Despite the favorable macro situation, Starwood Waypoint’s stock is actually about 10% below where it began trading post-spin. Looking ahead, there are doubts about the viability of the business if homeownership rates rebound and whether or not these companies can continue to grow their inventory, especially now that prices have rebounded from the depths of the crisis. This WSJ piece also raises additional concerns about whether or not rents can continue to increase in the face of increasing supply and loosening mortgage standard. Additionally, there are concerns about these company’s ability to manage and maintain their portfolios of properties although Starwood did bring in the highly respected Waypoint Group to handle those duties.Consolidation can help here and the combination is expected to generate ~$40-50m in synergies.
The new company will be led by Colony American’s current President, Fred Tuomi, who will assuke the CEO title of the joint company and SWAY’s current CEO, Doug Brien, will become President & COO. Barry Sternlicht and Thomas Barrack will both serve as non-executive chairman. The transaction is expected to close sometime during the first quarter of 2016, but is subject to a shareholder vote.
Disclosure: Author holds no position in any stock mentioned