Two Harbors Investment Corp. (NYSE: TWO; NYSE MKT: TWO.WS) today announced the proposed contribution of its portfolio of single-family rental properties to a newly formed entity intended to qualify as a real estate investment trust (“REIT”).
In exchange for its contribution, Two Harbors would receive shares of common stock of Silver Bay Realty Trust Corp. (“Silver Bay”), a newly organized Maryland corporation focused on the acquisition, renovation, leasing and management of single-family residential properties for rental income and long-term capital appreciation. Silver Bay will be externally managed by PRCM Real Estate Advisers LLC, which is a joint venture between an affiliate of Pine River Capital Management L.P. and Provident Real Estate Advisors LLC (“Provident”). An affiliate of Pine River also serves as the external manager of Two Harbors and provides acquisition and property management services with respect to Two Harbors’ portfolio of single-family rental properties.
Silver Bay has filed a registration statement with the U.S. Securities and Exchange Commission with respect to the proposed initial public offering (“IPO”) of its common stock. Silver Bay intends to acquire two large portfolios of single-family rental properties, including the Two Harbors portfolio and the portfolio currently managed by Provident, concurrently with the proposed IPO. The proposed contribution of the Two Harbors portfolio to Silver Bay is dependent upon the value of the contribution and amount of capital raised in the proposed IPO as well as market and other conditions. Subject to the approval of its board of directors and compliance with applicable securities laws, Two Harbors anticipates that it would distribute its shares of common stock in Silver Bay by means of a special dividend after the expiration of a 90-day lock-up period following the completion of Silver Bay’s proposed IPO.
"We are excited about the proposed Silver Bay transaction,” said Thomas Siering, President and Chief Executive Officer of Two Harbors. “We believe Two Harbors shareholders would benefit from the creation of a stand-alone, pure-play single-family residential property REIT. The current investment opportunity for single-family rental properties remains attractive and the proposed transaction would add additional scale and diversification to our existing portfolio.”