Silver Bay Realty Trust — Investor Presentation (September 2016)
32 slides from Silver Bay Realty Trust's investor presentation, Sep 22, 2016
Slide 1: Investor Presentation September 2016
Investor Presentation September 2016
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation and related conversations contain forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar
Slide 3: About Silver Bay
About Silver Bay Internally Managed REIT NYSE Listed: SBY First publicly traded single-family rental REIT formed in 2012 Internally managed REIT focused on acquisition, renovation, leasing and management of single-family properties in the U.S. Enterprise Value(1) $1.3 billion Portfolio(1)
Slide 4: Investment Highlights
Investment Highlights Strong Fundamentals Underpin the Single-Family Rental Industry Household formations and low homeownership rates driving demand Strong demographics Prospects for continued rental growth remain Single-family rental industry in early stages of institutional ownership Silve
Slide 5: Single-Family Rental Industry Overview
Single-Family Rental Industry Overview
Slide 6: Household Formations and Lower Homeownership Rates Driving Rental Demand
Households Growing & Housing Starts Lag(1) Homeownership Rates(1) (%) Household Formations and Lower Homeownership Rates Driving Rental Demand 6 (1) Current Population Survey/Housing Vacancy Survey, Series H-111, U.S. Census Bureau; National Association of Realtors; US Census Bureau, Population Divi
Slide 7: Millennials' Needs are Driving Demand for Single-Family Rentals
-2,000,000 0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 18-24 years 25-44 years 45-64 years Projected Population Growth by Cohort(1)(2) 2015-2025 Key Factors Influencing Housing Decisions Include(2) Millennials’ Needs are Driving Demand for Single-Family Rentals 7 (1) Current Population Surv
Slide 8: Millennials Require More Space as They Start Families
3% 97% 3% 46% 42% 9% Millennials Require More Space as They Start Families Single-family rental homes are more spacious than most apartments – The vast majority of single- family rental homes are 3+ bedrooms versus only 9% of apartments Silver Bay’s single-family rentals are priced attractively
Slide 9: Industry Rental Growth Expected to Continue
Home Prices and Rents(1) Industry Rental Growth Expected to Continue Rents have increased 4.0% compounded annually since 2000(1) Single-family rents are forecasted to grow approximately 3% annually through 2020(2) Rental rate increases are highly correlated with HPA (1) U.S. Census Bureau and
Slide 10: Underbuilding Driving Better Rental Rates and HPA
Single-Family vs. Apartment Construction Historical Averages(1) Underbuilding Driving Better Rental Rates and HPA Supply of apartments has risen dramatically in the past few years, which should put pressure on multi-family pricing Conversely, single-family homes are in short supply which could p
Slide 11: Residential Property Prices are Relatively More Stable
Single-Family vs. Commercial Property Prices(1) Residential Property Prices are Relatively More Stable Commercial property valuations are more sensitive to movements in interest rates. As interest rates rise, cap rates typically rise which causes more volatility in commercial property prices. Si
Slide 12: Single-Family Rental Industry in Early Stages of Institutional Ownership
Single-Family Rental Industry in Early Stages of Institutional Ownership (1) Single-Family Rental Primer; Green Street Advisors – Advisory & Consulting Group (2) Based on Silver Bay estimates Institutional ownership represents a minority (1.3%) of total single-family rentals in the U.S., leaving sig
Slide 13: Silver Bay Overview
Silver Bay Overview bowl lee! CaP SILVERBAY bo——
Slide 14: Silver Bay Formation and History
Silver Bay Formation and History 14 Two Harbors (“TWO”) begins to acquire single- family rentals SBY closes $313 million securitization transaction SBY acquires ~2,400 properties from The American Home Provident entities begin to acquire single-family rentals SBY IPO: TWO and Provident contributions
Slide 15: Silver Bay Portfolio is Diversified Across the U.S.
Silver Bay Portfolio is Diversified Across the U.S. (1) Total properties are as of June 30, 2016 and exclude properties reflected as assets held for sale on the Company's balance sheets (2) ‘Other’ category consists of properties within Nevada and Ohio. 8,911 Properties(1) [SERI ES NAME] 30% [SERI E
Slide 16: Our Strategic Priorities
Our Strategic Priorities PRIORITY OVERVIEW CAPITAL ALLOCATION Balanced approach to maximizing long-term stockholder value — Reinvestment in higher yielding assets — Dividends — Share repurchases 16 PORTFOLIO OPTIMIZATION Recycling capital from lower yielding non-core properties into higher yield
Slide 17: Strong Rental Demand is Driving Top Line Growth
Rental Increases and Retention Average Monthly Rent Balanced approach to revenue growth Strong Rental Demand is Driving Top Line Growth $1,149 $1,159 $1,167 $1,178 $1,190 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Average monthly rent continues to improve Pursue renewals Q2 2015 Q3 2015 Q4 2015 Q1
Slide 18: Affordability Gap Gives SBY Ability to Grow Rents
(1) US Census; 12/31/15 The HUD’s housing expenditure threshold is 30% of household income Silver Bay’s annual average rent of $14,000 represents only 24% of a resident’s income, well below the HUD standard This leaves considerable room for rental increases while still staying below the 30% HU
Slide 19: High Occupancy and Rental Increases Drive Same-Home NOI Growth
Same-Home NOI ($ in 000's) Same-Home Revenue ($ in 000's) $20,852 $21,103 $21,181 $21,672 $22,065 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 High Occupancy and Rental Increases Drive Same-Home NOI Growth Same-home portfolio of 5,942 properties represents approximately 67% of total portfolio NOI(1)
Slide 20: Intense Focus on Operations Driving Improved Efficiency
Days to Turn and Move-Out to Move-In (1) Internal Property Management 56 54 59 54 41 25 20 17 15 13 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Move Out To Move In Days to Turn Intense Focus on Operations Driving Improved Efficiency (1) Days from move-out to move-in represents the number of days from pa
Slide 21: SBY Focused on Portfolio Optimization
SBY Focused on Portfolio Optimization (1) Represents properties sold or contracted to be sold as of September 12, 2016 and the contracted price as a percentage of Silver Bay’s estimated fair market value (1) Reallocating capital to our core markets by disposing of non-core assets(1) and reinvesting
Slide 22: Portfolio Optimization and Operational Improvements Drive Increased Cash Flow
Core FFO -Trailing Twelve Months ($ in 000s) Net Loss -Trailing Twelve Months ($ in 000s) $15,399 $19,345 $22,782 $25,405 $28,130 $29,035 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Portfolio Optimization and Operational Improvements Drive Increased Cash Flow Generation Steady increases in cash
Slide 23: Capital Allocation Strategy
$0.22 $0.31 $0.39 $0.46 $0.50 $0.51 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Capital Allocation Strategy Steady increases in cash flow resulted in strong dividend growth and share repurchases – Dividend has grown 13-fold since formation – Opportunistically repurchased 11% of market cap sinc
Slide 24: Key Takeaways
Key Takeaways Silver Bay participates in an industry with strong fundamentals Economic conditions driving demand Strong demographics due to growing millennial population Low housing supply is resulting in rental rate growth Majority of single-family ownership is still “mom and pops” allowing
Slide 25: Appendix: Q2 Results and Portfolio Details
Appendix: Q2 Results and Portfolio Details
Slide 26: Q2 – 2016 Highlights
Q2 – 2016 Highlights Total revenue of $31.5 million, an increase of 4.3%, notwithstanding a decrease of 350 properties in the aggregate portfolio, compared to the second quarter of 2015 Aggregate occupancy rate increased to 97.6%, a 2.9% improvement compared to the second quarter of 2015 Net l
Slide 27: Silver Bay Homes are Affordable
Silver Bay Homes are Affordable Average Property Characteristics(1) Estimated Market Value per Property $167,000 Monthly Rent per Property $1,190 Age (years) 26.8 Square Footage 1,644 Beds 3.3 Baths 2.1 (1) All figures presented are for the SBY portfolio as of June 30, 2016. Households earning aroun
Slide 28: Portfolio of Single-Family Properties
Portfolio of Single-Family Properties As of June 30, 2016 Market Number of Properties(1) Aggregate Investment in Real Estate(2) (in thousands) Average Investment in Real Estate Per Property (in thousands) Average Age(3) (in years) Average Square Footage Atlanta 2,697 $317,820 $118 21.9 1,803 Phoenix
Slide 29: Portfolio Summary of Leasing Status of Properties
Market Number of properties Properties Occupied Properties Vacant Aggregate Portfolio Occupancy Rate Average Monthly Rent(1) Atlanta 2,697 2,638 59 97.8% $ 1,086 Phoenix 1,424 1,394 30 97.9% 1,118 Tampa 1,112 1,086 26 97.7% 1,318 Charlotte 684 663 21 96.9% 1,089 Dallas 503 486 17 96.6% 1,318 Orlando
Slide 30: Non-GAAP Definitions
Non-GAAP Definitions Net Operating Income and Same-Home Net Operating Income. The Company defines net operating income ("NOI") as total revenue less property operating and maintenance, real estate taxes, homeowners’ association fees, and property management expenses. NOI excludes depreciation and am
Slide 31: Non-GAAP Reconciliation: NOI and Same-Home NOI
Non-GAAP Reconciliation Net Operating Income and Same-Home Net Operating Income The following is a reconciliation of NOI and Same-Home NOI to net loss as determined in accordance with GAAP, by quarter, for the trailing five quarters ended June 30, 2016 (amounts in thousands): 31
Slide 32: Non-GAAP Reconciliation: Core Funds from Operations
Non-GAAP Reconciliation Core Funds from Operations The following table sets forth a reconciliation of the Company's net loss as determined in accordance with GAAP and its calculation of Core FFO for the trailing nine quarters ended June 30, 2016 (amounts in thousands): 32
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