Saturday, April 20, 2013

Silver Bay Stock Distribution Helps, But Not Enough To Buy


Next week, Two Harbors Investment Corp (TWO) is expected to distribute its remaining shares of Silver Bay Realty Trust (SBY) to shareholders via a special dividend. Two Harbors holds 17,824,647 shares or around 45% of the outstanding shares of Silver Bay Realty. While this move was expected after the IPO back in December, the doubling of the public float is the next step making Silver Bay Realty an investable REIT.

The company plans to acquire, renovate, lease, and maintain a portfolio of single-family homes in select attractive markets in the U.S. It plans to operate under a REIT where substantially all of future income is returned to shareholders.

While Silver Bay still sees favorable trends for purchasing single-family rental houses, some news suggests that the onslaught of private equity money in major markets might be placing pressure on rental rates. As the company moves to invest and stabilize the purchased homes, the abundance of competition to an unproven concept could be very damaging.

Read the full article at Seeking Alpha.


Disclosure: No positions mentioned. Please review the disclaimer page for more details. 




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