Eyes will be on Silver Bay Realty Trust (NYSE:SBY) to look for follow-through after yesterday's roughly 3% gain on disclosure of a move to internalize company management. The transaction currently is leaning towards Silver Bay's acquisition of the external manager - PRCM Real Estate Advisors - with company shares as the currency.
Surprised at the bump in property maintenance to 29.5% of revenue from 23.5% in Q2 and just 19% forecast, KBW's Jade Rahmani asks for clarification. Management admits surprise at some costs, but reiterates its commitment to bring the ratio down, and asks for time to get more of the portfolio leased and the operation up and running at full speed.
In response to another question about management fees - which at the moment are charitably running at the whopping rate of more than 15% of revenue - management promises to dramatically bring that down in 2014. CEO David Miller notes the South Florida operation is bringing lots of costs, but not a lot of revenue as it ramps up.
Acquisitions - which slowed to about zero in Q3 - have started back up again in Q4, Miller tells Zelman's Dennis McGill.
Just 3 weeks after the IPO, American Homes 4 Rent (AMH -1.3%) is reportedly firing 15% of its workforce, according to a Bloomberg report. Earlier this week, the company reported a $14M loss for Q2.
The move raises a question over the suddenly popular but never-proven business model of earning decent returns by amassing thousands of single-family for rent (AMH has more than 20K now).
Other publicly traded players (also recently gone public) include Silver Bay (SBY +0.6%) and American Residential Properties (ARPI +0.8%), not to mention the biggest of them all (but not a single-family rental pure-play) Blackstone (BX).
Revenue gained 40% Q/Q to $10.7M as 1,197 previously vacant homes were leased. Net operating income of $3.1M up 79% from Q1. GAAP income remains negative ($6.8M or $0.18 per share) as many homes still in renovation or leasing stage.
Company owns 5,571 single family homes, up 21% Q/Q. 985 additional properties acquired in Q2.
New metric introduced: Estimated net asset value per share of $18.95 based on estimated fair value of properties. Book value - which contains no estimate of property price appreciation - is $17.30 per share.
Occupancy rate for stabilized properties of 94% up 200 bps from Q1. Rate for properties owned 6 months or more of 87% up 600 bps. Rate for entire portfolio of 65% up 1200 bps. Average monthly rent of $1,148 down $8. (PR)
JPMorgan's Anthony Paolone tries to draw management out on if repair and maintenance costs are going according to plan, and CFO Christine Battist allows that they're a bit higher than anticipated. COO Pat Freydberg says there's not a material difference from expectations, though he'd like to see a higher volume of data before drawing conclusions.
SBY +3.5%. Other single family names: American Homes 4 Rent (AMH +2.4%), American Residential Properties (ARPI +2%).
More on Two Harbors (TWO) Q1 earnings: Book value/share of $11.19 vs. $11.54 on Dec. 31, but special dividend of Silver Bay (SBY) stock amounted to $1.01, so book value actually rose nicely. Closing stock price today of $11.59. Net interest spread of 2.9%, unchanged from Q4. Shares +3.5% AH. Earnings call tomorrow at 9 ET. (PR)
Two Harbors (TWO) announces a Q1 dividend of $0.32/share plus a special dividend in which spun off Silver Bay (SBY) stock will be distributed to shareholders of record as of April 2. The company also commences a secondary offering of 50M shares, about one-sixth of the current float. Shares -2.1% AH.
Two Harbors (TWO) gains 2.2% AH after declaring a $0.55 Q4 dividend, up from $0.36 last quarter. The company doesn't break out how much of this is from recurring income, and how much from the sale of its single-family property portfolio to Silver Bay (SBY) and the realized gains from MBS sales. (PR)