Waypoint Homes and Menlo Park-based private equity firm GI Partners have closed a $245 million revolving credit facility with Citi. The facility will support the acquisition, renovation, long-term ownership and management of Waypoint’s growing national portfolio of single family rental homes. Based in Oakland, Calif., Waypoint Homes has created a next-generation real estate company to help address the lack of liquidity contributing to the prolonged U.S. housing crisis.
Waypoint Homes, a pioneer in the REO-to-rental industry, and its financial sponsor, GI Partners, a Menlo Park-based private equity firm, today announced the closing of a $245 million revolving credit facility with Citi, one of the world’s leading global banks. The facility will support the acquisition, renovation, long-term ownership and management of Waypoint’s growing national portfolio of single family rental (“SFR”) homes.
“We are extremely pleased to announce this deal with Citi,” said Managing Director Gary Beasley, who represented Waypoint in the financing negotiations. “We worked collaboratively with Citi to ‘crack the code’ on how to structure a facility that worked well for all parties in this transaction. Since there was no playbook for this, we borrowed elements from both residential and commercial facilities to devise a hybrid structure that’s well suited to the emerging SFR space. We think this structure elegantly balances our desire for ease and flexibility while building in the appropriate protections for Citi. This deal may well serve as a model to support the billions of dollars of equity that have been committed to our industry.”
In December 2011, Waypoint announced its partnership with GI Partners, which represented the first large institutional investment into the SFR industry. The Citi financing will support the acquisition of additional homes initially funded by the first $150 million of equity invested by GI Partners into its joint-venture with Waypoint. “We are proud to work with Citi and Waypoint to create this innovative financing that enhances Waypoint’s ability to acquire and renovate properties highly efficiently,” said Hoon Cho, a Managing Director at GI Partners. “This financing represents an important milestone for institutionalizing single family rental properties as an asset class. Securing attractive debt financing is a critical step to allowing Waypoint and other SFR businesses to mature and ultimately become viable public platforms.”
Susan Mills, head of Residential Finance at Citi, commented, “We have been studying the emerging SFR space for some time, and have decided to take a leadership position by identifying experienced operators and structuring a loan to help finance their business. This deal underlines Citi’s confidence in the investment strategy, which could help clear the backlog of foreclosures that has slowed the U.S. housing market’s recovery. We could not be more pleased with our partnership with Waypoint and GI Partners, and look forward to a long and deepening relationship as their platform and the industry mature. ”
The multi-year, revolving credit facility is designed to be very flexible for the borrower, with funds made available at increasing advance rates based upon the stage of the home as it progresses from acquisition, through completed renovation, through lease-up and occupancy.
Waypoint/GI Partners was represented by John Cahill of the law firm Paul Hastings LLP. Citi was represented by Bob McCarthy from the law firm SNR Denton US LLP.
About Waypoint Homes: Based in Oakland, Calif., Waypoint Homes has created a next-generation real estate company with an innovative business model to help address the lack of liquidity contributing to the prolonged U.S. housing crisis. The Waypoint solution centers on buying distressed single-family houses, renovating them, and then leasing them to residents via innovative leasing programs that are designed to provide a path to future home ownership for the residents. A leader in the emerging REO-to-rental industry since its founding in 2008, Waypoint’s portfolio includes more than 2,400 homes in California, Arizona, Illinois and Georgia and the company is rapidly expanding operations in targeted cities nationwide.
About GI Partners: Established in 2001, GI Partners is a leading private investment firm with investments in North America and Western Europe. The firm is active in a number of key sectors, including technology, healthcare services, financial / real estate services, leisure and retail. Since inception, the firm has secured $8.4 billion of equity capital commitments from recognized institutional private equity and real estate investors in the U.S., Europe, Asia and the Middle East.