed with the SEC on January 5, 2016, as amended on March 22, 2016 and March 25, 2016.

 

 

 

iii


 

PART I - FINANCIAL INFORMATION

 

 

Item 1. Financial Statements (Unaudited)

COLONY STARWOOD HOMES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

 

 

 

As of

 

 

As of

 

 

 

June 30, 2016

 

 

December 31, 2015

 

ASSETS

 

(Unaudited)

 

 

 

 

 

Investments in real estate properties:

 

 

 

 

 

 

 

 

Land and land improvements

 

$

1,513,633

 

 

$

751,582

 

Buildings and building improvements

 

 

4,263,105

 

 

 

2,653,380

 

Furniture, fixtures and equipment

 

 

117,240

 

 

 

76,199

 

Total investments in real estate properties

 

 

5,893,978

 

 

 

3,481,161

 

Accumulated depreciation

 

 

(291,581

)

 

 

(207,841

)

Investments in real estate properties, net

 

 

5,602,397

 

 

 

3,273,320

 

Real estate held for sale, net

 

 

48,945

 

 

 

16,279

 

Cash and cash equivalents

 

 

164,800

 

 

 

162,090

 

Restricted cash

 

 

164,844

 

 

 

69,284

 

Investments in unconsolidated joint ventures

 

 

34,915

 

 

 

35,518

 

Loans receivable, net

 

 

 

 

 

646,479

 

Asset-backed securitization certificates

 

 

110,538

 

 

 

33,689

 

Assets held for sale (Note 14)

 

 

462,015

 

 

 

 

Goodwill

 

 

257,271

 

 

 

 

Other assets, net

 

 

40,666

 

 

 

42,159

 

Total assets

 

$

6,886,391

 

 

$

4,278,818

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

91,989

 

 

$

27,605

 

Resident prepaid rent and security deposits

 

 

56,329

 

 

 

31,813

 

Related-party payable

 

 

 

 

 

514

 

Secured credit facilities

 

 

700,000

 

 

 

477,284

 

Master repurchase facility

 

 

 

 

 

167,348

 

Mortgage loans, net

 

 

2,742,720

 

 

 

1,690,918

 

Convertible senior notes, net

 

 

346,685

 

 

 

 

Secured notes, net

 

 

 

 

 

215,634

 

Liabilities related to assets held for sale (Note 14)

 

 

260,441

 

 

 

 

Other liabilities

 

 

15,604

 

 

 

16,303

 

Total liabilities

 

 

4,213,768

 

 

 

2,627,419

 

Commitments and contingencies (Note 15)

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Preferred shares $.01 par value, 100,000,000 shares authorized, none issued and

   outstanding as of June 30, 2016 and 125 issued and outstanding as of

   December 31, 2015

 

 

 

 

 

Common A common shares $.01 par value, 26,075,000 shares authorized, issued and

   outstanding as of December 31, 2015

 

 

 

 

 

261

 

Common B common shares $.01 par value, 423,925,000 shares authorized, 123,068,500

   issued and outstanding as of December 31, 2015

 

 

 

 

 

1,231

 

Common shares $.01 par value, 500,000,000 shares authorized, 101,489,794

   issued and outstanding as of June 30, 2016

 

 

1,015

 

 

 

Additional paid-in capital

 

 

2,730,874

 

 

 

1,223,030

 

Accumulated deficit

 

 

(250,752

)

 

 

(147,484

)

Accumulated other comprehensive loss

 

 

(16,447

)

 

 

(2,150

)

Total shareholders’ equity

 

 

2,464,690

 

 

 

1,074,888

 

Non-controlling interests

 

 

207,933

 

 

 

576,511

 

Total equity

 

 

2,672,623

 

 

 

1,651,399

 

Total liabilities and equity

 

$

6,886,391

 

 

$

4,278,818

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements

1


 

COLONY STARWOOD HOMES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

134,442

 

 

$

70,434

 

 

$

264,894

 

 

$

134,652

 

Other property income

 

 

6,412

 

 

 

4,778

 

 

 

12,456

 

 

 

9,393

 

Other income

 

 

2,979

 

 

 

 

 

 

5,869

 

 

 

 

Total revenues

 

 

143,833

 

 

 

75,212

 

 

 

283,219

 

 

 

144,045

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property operating and maintenance

 

 

22,030

 

 

 

14,700

 

 

 

40,548

 

 

 

28,194

 

Real estate taxes, insurance and HOA costs

 

 

27,832

 

 

 

14,532

 

 

 

55,114

 

 

 

28,572

 

Property management

 

 

9,332

 

 

 

4,471

 

 

 

18,083

 

 

 

9,261

 

Interest expense

 

 

37,984

 

 

 

15,169

 

 

 

75,441

 

 

 

31,315

 

Depreciation and amortization

 

 

44,844

 

 

 

26,874

 

 

 

88,474

 

 

 

52,885

 

Impairment of real estate assets

 

 

144

 

 

 

275

 

 

 

174

 

 

 

453

 

Share-based compensation

 

 

711

 

 

 

 

 

 

1,098

 

 

 

 

General and administrative

 

 

13,537

 

 

 

8,734

 

 

 

30,875

 

 

 

17,979

 

Merger and transaction-related

 

 

5,073

 

 

 

 

 

 

28,555

 

 

 

 

Total expenses

 

 

161,487

 

 

 

84,755

 

 

 

338,362

 

 

 

168,659

 

Net gain on sales of real estate

 

 

527

 

 

 

838

 

 

 

1,911

 

 

 

1,239

 

Equity in income from unconsolidated joint ventures

 

 

157

 

 

 

13

 

 

 

354

 

 

 

106

 

Other (expense) income, net

 

 

(2,296

)

 

 

(2,145

)

 

 

(2,691

)

 

 

(1,959

)

Loss before income taxes

 

 

(19,266

)

 

 

(10,837

)

 

 

(55,569

)

 

 

(25,228

)

Income tax expense

 

 

81

 

 

 

267

 

 

 

326

 

 

 

254

 

Net loss from continuing operations

 

 

(19,347

)

 

 

(11,104

)

 

 

(55,895

)

 

 

(25,482

)

Income (loss) from discontinued operations, net (Note 14)

 

 

2,684

 

 

 

3,854

 

 

 

(7,817

)

 

 

839

 

Net loss

 

 

(16,663

)

 

 

(7,250

)

 

 

(63,712

)

 

 

(24,643

)

Net loss attributable to non-controlling interests

 

 

988

 

 

 

2,649

 

 

 

3,838

 

 

 

9,121

 

Net loss attributable to Colony Starwood Homes

 

 

(15,675

)

 

 

(4,601

)

 

 

(59,874

)

 

 

(15,522

)

Net income attributable to preferred shareholders

 

 

 

 

 

(4

)

 

 

 

 

 

(8

)

Net loss attributable to common shareholders

 

$

(15,675

)

 

$

(4,605

)

 

$

(59,874

)

 

$

(15,530

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per common share - basic and diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss from continuing operations

 

$

(0.19

)

 

$

(0.17

)

 

$

(0.55

)

 

$

(0.39

)

Income (loss) from discontinued operations

 

$

0.03

 

 

$

0.06

 

 

$

(0.08

)

 

$

0.01

 

Net loss attributable to common shareholders

 

$

(0.15

)

 

$

(0.07

)

 

$

(0.59

)

 

$

(0.24

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.22

 

 

$

 

 

$

0.44

 

 

$

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

 

2


 

COLONY STARWOOD HOMES

CONDENSED CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME (LOSS)

(in thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Other Comprehensive Loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(16,663

)

 

$

(7,250

)

 

$

(63,712

)

 

$

(24,643

)

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in fair value of cash flow hedge

 

 

(13,160

)

 

 

(593

)

 

 

(15,017

)

 

 

(1,311

)

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

(315

)

Other comprehensive loss

 

 

(13,160

)

 

 

(593

)

 

 

(15,017

)

 

 

(1,626

)

Comprehensive loss

 

 

(29,823

)

 

 

(7,843

)

 

 

(78,729

)

 

 

(26,269

)

Comprehensive loss attributable to non-controlling interests

 

 

1,769

 

 

 

2,871

 

 

 

4,728

 

 

 

9,729

 

Comprehensive loss attributable to common shareholders

 

$

(28,054

)

 

$

(4,972

)

 

$

(74,001

)

 

$

(16,540

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

 

 

 

3


 

COLONY STARWOOD HOMES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(in thousands, except share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

Other

 

 

Total

 

 

Non-

 

 

 

 

 

 

 

Preferred Shares

 

 

Common Shares

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

Shareholders'

 

 

controlling

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity

 

 

Interests

 

 

Total Equity

 

Balances at December 31, 2015

 

 

125

 

 

$

 

 

 

149,143,500

 

 

$

1,492

 

 

$

1,223,030

 

 

$

(147,484

)

 

$

(2,150

)

 

$

1,074,888

 

 

$

576,511

 

 

$

1,651,399

 

Net effects of CAH Reorganization

 

 

(125

)

 

 

 

 

 

 

 

 

 

 

 

269,872

 

 

 

4,305

 

 

 

 

 

 

274,177

 

 

 

(576,511

)

 

 

(302,334

)

Net effects of Merger

 

 

 

 

 

 

 

 

(45,626,500

)

 

 

(457

)

 

 

1,281,404

 

 

 

 

 

 

(170

)

 

 

1,280,777

 

 

 

214,081

 

 

 

1,494,858

 

Capital distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,420

)

 

 

(1,420

)

Dividends declared of $0.44 per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(47,699

)

 

 

 

 

 

(47,699

)

 

 

 

 

 

(47,699

)

Repurchases of common shares

 

 

 

 

 

 

 

 

(2,049,433

)

 

 

(20

)

 

 

(44,530

)

 

 

 

 

 

 

 

 

(44,550

)

 

 

 

 

 

(44,550

)

Share-based compensation

 

 

 

 

 

 

 

 

22,227

 

 

 

 

 

 

1,098

 

 

 

 

 

 

 

 

 

1,098

 

 

 

 

 

 

1,098

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(59,874

)

 

 

 

 

 

(59,874

)

 

 

(3,838

)

 

 

(63,712

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(14,127

)

 

 

(14,127

)

 

 

(890

)

 

 

(15,017

)

Balances at June 30, 2016

 

 

 

 

$

 

 

 

101,489,794

 

 

$

1,015

 

 

$

2,730,874

 

 

$

(250,752

)

 

$

(16,447

)

 

$

2,464,690

 

 

$

207,933

 

 

$

2,672,623

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements

 

 

 

 

4


 

COLONY STARWOOD HOMES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited) 

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2016

 

 

2015

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net loss

 

$

(63,712

)

 

$

(24,643

)

Adjustments to reconcile net loss to net cash provided by operating

   activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

88,474

 

 

 

52,885

 

Amortization of net origination fees

 

 

 

 

 

(139

)

Amortization of mortgage loan discounts

 

 

10,617

 

 

 

444

 

Amortization of deferred financing costs

 

 

6,611

 

 

 

10,337

 

Share-based compensation

 

 

1,098

 

 

 

 

Equity in income of unconsolidated joint ventures

 

 

(354

)

 

 

(106

)

Distributions from unconsolidated joint ventures

 

 

354

 

 

 

 

Bad debt expense

 

 

4,085

 

 

 

1,927

 

Net gain on sales of real estate

 

 

(3,607

)

 

 

(1,239

)

Gain on loan conversions, net (Note 14)

 

 

(10,054

)

 

 

 

Gain on NPL sales (Note 14)

 

 

(2,362

)

 

 

 

Gain on sale of marketable securities

 

 

 

 

 

(288

)

Unrealized losses (gains) from derivative instruments

 

 

852

 

 

 

(901

)

Impairment of real estate assets

 

 

174

 

 

 

453

 

Net changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Restricted cash

 

 

(19,429

)

 

 

(4,292

)

Other assets

 

 

6,264

 

 

 

(6,263

)

Accounts payable and accrued expenses

 

 

(14,976

)

 

 

9,687

 

Resident prepaid rent and security deposits

 

 

1,365

 

 

 

3,501

 

Borrower deposits and other liabilities

 

 

(318

)

 

 

(1,181

)

Net cash provided by operating activities

 

 

5,082

 

 

 

40,182

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Cash acquired in the Merger and CAH Reorganization, net

 

 

57,655

 

 

 

 

Acquisition of real estate properties

 

 

(18,501

)

 

 

(117,303

)

Capital expenditures for real estate properties

 

 

(50,089

)

 

 

(42,027

)

Proceeds from sales of real estate

 

 

136,307

 

 

 

32,205

 

Proceeds from sales of loans and other proceeds on loans (Note 14)

 

 

25,128

 

 

 

 

Proceeds from sales of marketable securities

 

 

 

 

 

4,430

 

Distributions from unconsolidated joint ventures

 

 

729

 

 

 

4,094

 

Investment in purchased loans receivable (Note 14)

 

 

 

 

 

(135,503

)

Repayments of principal on loans receivable (Note 14)

 

 

 

 

 

70,528

 

Net disbursements on originated loans (Note 14)

 

 

 

 

 

(64,562

)

Payment of leasing costs

 

 

(4,407

)

 

 

(2,953

)

Net cash provided by (used in) investing activities

 

 

146,822

 

 

 

(251,091

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements

5


 

COLONY STARWOOD HOMES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in thousands)

(Unaudited)

 

 

 

Six Months Ended

 

 

 

June 30,

 

 

 

2016

 

 

2015

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Borrowings on secured credit facilities

 

$

42,374

 

 

$

201,932

 

Payments of secured credit facilities

 

 

(560,959

)

 

 

(447,238

)

Payments on master repurchase facility (Note 14)

 

 

(24,320

)

 

 

 

Proceeds from the issuance of mortgage loans, net

 

 

485,641

 

 

 

640,073

 

Payments on mortgage loans

 

 

(5,220

)

 

 

(3,408

)

Payment of financing costs

 

 

(10,011

)

 

 

(17,494

)

Change in escrow reserves for credit facilities, net

 

 

5,599

 

 

 

18,177

 

Repurchases of common shares

 

 

(44,550

)

 

 

 

Contributions from non-controlling interests

 

 

 

 

 

11,630

 

Distributions to non-controlling interests

 

 

(1,420

)

 

 

 

Proceeds from issuance of preferred shares

 

 

 

 

 

101

 

Redemption of preferred shares

 

 

(607

)

 

 

 

Payments of dividends

 

 

(23,850

)

 

 

(20

)

Payment of offering costs

 

 

(11,871

)

 

 

(2,374

)

Net cash (used in) provided by financing activities

 

 

(149,194

)

 

 

401,379