We estimate that the net proceeds we will receive from selling
13,250,000 shares of our common stock in this offering will be approximately
$228.6 million, after deducting underwriting discounts and commissions and
estimated offering expenses of approximately $16.6 million (or, if the
underwriters exercise their over-allotment option in full, approximately
$263.4 million, after deducting estimated underwriting discounts and commissions
and offering expenses of approximately $18.5 million).
We will contribute the net proceeds of this offering to the Operating
Partnership, which will use the net proceeds of this offering to purchase
additional single-family properties, to renovate such properties for rental to
tenants and for working capital. In addition, we plan to make cash payments to
Prior Provident Investors in connection with the Formation Transactions of
approximately $5.3 million. Pending application of any portion of the net
proceeds, we or the Operating Partnership will invest such funds in
interest-bearing accounts and short-term, interest-bearing securities as is
consistent with our intention to qualify for taxation as a REIT. These
investments are expected to provide lower net return than what we will seek to
achieve from our target assets.
The residential rental market is fragmented in both its ownership and
operations. We believe that bringing an institutionalized approach to the
business carries many benefits. We will face competition in property acquisition
from individual investors, private pools of capital and other institutional
buyers which may increase the prices for properties that we would like to
purchase and impact our ability to achieve our expected yields. We will also
compete for the best tenants. However, we believe that being an early
institutional participant in this sector, having an integrated and scalable
platform with local market presence and using our wealth of existing in-house
expertise will give us competitive advantages.
Company Description
Silver Bay Realty Trust Corp. is a newly organized Maryland corporation
focused on the acquisition, renovation, leasing and management of single-family
properties. We generate virtually all of our revenue by leasing our portfolio of
single-family properties and, from this revenue, expect to pay the
operating
costs associated with our business and any distributions to our stockholders.
Our principal objective is to generate attractive risk-adjusted returns for our
stockholders over the long term, primarily through dividends and secondarily
through capital appreciation. We seek to establish a reputation as a good
landlord to our tenants and a good neighbor in the communities where we operate.
We believe that we can achieve economies of scale and develop a valuable
consumer brand and that we are well positioned to be a market-leading firm in
the single-family rental industry.
We intend to elect and qualify to be taxed as a REIT for U.S. federal tax
purposes. We are externally managed by PRCM Real Estate Advisers LLC, or our
Manager, which is also our promoter. We will rely on our Manager to provide or
obtain on our behalf the personnel and services necessary for us to conduct our
business as we have no employees of our own.
Concurrently with this offering, we plan to complete a series of formation
transactions, or the Formation Transactions, through which we will acquire our
initial portfolio of single-family properties, or our Initial Portfolio, from
Two Harbors Investment Corp., or Two Harbors, and the owners of the membership
interests of entities managed by Provident Real Estate Advisors LLC, or
Provident. The properties in our Initial Portfolio were acquired by the entities
that will become our subsidiaries in the Formation Transactions between 2009 and
the date of this prospectus, and are located in Arizona, California, Florida,
Georgia, Nevada, North Carolina and Texas. As of September 30, 2012, the Initial
Portfolio consisted of more than 2,540 single-family properties.
We intend to continue acquiring single-family properties located in our
target markets through a variety of acquisition channels, including foreclosure
auctions, online auctions, brokers, multiple listing services, or MLS, short
sales and bulk purchases from institutions or investor groups disposing of
portfolios of real estate owned by them. Upon completion of this offering and
the Formation Transactions, we will acquire more than 3,100 single-family
properties, have net proceeds of approximately $223.3 million in cash plus any
remaining cash contributed to us pursuant to the Formation Transactions, which
will be available for pending and future acquisitions and working capital, and
have no outstanding indebtedness.
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Our principal executive office is located at 601 Carlson Parkway, Suite 250,
Minnetonka, Minnesota. Our telephone number is (952) 358-4400. Our web address
is www.silverbayrealtytrustcorp.com.