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Invitation Homes And Starwood Waypoint Homes To Merge

Invitation Homes (INVH) and Starwood Waypoint Homes (SFR), two leading owners and operators of single-family rental homes in the United States, announced the signing of a definitive agreement to combine in a 100 percent stock-for-stock merger-of-equals transaction. The combined company will operate under the name "Invitation Homes."

As per the terms of the agreement, each Starwood Waypoint Homes share will be converted into 1.614 Invitation Homes shares, based on a fixed exchange ratio. Upon the closing of the transaction, Invitation Homes stockholders will own approximately 59 percent of the combined company's stock, while Starwood Waypoint Homes stockholders will own approximately 41 percent of the combined company's stock.

Based on the closing prices of Starwood Waypoint Homes common shares and Invitation Homes common stock on August 9, 2017, the equity market capitalization of the combined company would be approximately $11 billion and the total enterprise value (including debt) would be approximately $20 billion.

The combined company's shares are expected to continue trading on the New York Stock Exchange under the ticker symbol for Invitation Homes (INVH).

Upon completion of the transaction, Fred Tuomi, Chief Executive Officer of Starwood Waypoint Homes, will become CEO of Invitation Homes; Ernie Freedman, Chief Financial Officer of Invitation Homes, will remain CFO; Charles Young, Chief Operating Officer of Starwood Waypoint Homes, will become COO; and Dallas Tanner, Chief Investment Officer of Invitation Homes, will remain CIO. The combined company will be headquartered in Dallas, Texas, and will maintain a presence in Scottsdale, Arizona. The combined Board is expected to have 11 directors, consisting of six directors appointed by Invitation Homes and five directors appointed by Starwood Waypoint Homes.

The combined company is expected to generate projected annual run-rate cost synergies of $45-50 million, with potential additional upside from the implementation of best practices to optimize revenue management and operating efficiency. The transaction is expected to be accretive to core FFO and AFFO on a run-rate basis. The combined company is also expected to benefit from a flexible balance sheet with lower long-term cost of capital and a continued path towards deleveraging.

The transaction will also significantly increase the free float of Invitation Homes' shares and reduce Blackstone's ownership stake in the combined company to 41 percent from 70 percent in the current, stand-alone Invitation Homes. The quarterly dividend is expected to be $0.11 per share post-close.

The transaction has been unanimously approved by the boards of both Starwood Waypoint Homes and Invitation Homes. Following the execution of the definitive merger agreement, Blackstone, the majority stockholder of Invitation Homes, delivered a written consent approving the issuance of Invitation Homes common stock in the merger and the other transactions contemplated by the merger agreement. The transaction is expected to close by year-end, subject to approval by Starwood Waypoint Homes stockholders and other customary closing conditions.

by RTT Staff Writer

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