As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

10/31/13  Starwood Waypoint Homes           10-12B                 3:11M                                    Merrill Corp/New/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 10-12B      Registration of Securities (General Form)           HTML     43K 
 2: EX-99.1     Miscellaneous Exhibit                               HTML   2.18M 
 3: EX-99.2     Miscellaneous Exhibit                               HTML    427K 

SUMMARY

        This summary highlights some of the information in this information statement. You should read carefully the more detailed information set forth under "Risk Factors" and the other information included in this information statement. Unless otherwise indicated, the information contained in this information statement, including our consolidated financial statements, assumes the completion of all the transactions referred to in this information statement in connection with the separation, which will be completed on the distribution date.

Our Company

        We are a Maryland real estate investment trust formed primarily to acquire, renovate, lease and manage residential assets in select markets throughout the United States and currently own all of Starwood Property Trust's single-family rental homes and distressed and non-performing residential mortgage loans. Our primary strategy is to acquire single-family homes, or homes, through a variety of channels, renovate these homes to the extent necessary and lease them to qualified residents. We seek to take advantage of continuing dislocations in the housing market and the macroeconomic trends in favor of leasing homes by acquiring, owning, renovating and managing homes that we believe will (1) generate substantial current rental income, which will grow over time, and (2) appreciate in value as the housing market continues to recover over the next several years. In addition to the direct acquisition of homes, we purchase pools of distressed and non-performing residential mortgage loans at significant discounts to their most recent broker price opinion, or BPO, which we may seek to (1) convert into homes through the foreclosure or other resolution process that can then either be contributed to our rental portfolio or sold or (2) modify and hold or resell at higher prices if circumstances warrant. Our objective is to generate attractive risk-adjusted returns for our shareholders over the long-term, primarily through dividends and secondarily through capital appreciation.

        We will be externally managed and advised by our Manager. Our Manager is an affiliate of Starwood Capital Group, a privately-held private equity firm founded and controlled by Barry Sternlicht, our chairman. Our Manager has entered into a transaction agreement to acquire, upon the completion of the separation, the single-family home operating platform currently operated by the Waypoint manager, or the Waypoint platform. The Waypoint platform is an advanced, technology driven operating platform developed by the executive team of the Waypoint manager that provides the backbone for deal sourcing, property underwriting, acquisitions, asset protection, renovations, marketing and leasing, repairs and maintenance, portfolio reporting and property management of homes. In connection with the acquisition of the Waypoint platform, the members of the executive team of the Waypoint manager, or the Waypoint executive team, will become, upon the completion of the separation, members of our Manager's executive team. In addition, upon the completion of the separation, our Manager will seek to retain approximately 570 employees currently employed by the Waypoint manager who will provide our Manager with in-house operations associated with every stage of the life cycle of a home. This acquisition is subject to completion of documentation and customary closing conditions and will be conditioned upon, and will occur upon the completion of, the separation. As a result, there can be no assurance that this acquisition will be completed on the terms described or at all.

        When pursuing home acquisitions, we focus on markets that we believe present the greatest opportunities for home price appreciation, that have strong rental demand and where we can attain property operating efficiencies as a result of geographic concentration of assets in our portfolio. A significant portion of our initial home portfolio is located in Florida and Texas, although we have made, and/or intend to pursue, acquisitions in other states as well, including Arizona, California, Colorado, Georgia, Illinois, Nevada and North Carolina. We identify and pursue individual home acquisition opportunities through a number of sources, including our Manager's strategic exclusive relationships with regional and local partners in our target markets, as well as through multiple listing services, or

 

MLS listings, foreclosure auctions and short sales. In addition, we may opportunistically identify and pursue bulk portfolios of homes from banks, mortgage servicers, other single-family home rental companies, government sponsored enterprises, private investors and other financial institutions. We believe that favorable prevailing home prices coupled with the potential to purchase distressed and non-performing residential mortgage loans at significant discounts to their most recent BPO provide us with a substantial market opportunity to acquire residential assets that generate attractive risk-adjusted returns as the housing market continues to recover.

        As of June 30, 2013, our portfolio consisted of 4,313 owned homes and homes underlying distressed and non-performing residential mortgage loans, including (1) 2,778 homes located in 25 states with an aggregate investment, inclusive of acquisition and actual and budgeted upfront renovation costs, of approximately $381.8 million and (2) distressed and non-performing residential mortgage loans with an unpaid principal balance, or UPB, of $402.4 million and a total cost basis of $189.3 million that are secured by first liens on 1,535 homes. As of June 30, 2013, the 787 homes we owned for more than 180 days were approximately 73.4% leased, which excludes 66 homes listed for sale.

        For the period from July 1, 2013 through September 30, 2013, we acquired and, as of September 30, 2013, we had contracted to acquire an aggregate of 1,692 additional owned homes and homes underlying distressed and non-performing residential mortgage loans, including (1) 1,459 homes acquired with an aggregate investment, inclusive of acquisition and actual and budgeted upfront renovation costs, of approximately $195.4 million and 91 homes under contract with an aggregate expected acquisition cost of $13.0 million and (2) distressed and non-performing residential mortgage loans acquired with an UPB of $40.6 million and a total purchase price of $20.2 million that are secured by first liens on 142 homes. There can be no assurance that we will close on all of the homes we have contracted to acquire. Upon the completion of the separation, we expect to have approximately $       million of cash (including cash contributed to us by Starwood Property Trust prior to the separation) and no outstanding indebtedness. We are also in negotiations to enter into a $       million secured revolving credit facility prior to the completion of the separation that would be available to fund our future growth, although there can be no assurance that we will be able to enter into this new facility on favorable terms, or at all.

        Prior to the separation, we are a wholly-owned subsidiary of Starwood Property Trust, a NYSE-listed REIT externally managed by a subsidiary of Starwood Capital Group that is focused on originating, investing in, financing and managing commercial mortgage loans and other commercial real estate debt investments, commercial mortgage-backed securities and other commercial real estate-related debt investments. Starwood Property Trust has also invested in residential mortgage-backed securities, residential real estate owned, or REO, distressed and non-performing residential mortgage loans and commercial properties subject to net leases. Starwood Property Trust formed us to concentrate the business of ownership of single-family residential rental homes and distressed and non-performing residential mortgage loans. Our Manager and Starwood Capital Group have agreed that neither they nor any entity controlled by Starwood Capital Group (including Starwood Property Trust) will sponsor or manage any U.S. publicly traded entity (other than us) that invests primarily in single-family residential rental homes or distressed and non-performing single-family residential mortgage loans for so long as the management agreement is in effect and our Manager and Starwood Capital Group are under common control.

        We intend to elect and qualify to be taxed as a REIT for U.S. federal income tax purposes, commencing with our taxable year ending December 31, 2014. We generally will not be subject to U.S. federal income taxes on our REIT taxable income to the extent that we annually distribute all of our REIT taxable income to shareholders and qualify and maintain our qualification as a REIT.

 

Reasons for the Separation

        Upon careful review and consideration in accordance with the applicable standard of review under Maryland law, Starwood Property Trust's board of directors determined that our separation from Starwood Property Trust is in the best interests of Starwood Property Trust and its stockholders. The board's determination was based on a number of factors, including those set forth below.

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Creation of Two Focused Companies.  After the separation, we will focus primarily on investments in homes and distressed and non-performing residential mortgage loans, and Starwood Property Trust will focus primarily on commercial mortgage loans and other commercial real estate debt investments, commercial mortgage-backed securities, other commercial real estate-related debt investments, residential mortgage-backed securities and commercial properties subject to net leases. We believe investors may find it more appealing to be able to invest in two distinct businesses. Each business will have the opportunity to cultivate a distinct identity, which we expect will facilitate investor understanding by reducing the complexity associated with a company that has diverse business and growth strategies.



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Potential for a Higher Aggregate Market Value for Stockholders and Shareholders.  The separation will enable potential investors and the financial community to evaluate the performance of each company separately, which may result in a higher aggregate market value than the value of the combined company.



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Tailored Capital Structure and Financing Options.  Each company will have the flexibility to create a capital structure tailored to its needs, and each may be able to attain more favorable financing terms separately. In addition, tailored capital structures will facilitate each company's ability to pursue acquisitions, possibly using common stock or common shares, as applicable, or, in our case, common units of limited partnership interest, or OP units, in our operating partnership, as currency, and other strategic alliances.

        The anticipated benefits of the separation are based on a number of assumptions, and there can be no assurance that such benefits will materialize to the extent anticipated, or at all. In the event that the separation does not result in such benefits, the costs associated with the separation, including an expected increase in general and administrative expenses, could have a material adverse effect on each company individually and in the aggregate. For more information about the risks associated with the separation, see "Risk Factors."

Our Manager and Starwood Capital Group

        We will be externally managed and advised by our Manager pursuant to the terms of a management agreement. Our Manager was formed as a Delaware limited liability company in June 2013. We expect to benefit from the personnel, relationships and experience of the executives who will be members of our Manager's executive team upon the completion of the separation. The members of the Waypoint executive team who will be members of our Manager's executive team upon the completion of the separation began operating homes in January 2009 to take advantage of an opportunity to bring institutional practices to a highly fragmented real estate asset class and, since that time, have actively developed a highly scalable operating platform for home rentals.

        Our Manager is an affiliate of Starwood Capital Group, a privately-held private equity firm founded and controlled by Barry Sternlicht, our chairman. As of March 31, 2013, Starwood Capital Group had approximately $26.3 billion of real estate-related assets under management and, since its inception, had invested approximately $11 billion of equity in real estate across the capital structure. As of March 31, 2013, Starwood Capital Group had invested over $1.6 billion in land-related transactions and had participated in the development and financing of more than 50,000 home sites across the United States since its inception. Through Starwood Land Ventures, or SLV, Starwood Capital Group

 

has enhanced its local market expertise in residential assets, which Starwood Capital Group has used to identify target markets that it believes are attractive for the acquisition of single-family rental housing. In addition, as of March 31, 2013, Starwood Capital Group owned over 50,000 multi-family apartment units throughout the United States.

        Starwood Capital Group has invested in most major classes of real estate, directly and indirectly through operating companies, portfolios of properties and single assets, including multifamily, office, retail, hotel, home building, residential land and communities, senior housing, mixed-use and golf courses. Our Manager will draw upon the disciplined approach and deep real estate knowledge base of Starwood Capital Group's personnel and an established track record of distressed investing to help guide our targeted approach to the acquisition, renovation, leasing and management of residential assets. Starwood Capital Group employees have been responsible for the acquisition of all homes and distressed and non-performing residential mortgage loans in our portfolio. Starwood Capital Group has carefully selected the homes in our portfolio and has targeted individual neighborhoods, home types and vintages, which it believes will lead to appreciation in the value of such homes as the housing market continues to recover.

        Pursuant to the terms of a management agreement between our Manager and us, our Manager will provide us with our management team and appropriate support personnel. Pursuant to an investment advisory agreement between our Manager and Starwood Capital Group Management, L.L.C., our Manager will have access to the personnel and resources necessary for the implementation and execution of our business and growth strategies. Upon the completion of the separation, our Manager will maintain 13 regional offices and 7 resident services centers. The regional offices house our Manager's regional officers, local acquisitions and construction teams, and, if applicable, our Manager's local marketing and leasing, property management and repairs and maintenance teams. The resident services centers will serve as localized customer-facing offices that help to facilitate resident satisfaction and retention, as well as to integrate all local operations. Upon the completion of the separation, our Manager expects to continue opening additional resident services centers as we scale in our target markets.

        Our Manager draws upon the experience and expertise of Starwood Capital Group's team of professionals and support personnel, including Starwood Capital Group's dedicated asset management group and Starwood Capital Group's portfolio management, finance and administration functions, which address legal, compliance, investor relations and operational matters, asset valuation, risk management and information technologies, in connection with the performance of our Manager's duties.

        All of our officers are executives of our Manager. We do not expect to have any employees. Our Manager is not obligated to dedicate any of its executives or other personnel exclusively to us. In addition, neither our Manager nor its executives or other personnel, including our executive officers supplied to us by our Manager, is obligated to dedicate any specific portion of its or their time to us. Our Manager will at all times be subject to the supervision and oversight of our board of trustees and has only such functions, responsibilities and authority as are specified in the management agreement. In addition, upon the completion of the separation, our Manager will seek to retain approximately 570 employees currently employed by the Waypoint manager who will provide our Manager with in-house operations associated with every stage of the life cycle of a home.

        Our Manager and Starwood Capital Group have agreed that neither they nor any entity controlled by Starwood Capital Group (including Starwood Property Trust) will sponsor or manage any U.S. publicly traded entity (other than us) that invests primarily in single-family residential rental homes or distressed and non-performing single-family residential mortgage loans for so long as the management agreement is in effect and our Manager and Starwood Capital Group are under common control.

        Since 2009, entities controlled by the Waypoint executive team closed ten private funds to acquire, renovate and improve homes with equity commitments totaling over $371 million. Through

 

September 30, 2013, these ten Waypoint legacy funds had commitments for over $873 million of equity and debt capital. As of September 30, 2013, the Waypoint manager has deployed over $870 million of this capital, assembling a portfolio of over 4,980 homes in the San Francisco Bay Area, Sacramento, Los Angeles, the Inland Empire, Phoenix, Las Vegas, Chicago, Texas, Atlanta, Central Florida and South Florida. As of September 30, 2013, of the 3,834 homes that these ten Waypoint legacy funds had owned for more than 180 days, approximately 94.0% were leased. See "Our Manager and the Management Agreement—Historical Performance of Programs Sponsored by the Waypoint Manager." The Waypoint manager has agreed that, upon the full deployment of the Waypoint legacy fund's capital commitments (of which approximately $3.0 million was estimated to be remaining as of September 30, 2013), the Waypoint legacy funds and the Waypoint manager will no longer contract to acquire additional homes and will not contract to acquire distressed and non-performing single-family residential mortgage loans, subject to certain limited exceptions. See "—Conflicts of Interest and Related Policies—The Waypoint Legacy Funds and the Waypoint Manager." We are not acquiring the Waypoint legacy funds or the assets thereof, and the leasing results for our properties may differ materially from that of the Waypoint legacy funds.

        Our Manager will not acquire the Waypoint manager. Through one or more affiliates, the Waypoint manager, upon the completion of the separation, will (1) continue to be owned by certain members of the Waypoint executive team who will be members of our Manager's executive team and other third parties and (2) be permitted to continue to manage the assets and properties of the Waypoint legacy funds and to collect and retain for the Waypoint manager's sole account the net fee income and promoted interests in such entities. To facilitate these efforts, appropriate Waypoint manager affiliates will be granted, upon the completion of the separation and during the duration of the Waypoint legacy funds' existence, (1) a license to use the technology and operational platform and knowhow of our Manager and (2) in order to assist in the operation of homes owned by the Waypoint legacy funds, access to the approximately 570 employees of the Waypoint manager that our Manager will seek to retain upon the completion of the separation. Any expenses, including personnel and employee costs related to the Waypoint manager or the Waypoint legacy funds, incurred by our Manager will either be reimbursed by the Waypoint manager at actual cost or covered (in whole or in part) pursuant to an agreed upon arrangement with the Waypoint manager. The fees that we pay to our Manager will not be reduced in connection with any reimbursement of our Manager by the Waypoint manager or the Waypoint legacy funds. See "Our Manager and the Management Agreement—Management Agreement."

        For a period of three years from the completion of the separation, except for activities related to the management of the Waypoint legacy funds, each of the Waypoint parties have agreed that they will not, and will cause each of their affiliates not to, directly or indirectly: (1) engage or invest in activities or businesses, or establish any new businesses, within any geographic location in which we, our Manager, any of our or our Manager's respective affiliates or the Waypoint platform conducted, or was planning to conduct, business on or before the completion of the separation that are substantially in competition with us, our Manager or the Waypoint platform; or (2) solicit, recruit or hire any of the members of the Waypoint executive team or encourage any of such employees to leave the employment of our Manager or any of its affiliates, in each case subject to certain limited exceptions. During the time that a GI party designee serves on the board of directors of our Manager, each of the GI parties has agreed that it will not, either directly or through a portfolio company that it controls, invest equity in any entity (other than Waypoint/GI Venture, LLC and Waypoint Fund XI, LLC) whose primary business purpose is the acquisition and rental of single-family homes. Each of the GI parties has also agreed that, for a period of 18 months from the completion of the separation, neither it nor any of its portfolio companies acting on its behalf and at its direction will solicit or hire any of the members of the Waypoint executive team or encourage any of such employees to leave the employment of our Manager or any of its affiliates, subject to certain limited exceptions. See "—Conflicts of Interest and Related Policies—Exclusivity Provisions."

 

Market Opportunities

        All information in this "—Market Opportunities" section, other than the last paragraph, is derived from a market study prepared for us in connection with the separation by JBREC.

        Residential housing is the largest real estate asset class in the United States with a total value of approximately $17.7 trillion, according to the 2012 fourth quarter Federal Reserve Flow of Funds release. Since 1965, according to the U.S. Census Bureau, approximately one-third of this asset class has been rented, and single-family homes currently comprise roughly one-third of all residential rental housing.

        While a large and growing asset class, single-family rental properties have historically been managed by relatively small-scale, "mom and pop" owner-operators or by a limited number of local and regional property management organizations. More recently, the ownership profile of residential single-family rental properties has begun to shift to larger investors and national owner-operators, including us, seeking to efficiently acquire large numbers of homes at distressed values, generate attractive rental cash flow streams and benefit from any potential home price appreciation. JBREC believes the return profile from current rental yields and potential for future home price appreciation is significant enough to encourage investment in the systems, structures and technologies that can make economies of scale possible, resulting in an opportunity for broader industry consolidation by larger and better-capitalized investors that are introducing a higher standard of institutional management to this asset class.

        After nearly a decade of solid home price appreciation from 1998 to 2006, which JBREC believes in many markets was in excess of underlying fundamentals, a significant over-correction has occurred in the pricing of the single-family housing sector. Home prices declined approximately 35% in some of the largest U.S. housing markets (as measured by the not-seasonally adjusted CoreLogic Case-Shiller Composite 20 Home Price Index) from its peak on July 1, 2006 to its trough on March 1, 2012. While prices have begun to recover, with a 5% recovery through 2012 of the 30% peak to trough correction nationally per JBREC's Burns Home Value Index, JBREC believes that a substantial number of non-performing residential mortgage loans will need to be resolved over the next five years, including through foreclosure, short sale or conversion through a bank deed-for-lease program. As a result, JBREC believes there may be the opportunity for experienced and well-capitalized operators to acquire large volumes of single-family rental homes at attractive pricing.

        Over the past two years, the U.S. rental housing market has begun a sustained recovery. In many markets, rental vacancies have fallen and rents have risen, even in areas hardest hit during the housing and economic downturn. The recent drop in home prices (with its trough in March 2012 in some of the largest U.S. housing markets), constraints on mortgage lending, job volatility requiring greater geographic mobility, economic uncertainty, evolving demographics and expanded rental options are changing the way many Americans live. Many people, who in the past might have become homeowners, are instead becoming long-term renters of single-family homes. According to JBREC, for every 1.0% decline in the homeownership rate, the occupants of approximately 1.1 million homes become prospective tenants. The U.S. Census Bureau reports the national homeownership rate was 65.0% in the second quarter of 2013, which is down from a peak of 69.2% in the fourth quarter of 2004. While single-family home prices are in the early stages of recovery, multi-family property prices have been improving during the last two years and have returned to levels on par with early 2006, as measured by the NCREIF Index, published by the National Council for Real Estate Investment Fiduciaries. Although multi-family properties and single-family homes do not generally compete for the same residents due to demographic and preference differences, we believe that many of the same characteristics that make multi-family properties attractive to investors apply to single-family homes.

        There has been an over-correction in housing prices in certain housing markets, which has led to home prices being significantly below replacement cost in many of these markets. As the economy slowly strengthens and the housing market returns to long-term pricing norms, or reverts to mean pricing levels, we believe there is the potential for home price appreciation.

 

        We also believe that there continues to be a large amount of potential supply that we can purchase at potentially attractive pricing. According to Mortgage Bankers Association data, a total of 4.7 million single-family residential mortgage loans are currently non-performing. Over the next five years, a substantial number of non-performing residential mortgage loans will need to be resolved, including through foreclosure, short sale or conversion through a bank deed-for-lease program. At the current rate of delinquency and non-performance, it appears that over 4.2 million homeowners in the United States will be affected. Even if only half of the delinquent or non-performing residential mortgage loans proceed through the foreclosure process or are sold through the short sale process, the supply of inventory available for acquisition would be significant, at approximately $450 billion, assuming a U.S. median home price of $214,200 as of June 2013.

        We believe these factors taken together contribute to the single-family rental asset class potentially generating attractive risk-adjusted returns to investors through (1) current yields, which will grow over time, and (2) home price appreciation. Furthermore, we believe that by acquiring, renovating, leasing and managing homes in markets that meet our selection criteria we can provide attractive risk-adjusted returns to our shareholders. In addition, we believe that also acquiring distressed and non-performing residential mortgage loans will provide us with a significant opportunity to operate in the rental home market at a lower acquisition price and therefore a higher return relative to competitors that focus solely on direct purchases of homes.

Our Competitive Strengths and Business and Growth Strategies

Experienced Investment Team

        We will benefit from the experience and significant expertise of our Manager's executive team in real estate investing, particularly in the residential sector. The members of the Waypoint executive team who will be members of our Manager's executive team upon the completion of the separation have a proven investment track record in acquiring real estate in distressed market conditions and have been operating homes since 2009, which we believe is longer than many of our institutional competitors.

        As a former chairman and chief executive officer of Starwood Hotels & Resorts Worldwide, Inc., a Fortune 500 company, and current chairman and chief executive officer of Starwood Capital Group, chairman and chief executive officer of Starwood Property Trust and Chairman of TRI Pointe Homes, Inc., a builder of single-family homes, Barry Sternlicht, our chairman, brings a unique perspective on building a world class real estate operating business to our chairman position. We believe that our relationship with Starwood Capital Group, which, as of March 31, 2013, had approximately $26.3 billion of real estate-related assets under management, gives us a strong competitive advantage, in particular by providing us with access to the personnel, relationships and the acquisition and operational expertise of Starwood Capital Group through our Manager. As of March 31, 2013, Starwood Capital Group had invested over $1.6 billion in land-related transactions and had participated in the development and financing of more than 50,000 home sites across the United States since its inception. Through SLV, Starwood Capital Group has enhanced its local market expertise in residential assets, which Starwood Capital Group has used to identify target markets that it believes are attractive for the acquisition of single-family rental housing. In addition, as of March 31, 2013, Starwood Capital Group owned over 50,000 multi-family apartment units throughout the United States. Through our Manager, Starwood Capital Group's knowledge of the residential real estate business and established track record of distressed investing will guide our targeted approach in the rental home space.

        Our Manager's executive team's diverse real estate acquisition and operating experience set it apart from most traditional real estate investors. Our Manager's executive team has executed a wide variety real estate transactions across various economic cycles, demonstrating a sophisticated structuring capability and an ability to execute complex transactions. Members of our Manager's executive team upon the completion

 

of the separation have created or taken public five companies, Starwood Hotels & Resorts Worldwide, Inc., Starwood Property Trust, iStar Financial, Inc., TRI Pointe Homes, Inc. and ZipRealty, Inc. They also participated in the formation of Equity Residential Properties Trust, one of the premier U.S. multi-family REITs. We believe this breadth of experience will provide us with competitive advantages in acquiring and operating assets, raising capital, obtaining flexible and efficient financing options and using creative strategies to sell assets that have appreciated or that no longer fit with our strategic objectives.

Proprietary Technology

        We believe that achieving consistent operational excellence is crucial to the success of acquiring, renovating, leasing and managing a geographically dispersed portfolio of homes and acquiring distressed and non-performing residential mortgage loans. Upon the completion of the separation, the backbone of our Manager's operations will be formed by a proprietary technology system, which we refer to as Compass, that has been continually refined and enhanced since the members of the Waypoint executive team who will be members of our Manager's executive team upon the completion of the separation began operating homes in 2009. That executive team specifically designed Compass to be intuitive to employees across all functional areas. Compass is built on a cloud-based operating platform powered by leading technology companies, including Salesforce.com and Google, which will provide our Manager with the ability to quickly achieve scalability, security and redundancy in a cost-effective manner.

        Upon the completion of the separation, Compass will enable our Manager to have real-time oversight of all parts of our business, while maintaining the flexibility to evolve quickly as our business grows and additional functionality is needed. Managers, field personnel and technologists work together to continually define and automate business processes based on the latest data-driven analyses as well as to upgrade existing features and generate new applications.

        The below table sets forth several of the functional components of Compass that will help us to achieve key operational goals throughout the life cycle of a home. Compass provides work-flow management oversight that will link all of the functional areas that are involved in the home life cycle. Compass will be a key component in minimizing the time from the purchase of a home to move-in as well as facilitating necessary communication throughout the process. In addition, Compass is designed to provide an iterative feedback loop such that data learned in the process is easily shared and utilized across departments and regions to continually improve workstreams and implement best practices. Because the architecture of Compass is such that all operational information is housed in one system,

 

managers will have real-time access to information across all parts of the business and can continually make informed decisions that have meaningful impact on operations.

Highly Scalable Operating Platform

        We believe the operating platform that our Manager will have upon the completion of the separation will provide us with a critical competitive advantage. First, it will provide control over all aspects of the business, which is essential to hold all parties accountable for quality and performance

 

and to support the reputation of our brand. Through the consistent use of Compass, we believe our Manager will ensure management's visibility into our operations and create the ability to efficiently scale our business as it grows.

Disciplined Investment Process

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Home Acquisitions.  The members of the Waypoint executive team who will be members of our Manager's executive team upon the completion of the separation have developed a proprietary approach to acquiring homes based on extensive experience that includes "top-down" and "bottom-up" analyses and is supported by Compass. The acquisition process begins by targeting attractive markets based on macroeconomic, demographic and market-specific characteristics and then breaking these markets down into very specific sub-markets that we believe will provide attractive home acquisition and rental opportunities at scale and density sufficient to generate operating efficiencies. Individual homes within these sub-markets will be sourced through multiple channels and identified as acquisition targets based on both "bottom-up" neighborhood and street-level experience as well as "top-down" market and business analytics. The relative quality of the specific location of each home will be measured within Compass against investment parameters established by our Manager in order to automatically generate an appropriate risk-adjusted minimum return target for the opportunity.

Two critical estimates will then be incorporated to allow Compass to generate a maximum bid price for the home: an estimated rental rate and estimated renovation costs. An initial estimated rental rate will be determined by our Manager's proprietary yield management system within Compass, which is typically further refined by the local acquisitions employees in consultation with our Manager's local leasing agents. The initial estimated renovation costs will be derived using our Manager's proprietary "Cap Ex Predictor" program within Compass, which will generate an automated renovation estimate based upon the estimated scope and home location, characteristics and vintage. Based upon this data, and subject to limitations imposed by our Manager's own internal appraisal process in which it will derive an estimated "after renovated value," Compass will generate a maximum bid price for each home. We believe this proprietary approach to acquiring homes provides appropriate parameters and checks and balances for assembling a portfolio of homes that create an opportunity to achieve attractive risk-adjusted returns for our shareholders.

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Distressed and Non-Performing Residential Mortgage Loan Acquisitions.  We will also seek to acquire portfolios of distressed and non-performing residential mortgage loans. The quantity of distressed and non-performing residential mortgage loans remains substantial as a result of a backlog in the foreclosure process. We believe this dynamic results in opportunities to purchase large pools of distressed and non-performing residential mortgage loans at significant discounts to their most recent BPO. Upon our acquisition of these loans, we may seek to (1) convert the loans into homes that can then either be contributed to our rental portfolio or sold or (2) modify and hold or sell the loans at higher prices if circumstances warrant. Although acquiring homes through the foreclosure or other resolution process of loans may involve more effort and risk than acquiring homes directly, we believe that we will be compensated for such effort and risk through a lower cost basis for homes acquired in this manner.

We expect to utilize and develop strategic relationships to assist us in identifying and foreclosing on or disposing of distressed and non-performing residential mortgage loans. We have a joint venture with Prime Asset Fund VI, LLC, or Prime, an entity managed by Prime Finance, an asset manager that specializes in acquisition, resolution and disposition of distressed and non-performing residential mortgage loans. We own a greater than 99% interest in the joint venture, which holds all of our distressed and non-performing residential mortgage loans. Prime, in accordance with our instructions (which, upon the completion of the separation, will be based

 

in part on the use of certain analytic tools included in the Waypoint platform), identifies potential distressed and non-performing residential mortgage loan acquisitions for the joint venture and coordinates the acquisition, resolution or disposition of any such loans for the joint venture. To the extent the joint venture holds any homes (either as the result of the joint venture's conversion of distressed and non-performing residential mortgage loans to homes or the joint venture's acquisition of homes) that we, in our sole and absolute discretion, have determined not to sell through the joint venture, we are permitted to direct, and intend to direct, the joint venture to transfer such homes to us. Our distressed and non-performing residential mortgage loans are serviced by Prime's team of asset managers or licensed third-party mortgage loan servicers.

        While we focus on investments in homes and distressed and non-performing residential mortgage loans, we may selectively pursue other investment strategies, including the acquisition of performing residential mortgage loans and the acquisition or funding of loans secured by homes or entities that own portfolios of homes to the extent that those investments are consistent with our qualification as a REIT.

Attractive Portfolio and Access to an Extensive Pipeline of Investment Opportunities Through Quality Relationships

        As of June 30, 2013, our portfolio consisted of 4,313 owned homes and homes underlying distressed and non-performing residential mortgage loans, including (1) 2,778 homes located in 25 states with an aggregate investment, inclusive of acquisition and actual and budgeted upfront renovation costs, of approximately $381.8 million and (2) distressed and non-performing residential mortgage loans with an UPB of 402.4 million and a total cost basis of $189.3 million that are secured by first liens on 1,535 homes. As of June 30, 2013, the 787 homes we owned for more than 180 days were approximately 73.4% leased, which excludes 66 homes listed for sale. For the period from July 1, 2013 through September 30, 2013, we acquired and, as of September 30, 2013, we had contracted to acquire an aggregate of 1,692 additional owned homes and homes underlying distressed and non-performing residential mortgage loans, including (1) 1,459 homes acquired with an aggregate investment, inclusive of acquisition and actual and budgeted upfront renovation costs, of approximately $195.4 million and 91 homes under contract with an aggregate expected acquisition cost of $13.0 million and (2) distressed and non-performing residential mortgage loans acquired with an UPB of $40.6 million and a total purchase price of $20.2 million that are secured by first liens on 142 homes. There can be no assurance that we will close on all of the homes we have contracted to acquire. In addition, we have an extensive pipeline of potential acquisitions of homes and distressed and non-performing residential mortgage loans in select markets, including Arizona, California, Colorado, Florida, Georgia, Illinois, Nevada, North Carolina and Texas. We have not entered into any agreements to acquire any of the residential assets in our pipeline and do not believe that such acquisitions are probable at this time. There can be no assurance that we will ultimately acquire any of the residential assets in this pipeline on favorable terms, or at all. Our existing pipeline has been sourced primarily through the relationships our Manager's executive team have formed transacting with regional and local partners in our target markets, leading banks, mortgage servicers, other single-family home rental companies, government sponsored enterprises, private investors and other financial institutions. Our Manager has carefully selected the regional and local partners that assist us with acquisitions, which we believe are best in class in their markets, and these partners exclusively provide such services to us within our target parameters in our target markets. In certain cases, Starwood Capital Group has had long preexisting relationships with these partners. We believe the breadth of our Manager's and Starwood Capital Group's relationships will generate attractive investment opportunities for us.

 

Branded Strategy Through Differentiated Product and Service Offerings

        Upon the completion of the separation, we will strive to be recognized as the leading brand in the emerging home rental industry by combining a technology focused operating platform with best practices used in the multi-family and hospitality industries. Upon the completion of the separation, our Manager will use the trademarked slogan "Reinventing Renting™" to demonstrate our combined mission to reinvent the renting experience by making many of the traditional benefits of homeownership available to our residents. As depicted in the graphic below, this mission is supported by three pillars—quality homes, great service and rewarding leases—all of which are built on a foundation of respect.

Quality Homes

        We are highly focused on, and take substantial pride in, providing high quality rental homes in desirable single-family communities to our residents. The members of the Waypoint executive team who will be members of our Manager's executive team upon the completion of the separation have learned over their four years of experience those renovations that are the most important to residents and that they believe lead to increased rental and occupancy rates. Upon the completion of the separation, our Manager will have numerous relationships with national product vendors so that all of our homes will have a consistent look and feel ensuring an attractive product offering and renovation and repair efficiencies. The members of the Waypoint executive team who will be members of our Manager's executive team upon the completion of the separation have also developed strategic relationships with a large pool of established general contractors in each of our target markets to ensure all renovations are completed with the highest quality standards. In addition, we are highly conscious of our environmental impact and are committed to providing homes that are clean and energy efficient.

Great Service

        We believe that residents deserve great service. Upon the completion of the separation, our approach to service will best be exemplified by our Manager's 5+3 Resident Contact Model. Under this multi-faceted approach, a resident will receive a minimum of five contacts from various property management representatives in the first 90 days after move-in and three continuing points of contact through their residency. Upon the completion of the separation, our Manager will utilize Compass to ensure that all inquiries and maintenance requests are handled promptly and professionally, minimizing the time required from our residents. Compass also will enables us to continually measure resident feedback and improve the resident experience. This high-touch model will set initial expectations with

 

residents and maintain frequent contact to ensure residents uphold their lease requirements. In addition, the members of the Waypoint executive team who will be members of our Manager's executive team upon the completion of the separation have created the Waypoint Guarantee to demonstrate the commitment to providing the best customer service for our residents. Among other things, upon the completion of the separation, we will guarantee that if a resident is unhappy in the home and wishes to move, the lease may be terminated within the first 30 days of the lease term.

Rewarding Leases

        We believe that renting a home should be a rewarding experience, and, upon the completion of the separation, our Manager's Lease Plus Rewards® program will be setting a new standard for the home rental experience. Upon signing a twenty-four month lease, our residents will have the opportunity to earn credits, or Waypoints™, in a number of ways, including by making timely rent payments and maintaining the home in good condition. Program participants will be able to redeem their Waypoints™ during their lease term to purchase home improvements from a catalog of offerings or, at the end of their two-year lease term, to apply their Waypoints™ towards rent credits upon renewal or to receive cash back.

Foundation of Respect

        We value our commitment to building a company that values people and the communities in which we live and work. We are proud that we will be a real estate company with an innovative business model that we believe will make a positive impact for all involved stakeholders—residents, investors and community members—and we will continue to seek opportunities to strengthen our relationships with our stakeholders, including through participation in community projects and local charitable organizations.

Disciplined Approach to Entering New Markets

        We expect to continue expanding into new markets where we can build a portfolio of sufficient size to maintain efficient, vertical operations to meet our residents' expectations. We seek to enter new markets where we can provide a high-quality rental offering in desirable single-family communities. We establish "buy zones" where we attempt to acquire a critical mass of homes to maximize operating efficiencies.

        When entering a new market, a regional director will be selected and paired with the vice president of new markets to guide the expansion in an effective and timely manner pursuant to a detailed plan built on the extensive experience of the members of the Waypoint executive team who will be members of our Manager's executive team. Our Manager's automated and proprietary systems, tools and controls will allow it to establish a functioning acquisition platform to enable us to begin acquiring homes in new markets within 30 to 60 days of entry. Our Manager's highly scalable infrastructure will enable us to acquire homes that meet specified underwriting standards with a high degree of precision and quickly establish a critical mass of homes to maximize efficiency.

        We believe that our Manager's disciplined approach to entering new markets provides us with the flexibility to deploy capital to the most attractive markets without sacrificing our operational advantages.

 

Alignment of our Manager's and Starwood Capital Group's Interests with Our Interests

        Concurrently with the completion of the separation, we will grant our Manager            restricted share units, options with respect to            of our common shares and            LTIP units of limited partnership interest in our operating partnership, or LTIP units, which will vest ratably on a quarterly basis over a            -year period beginning on the first day of the first full calendar quarter after we complete the separation, and            of our common shares will be distributed to Starwood Capital Group and certain of Starwood Capital Group's officers and affiliates as a result of their ownership of shares of Starwood Property Trust common stock. In addition, the management fee we pay our Manager will be dependent on the price of our common shares, which will give our Manager an incentive to maximize the value of our common shares. Starwood Property Trust formed us to concentrate the business of ownership of single-family residential rental homes and distressed and non-performing residential mortgage loans, and our Manager and Starwood Capital Group have agreed that neither they nor any entity controlled by Starwood Capital Group (including Starwood Property Trust) will sponsor or manage any U.S. publicly traded entity (other than us) that invests primarily in single-family residential rental homes or distressed and non-performing single-family residential mortgage loans for so long as the management agreement is in effect and our Manager and Starwood Capital Group are under common control.

Comprehensive Capital Raising and Financing Strategy

        We believe our capital structure provides us with significant financial capacity and flexibility to fund our future growth. As a public company, we believe we will have access to multiple sources of capital raising and financing. Over time, these capital raising alternatives may include follow-on offerings of our common shares, preferred shares and hybrid equity, and these financing alternatives may include securitizations, secured and unsecured corporate level debt and credit facilities. We are in negotiations to enter into a $       million secured revolving credit facility prior to the completion of the separation that would be available to fund our future growth, although there can be no assurance that we will be able to enter into this new facility on favorable terms, or at all.

Our Portfolio

        As of June 30, 2013, our portfolio consisted of 4,313 owned homes and homes underlying distressed and non-performing residential mortgage loans, including (1) 2,778 homes located in 25 states with an aggregate investment, inclusive of acquisition and actual and budgeted upfront renovation costs, of approximately $381.8 million and (2) distressed and non-performing residential mortgage loans with an UPB of $402.4 million and a total cost basis of $189.3 million that are secured by first liens on 1,535 homes. As of June 30, 2013, the 787 homes we owned for more than 180 days were approximately 73.4% leased, which excludes 66 homes listed for sale.

        For the period from July 1, 2013 through September 30, 2013, we acquired and, as of September 30, 2013, we had contracted to acquire an aggregate of 1,692 additional owned homes and homes underlying distressed and non-performing residential mortgage loans, including (1) 1,459 homes acquired with an aggregate investment, inclusive of acquisition and actual and budgeted upfront renovation costs, of approximately $195.4 million and 91 homes under contract with an aggregate expected acquisition cost of $13.0 million and (2) distressed and non-performing residential mortgage loans acquired with an UPB of $40.6 million and a total purchase price of $20.2 million that are secured by first liens on 142 homes. There can be no assurance that we will close on all of the homes we have contracted to acquire.

 

        Set forth below is additional information as of June 30, 2013 regarding homes included in our portfolio.

        Set forth below is additional information as of June 30, 2013 regarding our leasing experience with respect to homes included in our portfolio.

 

        Set forth below is additional information as of June 30, 2013 regarding distressed and non-performing residential mortgage loans included in our portfolio. As of June 30, 2013, the total cost basis of $189.3 million for our portfolio of distressed and non-performing residential mortgage loans was 61.3% of the aggregate market value, as determined by the most recent BPO, provided to us by the applicable seller for each property in the respective portfolio or otherwise obtained by us, in each case prior to our purchase of the related portfolio. We cannot assure you that the BPOs accurately reflected the actual market value of the related property at the time of our respective purchases of distressed and non-performing residential mortgage loans or accurately reflect such market value today.

Our Financing Strategy

        We will have no outstanding indebtedness upon the separation. We intend to employ prudent leverage, to the extent available, to fund the acquisition of residential assets and to increase our potential return on shareholder equity. Any decision to use leverage will be based on our Manager's assessment of a variety of factors, including the anticipated liquidity and price volatility of the assets in our investment portfolio, the cash flow generation capability of our assets, the availability of credit on favorable terms, any prepayment penalties and restrictions on refinancing, the credit quality of our assets and our outlook for borrowing costs relative to the unlevered yields on our assets. We expect to employ portfolio financing primarily and to utilize credit facilities or other bank or capital markets debt financing, if available. We may consider seller financing if available from sellers of portfolios of residential assets and potentially financing from government sponsored enterprises if attractive programs are available. We may also utilize other financing alternatives such as securitizations, depending upon market conditions, and capital raising alternatives such as follow-on offerings of our common shares, preferred shares and hybrid equity.

        We are in negotiations to enter into a $         million secured revolving credit facility prior to the completion of the separation, although there can be no assurance that we will be able to enter into this new facility on favorable terms, or at all.

 

Summary Risk Factors

        You should consider carefully the risks in owning our common shares discussed below and under the heading "Risk Factors" beginning on page 45 of this information statement. If any of these risks occur, our business, financial condition, liquidity, results of operations and prospects, as well as our ability to make distributions to our shareholders, could be materially and adversely affected. In that case, the market price of our common shares could decline significantly, and you could lose all or a part of the value of your ownership in our common shares.

•

We are employing a new and untested business model with no proven track record, which may make our business difficult to evaluate.



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We are a recently organized company with a very limited operating history, and we may not be able to operate our business successfully or generate sufficient cash flow to make or sustain distributions to our shareholders.



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We intend to continue to rapidly expand our scale of operations and make acquisitions even if the rental and housing markets are not as favorable as they have been in recent months, which could adversely impact anticipated yields.



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We will rely on Prime with respect to our distressed and non-performing residential mortgage loan acquisitions, and, if our relationship with Prime is terminated, we may not be able to timely replace Prime on favorable terms in a timely manner, or at all.



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Our investments are and will continue to be concentrated in our target markets and in the single-family homes sector of the real estate industry, which exposes us to downturns in our target markets or in the single-family homes sector.



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Competition in identifying and acquiring homes and distressed and non-performing residential mortgage loans could adversely affect our ability to implement our business and growth strategies, which could materially and adversely affect us.



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We face significant competition in the leasing market for quality residents, which may limit our ability to rent our homes on favorable terms or at all.



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Mortgage loan modification programs and future legislative action may adversely affect the number of available homes and distressed and non-performing residential mortgage loans that meet our investment criteria.



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Distressed and non-performing residential mortgage loans may have a particularly high risk of loss, and we cannot assure you that we will be able to generate attractive risk-adjusted returns.



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The large supply of homes becoming available for purchase as a result of the heavy volume of foreclosures, combined with low residential mortgage rates, may cause some potential renters to seek to purchase residences rather than lease them and, as a result, cause a decline in the number and quality of potential residents.



•

The supply of distressed and non-performing residential mortgage loans may decline over time as a result of higher credit standards for new loans and/or general economic improvement and the prices for distressed and non-performing residential mortgage loans may increase, which could materially and adversely affect us.



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Our evaluation of homes and distressed and non-performing residential mortgage loans involves a number of assumptions that may prove inaccurate, which could result in us paying too much for any such assets we acquire or overvaluing such assets or such assets failing to perform as we expect.

 

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Our leases are relatively short-term in nature, which exposes us to the risk that we may have to re-lease our rental homes frequently and we may be unable to do so on attractive terms, on a timely basis or at all.



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Our inability to promptly foreclose upon defaulted residential mortgage loans could increase our costs and/or diminish our expected return on investments.



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Our operating results are subject to general economic conditions and risks associated with our real estate assets.



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We may have difficulty selling our real estate investments, and our ability to distribute all or a portion of the net proceeds from such sale to our shareholders may be limited.



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We are dependent on Starwood Capital Group, including our Manager, and their key personnel who provide services to us, and we may not find a suitable replacement for our Manager or Starwood Capital Group if the management agreement is terminated, or for these key personnel if they leave Starwood Capital Group or otherwise become unavailable to us.



•

We may have conflicts of interest with Starwood Capital Group and Starwood Property Trust.



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We own homes in some of the same geographic regions as the Waypoint legacy funds and may compete for tenants with the Waypoint legacy funds.



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We may have other conflicts of interest with the Waypoint manager and the Waypoint legacy funds.



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The management agreement with our Manager was not negotiated on an arm's-length basis and may not be as favorable to us as if it had been negotiated with an unaffiliated third party and may be costly and difficult to terminate.



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Upon the completion of the separation, our Manager's operations will be dependent upon Compass. The interruption of our Manager's ability to use Compass may have an adverse impact on our business.



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Upon the completion of the separation, our Manger will seek to retain approximately 570 employees currently employed by the Waypoint manager who will provide our Manager with in-house operations associated with every stage of the life cycle of a home. Our Manager may not be able to retain all of these employees, and, in connection with any employees our Manager does retain, we will incur significant costs related to reimbursing our Manager for our allocable share of compensation paid to our Manager's officers and employees in addition to the management fee payable to our Manager.



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If we internalize our Manager, we will become exposed to new and additional costs and risks and may pay substantial consideration to our Manager.



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We may be unable to achieve some or all of the benefits that we expect to achieve from the separation.



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We expect to use leverage in executing our business and growth strategies, which may adversely affect the return on our assets and may reduce cash available for distribution to our shareholders.



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Access to financing sources may not be available on favorable terms, or at all, especially in light of current market conditions, which could adversely affect our ability to maximize our returns.



•

No public market currently exists for our common shares and if an active trading market does not develop or is not sustained, your ability to sell shares when desired and the prices obtained will be adversely affected.

 

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We have not established a minimum distribution payment level, and we cannot assure you of our ability to make distributions in the future.



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Certain provisions of Maryland law could inhibit changes in control of us.



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Our failure to qualify as a REIT in any taxable year would subject us to U.S. federal income tax and potentially state and local taxes, which would reduce the cash available for distribution to our shareholders.



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We may be required to hold and sell a significant amount of properties through one or more taxable REIT subsidiaries, or TRSs, the earnings of which are subject to U.S. federal corporate income taxation, and the amount of such taxes may be material.



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We may recognize taxable income or gain that is unaccompanied by cash due to (1) our investment in distressed and non-performing residential mortgage loans and being required to accrue income with respect to such loans even in the absence of payments or (2) upon taking title to real property by foreclosure, deed in lieu of foreclosure or similar process. This may require us to borrow money or seek other sources of capital, the availability and amount of which cannot be assured, or engage in transactions in which we otherwise would not in order to generate the funds necessary to meet the REIT distribution requirements.

Our History and Organizational Structure

        We were organized as a Maryland corporation in May 2012 as a wholly-owned subsidiary of Starwood Property Trust. Subsequently, we changed our corporate form from a Maryland corporation to a Maryland real estate investment trust and our name from Starwood Residential Properties, Inc. to Starwood Waypoint Residential Trust. Upon the completion of the separation, Starwood Property Trust will not own any of our common shares. Starwood Property Trust is a NYSE-listed REIT externally managed by a subsidiary of Starwood Capital Group that is focused on originating, investing in, financing and managing commercial mortgage loans and other commercial real estate debt investments, commercial mortgage-backed securities and other commercial real estate-related debt investments. Starwood Property Trust has also invested in residential mortgage-backed securities, REO, distressed and non-performing residential mortgage loans and commercial properties subject to net leases. Starwood Property Trust formed us to concentrate the business of ownership of single-family residential rental homes and distressed and non-performing residential mortgage loans.

        Our operating partnership was formed as a Delaware limited partnership in May 2012. Our wholly-owned subsidiary is the sole general partner of our operating partnership, and we conduct substantially all of our business through our operating partnership. Concurrently with the completion of the separation, we will grant our Manager                LTIP units, as described in "Management—Equity Incentive Plans." This award of LTIP units will vest ratably on a quarterly basis over a                -year period beginning on the first day of the first full calendar quarter after we complete the separation. Once vested, this award is convertible into OP units on the terms set forth in our operating partnership's partnership agreement. Assuming that the award is vested and converted into OP units concurrently with the completion of the separation, we would own        % of the OP units in our operating partnership upon the completion of the separation.

        We will be externally managed and advised by our Manager. Our Manager was formed as a Delaware limited liability company in June 2013. Our Manager is an affiliate of Starwood Capital Group, a privately-held private equity firm founded and controlled by Barry Sternlicht, our chairman. Our Manager has entered into a transaction agreement to acquire, upon the completion of the separation, the Waypoint platform currently operated by the Waypoint manager. In connection with the acquisition of the Waypoint platform, the Waypoint executive team will become, upon the completion of the separation, members of our Manager's executive team. In addition, upon the completion of the

 

separation, our Manager will seek to retain approximately 570 employees currently employed by the Waypoint manager who will provide our Manager with in-house operations associated with every stage of the life cycle of a home. This acquisition is subject to completion of documentation and customary closing conditions and will be conditioned upon, and will occur upon the completion of, the separation. As a result, there can be no assurance that this acquisition will be completed on the terms described or at all.

        The following chart shows our structure after giving effect to the separation.

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(1)

Excludes any of our common shares to be distributed to Starwood Capital Group, our trustees or our officers as the result of any shares of Starwood Property Trust common stock owned by them.

(2)

Includes (a) an aggregate of                of our restricted common shares to be granted to our            trustee nominees pursuant to the Starwood Waypoint Residential Trust Non-Executive Trustee Share Plan, or the Trustee Share Plan, described in "Management—Equity Incentive Plans" concurrently with the completion of the separation and (b)              of our common shares to be distributed to our trustees and officers as a result of their ownership of shares of Starwood Property Trust common stock.

 

(3)

Starwood Capital Group Global, L.P. is controlled by Mr. Sternlicht, our chairman.

(4)

The holders of the class A interests will be entitled to vote on all matters on which members of our Manager are entitled to vote.

(5)

The holders of the class B interests will have voting or consent rights solely with respect to specific items. The holders of the class B interests will be entitled to a percentage of any management fees paid to our Manager, which percentage may adjust over time based on the amount, if any, of incremental equity capital invested by us. The holders of the class B interests will also be entitled to a portion of any consideration paid by the us in connection with an internalization of our Manager, should one occur.

(6)

Concurrently with the completion of the separation, we will grant our Manager                restricted share units and options with respect to             of our common shares, as described in "Management—Equity Incentive Plans." This award of restricted share units and options will vest ratably on a quarterly basis over a             -year period beginning on the first day of the first full calendar quarter after we complete the distribution. Once vested and, in the case of the options, exercised, this award will be settled in our common shares. The common share percentages assume that these awards have been settled in our common shares concurrently with the completion of the separation. Also includes            of our common shares to be distributed to Starwood Capital Group and certain of Starwood Capital Group's officers and affiliates (other than shares distributed to our trustees and officers) as a result of their ownership of shares of Starwood Property Trust common stock.

(7)

Concurrently with the completion of the separation, we will grant our Manager                LTIP units, as described in "Management—Equity Incentive Plans." This award of LTIP units will vest ratably on a quarterly basis over a            -year period beginning on the first day of the first full calendar quarter after we complete the separation. Once vested, this award is convertible into OP units on the terms set forth in our operating partnership's partnership agreement. The OP unit percentages assume that the award has been vested and converted into OP units concurrently with the completion of the separation.

Our Management Arrangements

Management Agreement with Our Manager

        We will enter into a management agreement with our Manager effective upon the completion of the separation. Pursuant to the management agreement, our Manager will implement our business and growth strategies and perform certain services for us, subject to oversight by our board of trustees. Our Manager will be responsible for, among other duties, (1) identifying homes and distressed and non-performing residential mortgage loans for acquisition, including by supervising the regional and local partners with whom our Manager has entered into strategic relationships, (2) acquiring homes and distressed and non-performing residential mortgage loans, (3) supervising its employees with respect to the conversion of our acquisitions into rental homes and the subsequent renovation, leasing, maintenance and other property management of our rental homes, (4) financing our acquisitions and activities related thereto and (5) providing us with investment advisory services. In addition, our Manager has an investment committee that will oversee compliance with our investment policies, business and growth strategies and financing strategy.

        The initial term of the management agreement will end three years after the completion of the separation, with automatic one-year renewal terms that end on the anniversary of the completion of the separation. Our independent trustees will review our Manager's performance annually, and, following the initial term, the management agreement may be terminated annually upon the affirmative vote of at least two-thirds of our independent trustees based upon: (1) our Manager's unsatisfactory

 

performance that is materially detrimental to us; or (2) our determination that the management fees payable to our Manager are unfair, subject to our Manager's right to prevent termination based on unfair fees by accepting a reduction of management fees agreed to by at least two-thirds of our independent trustees. We will provide our Manager with 180 days' prior written notice of such a termination. Unless terminated for cause, our Manager will be paid a termination fee equal to three times the annualized base management fee, as described in the table below, based on the management fee paid in the most recently completed eight fiscal quarters before the date of termination. We may also terminate the management agreement at any time, including during the initial term, for cause without payment of any termination fee. During the initial three-year term of the management agreement, we may not terminate the management agreement except for cause. Our Manager may decline to renew the management agreement by providing us with 180 days prior written notice, in which case we would not be required to pay a termination fee. Our Manager is entitled to a termination fee upon termination of the management agreement by us without cause or termination by our Manager if we materially breach the management agreement.

 

        The following table summarizes the fees and expense reimbursements that we will pay to our Manager:

 

 

Investment Advisory Agreement

        Our Manager, acting on our behalf, will enter into an investment advisory agreement with Starwood Capital Group Management, L.L.C., which is registered as an investment adviser under the Investment Advisers Act of 1940, as amended, or the Advisers Act, effective upon the completion of the separation. Pursuant to this agreement, through our Manager, we will be provided with access to, among other things, Starwood Capital Group Management, L.L.C.'s investment advice regarding securities investments and Starwood Capital Group's portfolio management, asset valuation, risk management and asset management services, as well as administration services addressing legal, compliance, investor relations and information technologies necessary for our operations, in exchange for a fee representing the Manager's allocable cost for these services. All securities investment management services and advice with respect to our portfolio shall be made by the registered investment adviser, Starwood Capital Group Management, L.L.C. Our Manager will not provide any investment management services or investment advice to us with respect to securities. The fee paid by our Manager pursuant to this agreement shall not constitute a reimbursable expense under the management agreement.

Acquisition Sourcing and Property Management Arrangements

        Our Manager currently utilizes strategic relationships with regional and local partners to exclusively assist us in identifying individual home acquisition opportunities within our target parameters in our target markets. In addition, in certain markets where we do not own a large number of homes, our Manager utilizes strategic relationships with local property management companies that are recognized leaders in their markets to provide property management, rehabilitation and leasing services for our homes. Our Manager will compensate our regional and local partners and property management

 

companies directly based on negotiated market rates, and such compensation will constitute a reimbursable expense under the management agreement.

Prime Joint Venture

        We have a joint venture with Prime, an entity managed by Prime Finance, an asset manager that specializes in acquisition, resolution and disposition of distressed and non-performing residential mortgage loans. We own a greater than 99% interest in the joint venture, which owns all of our distressed and non-performing residential mortgage loans. We and Prime formed the joint venture for the purposes of: (1) acquiring pools or groups of distressed and non-performing residential mortgage loans and homes either (A) from the sellers who acquired such homes through foreclosure, deed-in-lieu of foreclosure or other similar process or (B) through foreclosure, deed-in-lieu of foreclosure or other similar process; (2) converting distressed and non-performing residential mortgage loans to performing residential mortgage loans through modifications, holding such loans, selling such loans or converting such loans to homes; and (3) either selling homes or renting homes as traditional residential rental properties. Prime has contributed less than 1% of the cash equity to the joint venture, or the Prime Percentage Interest, and Prime, in accordance with our instructions (which, upon the completion of the separation, will be based in part on the use of certain analytic tools included in the Waypoint platform), identifies potential distressed and non-performing residential mortgage loan acquisitions for the joint venture and coordinates the acquisition, resolution or disposition of any such loans for the joint venture. Our distressed and non-performing residential mortgage loans are serviced by Prime's team of asset managers or licensed third-party mortgage loan servicers.

        We have exclusive management decision making control with respect to various matters of the joint venture and control over all decisions of the joint venture through our veto power. We may elect, in our sole and absolute discretion, to delegate certain ministerial or day-to-day management rights related to the joint venture to employees, affiliates or agents of us or Prime.

        We also have the exclusive right under the joint venture, exercisable in our sole and absolute discretion, to designate distressed and non-performing residential mortgage loans and homes as "Rental Pool Assets." We will be liable for all expenses and benefit from all income from any Rental Pool Assets. The joint venture will be liable for all expenses and benefit from all income from all distressed and non-performing residential mortgage loans and homes not segregated into Rental Pool Assets, or the Non-Rental Pool Assets. We have the exclusive right to transfer any Rental Pool Assets from the joint venture to us, and we intend to exercise such right with respect to any homes held by the joint venture that we, in our sole and absolute discretion, have determined not to sell through the joint venture. Prime earns a fee from us equal to 3% of the value (as determined pursuant to the joint venture agreement) of the distressed and non-performing residential mortgage loans and homes we designate as Rental Pool Assets and that are transferred to us.

        In connection with the asset management services that Prime provides to the joint venture's Non-Rental Pool Assets, the joint venture pays Prime a monthly asset management fee equal to 0.167% of the aggregate net asset cost to the joint venture of the then existing Non-Rental Pool Assets. Prime's portion of all cash flow or income distributions from the joint venture with respect to Non-Rental Pool Assets is equal to: (1) Prime's Percentage Interest until we and Prime realize through distributions a 10% internal rate of return (as defined in the joint venture agreement); (2) 20% of any remaining distributable funds until we and Prime realize through distributions a cumulative 20% internal rate of return; and (3) 30% of any remaining distributable funds. All other funds distributed by the joint venture with respect to Non-Rental Pool Assets are distributed to us.

 

Conflicts of Interest and Related Policies

Management

        We are dependent on our Manager for our day-to-day management and do not and will not have any independent officers or employees. All of our officers are also executives of our Manager. Upon the completion of the separation, each of Gary M. Beasley, who will be our co-chief executive officer; Douglas R. Brien, who will be our co-chief executive officer; Colin T. Wiel, who will be our chief investment officer; Nina A. Tran, who will be our chief financial officer; Scott T. Gable, who will be our chief operating officer; S. Ali Nazar, who will be our chief technology officer; and Tamra D. Browne, who will be our general counsel, will continue to own an indirect beneficial ownership interest in the Waypoint manager. These individuals, as well as other employees of our Manager on whom we rely, could make substantial profits as a result of opportunities or management resources allocated to entities other than us, and they may have greater financial incentives tied to the success of such entities than to us. In addition, the obligations of our Manager and its officers and personnel to engage in other business activities, including for Starwood Capital Group or, upon the completion of the separation, the Waypoint manager, may reduce the time that our Manager and its officers and personnel spend managing us. Our management agreement with our Manager was negotiated between related parties and its terms, including fees and other amounts payable, may not be as favorable to us as if it had been negotiated at arm's length with an unaffiliated third party.

The Waypoint Legacy Funds and the Waypoint Manager

        The Waypoint manager manages homes owned by the Waypoint legacy funds. The Waypoint manager has agreed that, upon the full deployment of the Waypoint legacy fund's capital commitments (of which approximately $3.0 million was estimated to be remaining as of September 30, 2013), the Waypoint legacy funds and the Waypoint manager will no longer contract to acquire additional homes and will not contract to acquire distressed and non-performing single-family residential mortgage loans, except for (1) acquisitions of homes by a Waypoint legacy fund funded solely using proceeds of sales of other homes owned by such Waypoint legacy fund or (2) the acquisition of homes or portfolios of homes that do not meet our principal investment objectives. We are not acquiring the Waypoint legacy funds or the assets thereof. As a result, the Waypoint manager, and thereby upon the completion of the separation, certain of our officers and trustees and members of our Manager's executive team, may compete directly with us for financing opportunities, for leasing and in other aspects of our business, which could have an adverse effect on our business. The Waypoint manager has no fiduciary duties to us and there is no assurance that any conflicts of interest between the Waypoint manager and us will be resolved in favor of our shareholders.

        Our Manager will not acquire the Waypoint manager. Through one or more affiliates, the Waypoint manager, upon the completion of the separation, will (1) continue to be owned by certain members of the Waypoint executive team who will be members of our Manager's executive team and other third parties and (2) be permitted to continue to manage the assets and properties of the Waypoint legacy and to collect and retain for the Waypoint manager's sole account the net fee income and promoted interests in such entities. To facilitate these efforts, appropriate Waypoint manager affiliates will be granted, upon the completion of the separation and during the duration of the Waypoint legacy funds' existence, (1) a license to use the technology and operational platform and knowhow of our Manager and (2) in order to assist in the operation of homes owned by the Waypoint legacy funds, access to the approximately 570 employees of the Waypoint manager that our Manager will seek to retain upon the completion of the separation. Any expenses, including personnel and employee costs related to the Waypoint manager or the Waypoint legacy funds, incurred by our Manager will either be reimbursed by the Waypoint manager at actual cost or covered (in whole or in part) pursuant to an agreed upon arrangement with the Waypoint manager. The fees that we pay to our Manager will not be reduced in connection with any reimbursement of our Manager by the

 

Waypoint manager or the Waypoint legacy funds. Although the approximately 570 employees of the Waypoint manager that our Manager will seek to retain upon the completion of the separation will be employed by our Manger and not the Waypoint manager, because the Waypoint manager will continue to have access to such employees to assist in the operation of the Waypoint legacy funds, our Manager's employees will have less time available to devote to our business and may be unable to effectively allocate their time and other resources among multiple portfolios.

Current Co-Investment Rights and Obligations

        Our ability to make investments pursuant to our business and growth strategies is currently subject to (1) the fund documents of the Starwood Private Real Estate Funds and (2) the co-investment and allocation agreement among our Manager, Starwood Capital Group and us.

        Pursuant to the fund documents of the Starwood Private Real Estate Funds, if a proposed investment is (1) to be made by any investment vehicle (including us or Starwood Property Trust) managed by an entity controlled by Starwood Capital Group, (2) to be made in equity or debt interests relating to real estate and (3) expected (by the manager of the entity proposing to make the investment), at the time such investments is made, to produce an internal rate of return, or IRR, in excess of 14%, or a Starwood Real Estate Fund Allocation Investment, then the Starwood Private Real Estate Funds collectively will have the right to invest 25% of the equity capital proposed to be invested in such Starwood Real Estate Fund Allocation Investment.

        Pursuant to the co-investment and allocation agreement among our Manager, Starwood Capital Group and us, if an investment proposed to be made by any Starwood Party or us consists of single-family rental homes and/or distressed and non-performing single-family residential mortgage loans (or a portfolio that contains equity interests relating to real estate, if our Manager determines that more than 50% of the aggregate anticipated investment returns from the portfolio are expected to come from single-family rental homes and/or distressed and non-performing single-family residential mortgage loans), we will have the right to invest at least 75% of the equity capital proposed to be invested in such investment.

        Whether any Starwood Party or we exercise all or any part of its or our co-investment right will be subject to, among other things, the determination by the sponsor, manager or general partner, as the case may be, of each Starwood Party (each an affiliate of Starwood Capital Group) that the investment is suitable for such fund and the determination by our Manager (also an affiliate of Starwood Capital Group) that the investment is suitable for us.

        Our independent trustees will periodically review our Manager's, Starwood Capital Group's and Starwood Property Trust's compliance with the co-investment and allocation provisions described above, but they will not approve each co-investment by a Starwood Party and us unless the amount of capital we invest in the investment otherwise requires the review and approval of our independent trustees pursuant to our investment guidelines.

Exclusivity Provisions

        Starwood Property Trust, the company from which we are separating, is a NYSE-listed REIT externally managed by a subsidiary of Starwood Capital Group that is focused on originating, investing in, financing and managing commercial mortgage loans and other commercial real estate debt investments, commercial mortgage-backed securities and other commercial real estate-related debt investments. Starwood Property Trust has also invested in residential mortgage-backed securities, REO, distressed and non-performing residential mortgage loans and commercial properties subject to net leases. After the separation, we will focus primarily on investments in homes and distressed and non-performing residential mortgage loans, and Starwood Property Trust will focus primarily on commercial mortgage loans and other commercial real estate debt investments, commercial mortgage-

 

backed securities, other commercial real estate-related debt investments, residential mortgage-backed securities and commercial properties subject to net leases.

        Pursuant to the co-investment and allocation agreement among our Manager, Starwood Capital Group and us, our Manager and Starwood Capital Group have agreed that neither they nor any entity controlled by Starwood Capital Group (including Starwood Property Trust) will sponsor or manage any U.S. publicly traded entity (other than us) that invests primarily in single-family residential rental homes or distressed and non-performing single-family residential mortgage loans for so long as the management agreement is in effect and our Manager and Starwood Capital Group are under common control. However, our Manager and Starwood Capital Group and their respective affiliates may sponsor or manage (1) a U.S. publicly traded entity (including Starwood Property Trust) that invests generally in real estate assets, including rental homes or distressed and non-performing single-family residential mortgage loans, so long as any such entity does not invest primarily in single-family residential rental homes or distressed and non-performing single-family residential mortgage loans, or (2) a private or foreign entity that invests primarily in single-family residential rental homes or distressed and non-performing single-family residential mortgage loans; provided that, in each case, Starwood Capital Group will adopt a policy that either (a) provides for the fair and equitable allocation of investment opportunities between any such entity and us or (b) provides us the right to co-invest with any such entity, in each case subject to the suitability of each investment opportunity for any such entity and us and any such entity's and our availability of cash for investment.

        For a period of three years from the completion of the separation, except for activities related to the management of the Waypoint legacy funds, each of the Waypoint parties have agreed that they will not, and will cause each of their affiliates not to, directly or indirectly:

(1)

engage or invest in activities or businesses, or establish any new businesses, within any geographic location in which we, our Manager, any of our or our Manager's respective affiliates or the Waypoint platform conducted, or was planning to conduct, business on or before the completion of the separation that are substantially in competition with us, our Manager or the Waypoint platform including (a) soliciting any customer or prospective customer of us, our Manager or any of our or our Manager's respective affiliates to purchase any goods or services sold by us, our Manager or any of our or our Manager's respective affiliates, from anyone other than us, our Manager and our or our Manager's respective affiliates, and (b) assisting any person in any way to do, or attempt to do, anything prohibited by clause (a) above; provided, however, that nothing will prohibit (i) any Waypoint party or GI party from owning not in excess of 5% in the aggregate of any class of securities of any corporation if such securities are publicly traded and listed on any national or regional stock exchange or (ii) any individual from owning, acquiring, renovating, marketing, leasing and maintaining residential homes as personal investments; or



(2)

solicit, recruit or hire any of the members of the Waypoint executive team or encourage any of such employees to leave the employment of our Manager or any of its affiliates; provided, however, that this clause shall not apply to (a) any members of the Waypoint executive team who ceased to be an employee of our Manager or any of its affiliates at least 90 days prior to such solicitation or hiring, or (b) any general mass solicitations of employment and generalized employee searches by headhunter/search firms (in either case not focused specifically on or directed in any way at such employees of our Manager or any of its affiliates) or the hiring of any person who responds to any such general solicitations or searches.

        During the time that a GI party designee serves on the board of directors of our Manager, each of the GI parties has agreed that it will not, either directly or through a portfolio company that it controls, invest equity in any entity (other than Waypoint/GI Venture, LLC and Waypoint Fund XI, LLC) whose primary business purpose is the acquisition and rental of single-family homes.

 

Each of the GI parties has also agreed that, for a period of 18 months from the completion of the separation, neither it nor any of its portfolio companies acting on its behalf and at its direction will solicit or hire any of the members of the Waypoint executive team or encourage any of such employees to leave the employment of our Manager or any of its affiliates; provided, however, that this clause will not apply to (a) any members of the Waypoint executive team who ceased to be an employee of our Manager or any of its affiliates at least 90 days prior to such solicitation or hiring, or (b) any general mass solicitations of employment and generalized employee searches by headhunter/search firms (in either case not focused specifically on or directed in any way at such employees of our Manager or any of its affiliates) or the hiring of any person who responds to any such general solicitations or searches who responds to any such general solicitations or searches.

Transactions with Other Starwood Capital Group and Waypoint Related Entities

        In order to avoid any actual or perceived conflicts of interest between our Manager, Starwood Capital Group, Starwood Property Trust, any of their affiliates or any investment vehicle sponsored or managed by Starwood Capital Group or any of its affiliates, which we refer to collectively as the Starwood related parties, or the Waypoint manager, any of its affiliates or any investment vehicle sponsored or managed by the Waypoint manager or any of its affiliates, which we refer to collectively as the Waypoint related parties, and us, the approval of a majority of our independent trustees will be required to approve (1) any purchase of our assets by any of the Starwood related parties or any of the Waypoint related parties and (2) any purchase by us of any assets of any of the Starwood related parties or any of the Waypoint related parties.

Registration Rights of our Manager

        We have entered into a registration rights agreement with Starwood Capital Group, certain of Starwood Capital Group's officers and affiliates and our Manager with respect to (1) our common shares to be distributed to Starwood Capital Group and certain of Starwood Capital Group's officers and affiliates as a result of their ownership of shares of Starwood Property Trust common stock, (2) our common shares that are issuable upon (a) the vesting of the restricted share units, (b) the vesting and exercise of the options and (c) the vesting and conversion of LTIP units and the subsequent redemption of the related OP units to be granted to our Manager under our Starwood Waypoint Residential Trust Manager Equity Plan, or the Manager Equity Plan, concurrently with the completion of the separation and (3) any equity-based awards granted to our Manager under our Manager Equity Plan in the future. This agreement provides Starwood Capital Group, certain of Starwood Capital Group's officers and affiliates and our Manager with shelf, demand and piggyback registration rights.

Separation and Distribution Agreement

        We have entered into a Separation and Distribution Agreement to effect the separation and distribution and provide a framework for our relationships with Starwood Property Trust after the separation. This agreement will govern the relationship between us and Starwood Property Trust subsequent to the completion of the separation and distribution and provide for the allocation between us and Starwood Property Trust of Starwood Property Trust's assets, liabilities and obligations (including tax-related assets and liabilities) attributable to periods prior to the separation from Starwood Property Trust. See "Certain Relationships and Related Transactions—Separation and Distribution Agreement with Starwood Property Trust."

Distribution Policy

        We anticipate making regular quarterly distributions to holders of our common shares. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it

 

pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its REIT taxable income. We generally intend over time to make quarterly distributions in an amount at least equal to our REIT taxable income.

        Any distributions we make to our shareholders will be at the discretion of our board of trustees and will depend upon, among other things, our actual and anticipated results of operations and liquidity, which will be affected by various factors, including the income from our portfolio, our operating expenses and any other expenditures. For more information, see "Distribution Policy." Distributions to our shareholders will be generally taxable to them as ordinary income, although a portion of our distributions may be designated by us as capital gain or qualified dividend income or may constitute a return of capital. See "U.S. Federal Income Tax Considerations—Taxation of Shareholders."

REIT Qualification

        We intend to elect to qualify as a REIT commencing with our taxable year ending on December 31, 2014. Our qualification as a REIT depends upon our ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code of 1986, or the Code, relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels and the diversity of ownership of our shares. We believe that we have been organized in conformity with the requirements for qualification and taxation as a REIT under the Code, and that our intended manner of operation will enable us to meet the requirements for qualification and taxation as a REIT.

        So long as we qualify as a REIT, we generally will not be subject to U.S. federal income tax on our REIT taxable income that we distribute currently to our shareholders. If we fail to qualify as a REIT in any taxable year and do not qualify for certain statutory relief provisions, we will be subject to U.S. federal income tax at regular corporate rates and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year during which we lost our REIT qualification. Even if we qualify for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our income or property, and any income or gain derived through our TRSs will be subject to U.S. federal corporate income taxes.

Restrictions on Ownership and Transfer

        Subject to certain exceptions, our declaration of trust restricts ownership of more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of any class or series of our shares of beneficial interest, in order to protect our status as a REIT for U.S. federal income tax purposes. See "Description of Shares—Restrictions on Ownership and Transfer."

        Our declaration of trust also prohibits any person from, among other matters:

•

beneficially or constructively owning or transferring our shares of beneficial interest if such ownership or transfer would result in our being "closely held" within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a year);



•

transferring our shares of beneficial interest if such transfer would result in our shares of beneficial interest being owned by fewer than 100 persons, effective beginning on the date on which we first have 100 shareholders;



•

beneficially or constructively owning our shares of beneficial interest to the extent such beneficial or constructive ownership would cause us to constructively own 10% or more of the

 

ownership interests in a tenant (other than a TRS) of our real property within the meaning of Section 856(d)(2)(B) of the Code; or

•

beneficially or constructively owning or transferring our shares of beneficial interest if such beneficial or constructive ownership or transfer would otherwise cause us to fail to qualify as a REIT under the Code.

        Our board of trustees, in its sole discretion, may exempt (prospectively or retroactively) a person from the 9.8% ownership limit and other restrictions described above and as set forth in our declaration of trust and may establish or increase an excepted holder percentage limit for such person if our board of trustees obtains such representations, covenants and undertakings as it deems appropriate in order to conclude that granting the exemption and/or establishing or increasing the excepted holder percentage limit will not cause us to fail to qualify as a REIT.

        Our declaration of trust also provides that any ownership or purported transfer of our shares in violation of the foregoing restrictions will result in the shares owned or transferred in such violation being automatically transferred to one or more charitable trusts for the benefit of a charitable beneficiary and the purported owner or transferee acquiring no rights in such shares, except that any transfer that results in the violation of the restriction relating to our shares of beneficial interest being beneficially owned by fewer than 100 persons will be void ab initio. If the transfer to the trust is ineffective for any reason to prevent a violation of the restriction, the transfer that would have resulted in such violation will be void ab initio.

Emerging Growth Company Status

        We are an "emerging growth company," as defined in the JOBS Act, and we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies." These exemptions provide that, so long as a company qualifies as an "emerging growth company," it will, among other things:

•

be exempt from the "say on pay" provisions (requiring a non-binding shareholder vote to approve compensation of certain executive officers) and the "say on golden parachute" provisions (requiring a non-binding shareholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, and certain disclosure requirements of the Dodd-Frank Act relating to compensation of its chief executive officer;



•

be permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and instead provide a reduced level of disclosure concerning executive compensation, and be exempt from any rules that may be adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor's report on the financial statements.

        Although we are still evaluating the JOBS Act, we currently may take advantage of some or all of the reduced regulatory and reporting requirements that will be available to us so long as we qualify as an "emerging growth company," except that we have irrevocably elected not to take advantage of the extension of time to comply with new or revised financial accounting standards available under Section 102(b) of the JOBS Act.

        We will, in general, qualify as an "emerging growth company" until the earliest of:

•

the last day of our fiscal year following the fifth anniversary of the date of the separation;



•

the last day of our fiscal year in which we have annual gross revenue of $1.0 billion or more;

 

•

the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt; and



•

the date on which we are deemed to be a "large accelerated filer," which will occur at such time as we (1) have an aggregate worldwide market value of common equity securities held by non-affiliates of $700 million or more as of the last business day of our most recently completed second fiscal quarter, (2) have been required to file annual and quarterly reports under the Exchange Act for a period of at least 12 months and (3) have filed at least one annual report pursuant to the Exchange Act.

Our Corporate Information

        Until the completion of the separation, our principal executive offices will be located at 591 West Putnam Avenue, Greenwich, Connecticut 06830, and our telephone number will be (203) 422-8100. After the completion of the separation, our principal executive offices will be located at 1999 Harrison Street, Oakland, California, 94612, and our telephone number will be (510) 250-2200. Our website is www.                     .com. The information on our website is not a part of, or incorporated by reference into, this information statement.

 

Questions and Answers about Us and the Separation

 

 

 

 

 

 

The Separation and the Distribution

        The following is a summary of the material terms of the separation and other related transactions.

 

 

 

Summary Selected Financial Information

        The following presents summary selected historical consolidated financial data as of June 30, 2013 and December 31, 2012 and for the six months ended June 30, 2013, the period from May 23, 2012 (inception) through June 30, 2012 and the period from May 23, 2012 (inception) through December 31, 2012 and selected portfolio data as of June 30, 2013 and December 31, 2012. The summary selected historical consolidated financial data presented below under the captions "Consolidated Statement of Operations Data" and "Consolidated Balance Sheet Data" (1) as of December 31, 2012 and for the period from May 23, 2012 (inception) through December 31, 2012 have been derived from our audited consolidated financial statements and (2) as of and for the six months ended June 30, 2013 and for the period from May 23, 2012 (inception) through June 30, 2012 have been derived from our unaudited consolidated financial statements. You should read the following summary selected historical information in conjunction with "Selected Financial Information," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our historical consolidated financial statements and related notes included elsewhere in this information statement.

        Subsequent to June 30, 2013, we changed our corporate form from a Maryland corporation to a Maryland real estate investment trust and our name from Starwood Residential Properties, Inc. to Starwood Waypoint Residential Trust.

Consolidated Statement of Operations Data (in thousands)

 

Consolidated Balance Sheet Data (in thousands)

Selected Portfolio Data