Dive Brief:
-
Publicly traded Starwood Waypoint Residential Trust and closely held Colony American Homes they will merge to create a combined company that will produce an asset value of almost $8 billion. The companies estimate that the merger would allow for $50 million in cost reductions.
-
Both boards approved the deal, which involves Colony shareholders getting approximately 65 million shares of Starwood Waypoint. The deal is scheduled to close in the first quarter of 2016.
- Thomas J. Barrack Jr., executive chairman of Colony Capital, and Barry Sternlicht, Starwood Waypoint's chief executive, will lead the new company.
Dive Insight:
To ride out the housing crisis, large investors began acquiring and repairing homes to convert into rentals. The merger of two of the largest home rental companies in the U.S. likely means that investors predict homeownership will continue to elude millennials and others trying to make the shift from renter to owner.
Tightened lending rules, low wages and higher home prices have kept millions of Americans from owning homes. Though the Federal Reserve opted not to raise short-term rates, the central bank will take another look at a possible increase before the end of the year.
While rental rates are steadily rising, the U.S. homeownership rate is at 63.5% — the lowest it's been in almost 50 years, according to figures from the Commerce Department.