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Two Harbors Investment Corp. (NYSE: TWO; NYSE MKT: TWO.WS) today announced it has entered into an agreement with Silver Bay Realty Trust Corp. (“Silver Bay”), which will enable Silver Bay to acquire a portfolio of more than 3,100 single-family residential properties simultaneously with the closing of Silver Bay’s initial public offering of its common stock (“IPO”).
Pursuant to a contribution agreement, Two Harbors expects to contribute its existing portfolio of over 2,200 single-family properties to Silver Bay, together with $50 million in cash that will be used by Two Harbors to acquire and renovate properties through the closing. In exchange for the contribution, Two Harbors will receive approximately 17.8 million shares of common stock of Silver Bay, which will represent approximately 47.7% of the outstanding stock of Silver Bay after the offering or approximately 45.3% if the underwriters exercise their option to acquire additional shares within 30 days following the offering. The shares received by Two Harbors will be subject to a 90-day lock-up period following the closing of the IPO, after which Two Harbors may, subject to the discretion and approval of its Board of Directors and in compliance with applicable securities laws, hold, sell or otherwise dispose of the shares, which may include a distribution of the shares by means of a special dividend to Two Harbors shareholders. The Silver Bay common stock will be listed on the New York Stock Exchange under the symbol “SBY.”
"We are pleased to announce the progress of the Silver Bay transaction,” said Thomas Siering, President and Chief Executive Officer of Two Harbors. “Optimization of shareholder value is our primary objective. We believe Two Harbors shareholders are best served by the creation of a stand-alone, pure-play single-family residential property REIT.”
Silver Bay is a newly formed Maryland corporation focused on the acquisition, renovation, leasing and management of single-family residential properties for rental income and long term appreciation. Silver Bay will be externally managed by PRCM Real Estate Advisers LLC, a joint venture between an affiliate of Pine River Capital Management L.P. and Provident Real Estate Advisors LLC. An affiliate of Pine River also serves as the external manager of Two Harbors and provides property acquisition and property management services with respect to Two Harbors’ portfolio of single-family rental properties. Entities managed by Provident are also contributing approximately 880 single-family residential properties to Silver Bay as part of the transaction.