Starwood Waypoint Residential Trust and Colony American Homes, two of the largest U.S. single-family home landlords, said they will merge in an all-share deal that creates a company with $7.7 billion in assets.
Starwood shareholders will own 41% of the combined business and Colony American investors will hold the rest, the companies said in a statement Monday.
The new company, which will have more than 30,000 homes, will take advantage of the demand for rental properties and tight mortgage standards that are holding back home purchases. As landlords grow larger they see even more benefits from efficiencies that come with scale.
"We believe this merger demonstrates the power of scale and consolidation and really crystallizes the long-term durability of the single-family rental industry," Thomas Barrack Jr., executive chairman of Colony Capital Inc., said in a statement.
Barrack and Barry Sternlicht, chairman and chief executive officer of Starwood Capital Group, will serve as nonexecutive co-chairmen of the combined company’s board.
Starwood Waypoint and other publicly traded single-family landlords sold stock before they filled many of their properties with tenants, and have been struggling to convince investors they can operate the businesses efficiently. Starwood Waypoint's shares are down almost 14% this year through Sept. 19.
