Silver Bay Realty Trust — Q3 2015 Earnings Presentation
33 slides from Silver Bay Realty Trust's earnings presentation, Nov 24, 2015
Slide 1: Silver Bay Realty Trust Corp. Third Quarter 2015 Investor Presentation
SILVER BAY REALTY TRUST CORP. T h i r d Q u a r t e r 2 0 1 5 I n v e s t o r P r e s e n t a t i o n
Slide 2: Safe Harbor Statement / Forward-Looking Statements
2 S A F E H A R B O R S T A T E M E N T F O R W A R D - L O O K I N G S T A T E M E N T S This presentation includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Actual results may differ from exp
Slide 3: Silver Bay Realty Trust Corp.
3 S I L V E R B A Y R E A L T Y T R U S T C O R P . First publicly traded single-family residential REIT formed in 2012 Mission of bringing institutional excellence to the single-family rental market Capitalize on generational opportunity created by dislocations in U.S. housing market − Acquir
Slide 4: Silver Bay Portfolio and Infrastructure
4 SILVER BAY PORTFOLIO AND INFRASTRUCTURE DENOTES INTERNALLY MANAGED MARKET NORTHERN CA 384 SOUTHERN CA 97 LAS VEGAS 290 PHOENIX 1,424 TUCSON 209 DALLAS 504 SOUTHEAST FLORIDA 385 JACKSONVILLE 452 COLUMBUS 284 PLYMOUTH CORPORATE HEADQUARTERS ATLANTA 2,730 CHARLOTTE 690 TAMPA 1,112 ORLANDO(1) 513 (1)
Slide 5: Q3 – 2015 Highlights
5 Q3 – 2015 HIGHLIGHTS Total revenue increased to $30.6 million, a 53% year-over-year quarterly increase Net operating income (“NOI”)(1) of $16.5 million Core Funds from Operations (“Core FFO”)(1) of $0.17 per share − Sequential quarter increase in property operating and maintenance expense si
Slide 6: Fully Integrated Platform Built Around Technology
6 FULLY INTEGRATED PLATFORM BUILT AROUND TECHNOLOGY KEY FUNCTION PERFORMED BY SBY? Corporate / Finance / Accounting / Legal Investment Strategy / Data Analytics Acquisitions Renovations Property Management ~95% In-house(1) Resident Management / Customer Relations / Call Center Repairs & Ma
Slide 7: Investment Opportunity
7 INVESTMENT OPPORTUNITY
Slide 8: Commitment to Delivering Stockholder Value
8 COMMITMENT TO DELIVERING STOCKHOLDER VALUE (1) NOI, Core FFO and Estimated NAV are non-GAAP financial measures. Estimated NAV per share amounts are based upon common shares outstanding plus common units as of September 30, 2015. Non-GAAP reconciliations of these measures are included in the append
Slide 9: SFR Industry Opportunity
9 SFR INDUSTRY OPPORTUNITY Institutional ownership estimated to be 2-3% of single-family rental sector(1) − Opportunity to capture market share from non-institutional operators Typical single-family residents are families who choose homes based on neighborhood safety, proximity to employment cen
Slide 10: Portfolio Value Creation
10 $960 $980 $1,000 $1,020 $1,040 $1,060 $1,080 Q3 - 2014 Q4 - 2014 Q1 - 2015 Q2 - 2015 Q3 - 2015 M il li o n s PORTFOLIO VALUE CREATION CAPTURING VALUE: Q3 - 2014 PORTFOLIO, ONE YEAR LATER ESTIMATED VALUE OF REAL ESTATE ASSETS OWNED AT Q3-2014 INCREASED 7% YEAR-OVER-YEAR(1) Continued housing pric
Slide 11: What Is the Total Return Opportunity?
11 WHAT IS THE TOTAL RETURN OPPORTUNITY? UNLEVERED CASH FLOW MULTI-FACETED OPPORTUNITY TO MAXIMIZE THE COMPANY’S TOTAL RETURN ATTRACTIVE LEVERAGE HOME PRICE APPRECIATION CONTINUED GROWTH OPPORTUNITIES Ongoing buying opportunities with less competition Homes available at significant discounts to
Slide 12: Buying Below Replacement Cost Suggests Long-Term Appreciation Potential
12 $130 $150 $170 $190 $210 $230 $250 B U Y I N G B E L O W R E P L A C E M E N T C O S T S S U G G E S T S L O N G - T E R M A P P R E C I AT I O N P O T E N T I A L (1) (1) The information presented in this chart represents illustrative appreciation for residential real properties and assumes that
Slide 13: Focus on Cash Flow Generation
13 FOCUS ON CASH FLOW GENERATION (1) NOI and Core FFO are non-GAAP financial measures. The non-GAAP reconciliations of these measures are included in the appendix. (2) On August 12, 2014, the Company completed a $313 million securitization transaction with a blended effective interest rate of LIBOR
Slide 14: NOI Expansion Opportunity
14 N O I E X PA N S I O N O P P O R T U N I T Y REVENUE OPTIMIZATION STRATEGY Reduce turnover time between tenants from ~54 days in Q3 Rental increases of 3.0-3.5 % on renewals in 2015 OVERVIEW IMPACT Increases time generating revenue Increases rental rates BRINGING R&M / TURNOVER IN- HOUSE
Slide 15: Macro Fundamentals Remain Robust
15 MACRO FUNDAMENTALS REMAIN ROBUST Largest income producing asset class in the U.S. Supportive supply-demand fundamentals for single-family rentals, with decreasing homeownership increasing absorption, household formation expected to accelerate, and limited new supply Rising interest rates sh
Slide 16: Macroeconomic and Demographic Indicators Support Long-Term Rental Demand
16 MACROECONOMIC AND DEMOGRAPHIC INDICATORS SUPPORT LONG-TERM RENTAL DEMAND Muted single-family starts Lagging construction volumes not keeping pace with demand from new households Obsolescence of older housing stock Lower supply of existing homes on market Rising home prices Improving j
Slide 17: Rising Interest Rates in the SFR Sector
17 0 50 100 150 200 250 300 350 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 Period of Rising Interest Rates US 10 Yr. Treasury Yield Indexed Single Family Home Values RISING INTEREST RATES IN THE SFR SECTOR SINGLE-FAMILY HOME VALUES VS. 1
Slide 18: Platform Poised for Portfolio Growth
18 PLATFORM POISED FOR PORTFOLIO GROWTH OVERVIEW Silver Bay’s platform has ongoing ability of efficiently identifying and integrating large acquisitions with limited incremental G&A CASE STUDY: THE AMERICAN HOME ACQUISITION Acquired more than 2,400 properties from The American Home Increased hom
Slide 19: Operations Overview
19 O P E R AT I O N S O V E R V I E W
Slide 20: Business Objectives
20 BUSINESS OBJECTIVES O B J E C T I V E S : Provide high quality rental homes with best-in-class customer service to create a long-term sustainable business Achieve attractive total return combining capital appreciation with rental cash flow yields ACQUISITIONS RENOVATIONS P R O P E R T Y MANAG
Slide 21: Acquisition Strategy and Asset Selection Process
21 ACQUISITION STRATEGY AND ASSET SELECTION PROCESS TARGETED MSA EVALUATION NEIGHBORHOOD EVALUATION RIGOROUS PROPERTY DILIGENCE AND ASSESSMENT RENOVATION ASSESSMENT COMPREHENSIVE RENTAL AND RESIDENT EVALUATION Macroeconomic and demographic factors including population growth, unemployment and medi
Slide 22: Renovations
22 New appliance package Cabinet refresh, including new hardware or total cabinet replacement, if needed New flooring New light fixtures RENOVATIONS B E F O R E A F T E R Landscaping and yard cleanup Paint or exterior wash Driveway cleaning Roof replacement, if necessary New carpet
Slide 23: Resident services and customer experience
23 Centralized call center for service work orders allows for standardized communications and troubleshooting problems over the phone without dispatching contractors where possible Customer portal where residents can pay rent, enter work orders online and receive communications regarding their h
Slide 24: Target Residents Support Cash Flow
24 TARGET RESIDENTS SUPPORT CASH FLOW SBY designed its acquisition strategy to build a portfolio of properties that appeal to a large segment of U.S. households that have attractive characteristics as single-family renters Average rent of ~$1,160 reflects a portfolio of properties that are espec
Slide 25: Silver Bay Integrated Business Systems & Data
25 SILVER BAY INTEGRATED BUSINESS SYSTEMS & DATA Custom cloud-based system managing acquisitions and projects (renovations/turns) Centralized monitoring on a real-time basis from mobile devices Fully secured between local markets and external partners Provides real-time reports at a property
Slide 26: Appendix
26 A P P E N D I X
Slide 27: Formation and History
27 FORMATION AND HISTORY Provident Entities(1) commenced acquisition of single- family properties in 2009 Completed IPO of 15.2 million common shares for net proceeds of $263 million, inclusive of over-allotment Simultaneously, combined portfolios of single-family homes owned by Two Harbors(2)
Slide 28: Portfolio of Single-Family Properties
28 P O R T F O L I O O F S I N G L E - F A M I LY P R O P E R T I E S As of September 30, 2015 MARKET NUMBER OF PROPERTIES(1) AGGREGATE COST BASIS(2) (THOUSANDS) AVERAGE COST BASIS PER PROPERTY (THOUSANDS) AVERAGE AGE(3) (IN YEARS) AVERAGE SQUARE FOOTAGE Atlanta 2,730 $ 314,982 $ 115 21.1 1,798 Phoe
Slide 29: Portfolio Summary of Leasing Status of Properties
29 MARKET NUMBER OF PROPERTIES NUMBER OF STABILIZED PROPERTIES(1) PROPERTIES LEASED PROPERTIES VACANT AGGREGATE PORTFOLIO OCCUPANCY RATE STABILIZED OCCUPANCY RATE AVERAGE MONTHLY RENT(2) Atlanta 2,730 2,729 2,551 179 93.4% 93.5% $ 1,053 Phoenix 1,424 1,424 1,378 46 96.8% 96.8% 1,095 Tampa 1,112 1,11
Slide 30: Estimated Portfolio and Estimated Net Asset Value
30 ESTIMATED PORTFOLIO AND ESTIMATED NET ASSET VALUE Estimated Portfolio Value and Estimated NAV are non-GAAP financial measures. Silver Bay provides the Estimated Portfolio Value and Estimated NAV and believes such metrics are useful as additional tools for investors seeking to value the Company. T
Slide 31: Net Operating Income
31 N E T O P E R A T I N G I N C O M E Net operating income (“NOI”) is a non-GAAP financial measure defined by the Company as total revenue less property operating and maintenance, real estate taxes, homeowners’ association fees, and property management expenses. NOI excludes depreciation and amorti
Slide 32: Funds From Operations and Core Funds From Operations
32 FUNDS FROM OPERATIONS AND CORE FUNDS FROM OPERATIONS Funds From Operations ("FFO") is a non-GAAP financial measure that the Company believes, when considered with the financial statements determined in accordance with GAAP, is helpful to investors in understanding performance because it captures
Slide 33: 3300 FERNBROOK LANE NORTH | SUITE | PLYMOUTH | MN | 5447 P: 952.358.4400
33 3300 FERNBROOK LANE NORTH | SUITE 210 | PLYMOUTH | MN | 55447 P: 952.358.4400 | E: INVES TO RS@ SILVERBAYMGMT .C OM
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