Silver Bay Realty Trust (SBY) is a newly-formed REIT that was recently spun out of Two Harbors (TWO). The company seeks to buy distressed residential properties, rehabilitate them and then rent them out. The idea is that with housing prices still depressed in many parts of the country, SBY can use its managerial experience to identify the most distressed property markets and those that are most favorable for rental conditions. In essence, SBY buys up large blocks of nonperforming loans (or houses that are already in foreclosure) and remodels (or "stabilize") the properties in order to prepare them for renters. Then, the company collects monthly rent payments in order to provide revenue for ongoing operations,...
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