Starwood Waypoint Residential Trust (SWAY): Ken Griffin Raises His Exposure to REIT

Ken Griffin‘s Citadel Investment Group has boosted its exposure to Starwood Waypoint Residential Trust (NYSE:SWAY), as a new filing with the Securities and Exchange Commission showed. Citadel reported holding around 2.07 million shares of the Real Estate Investment Trust, up from 313,000 shares held previously. Following the increase, Citadel’s passive stake amasses 5.4% of the company’s common stock.


Starwood Waypoint Residential Trust (NYSE:SWAY) has been spun-off from Starwood Property Trust, Inc. (NYSE:STWD) at the beginning of the year. Citadel is also a shareholder of Starwood Property Trust, owning around 248,900 shares as of the end of June. Moreover, Mr. Griffin holds some 2.41 million shares of Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT). Both Starwood Property Trust and Starwood Hotels have been spun-off from Starwood Capital.

Overall, Mr. Griffin prefers to diversify his equity portfolio, Citadel holding several thousand positions with a total value of over $73 billion. Nevertheless, the fund’s largest long position is represented by Apple, of which Citadel holds around 8.57 million shares. However, Citadel also owns approximately 17.40 shares of Apple under Put options and 13.32 million shares under Call options. So far, Apple’s stock has gained ground over the last several years, and returned 25% only since the beginning of this year.

However, let’s get back to the Starwood Waypoint Residential Trust (NYSE:SWAY). The REIT that was set up to manage the single-family residential business of the Starwood Property Trust, Inc. (NYSE:STWD) lost around 14% since its IPO. Nevertheless, many big investors raised their stakes in the trust. For example, Israel Englander‘s Millennium Management added around 144,900 shares to its position during the second quarter, raising it to over 1.12 million shares. Millennium Management also increased its stake in Starwood Property Trust, Inc. (NYSE:STWD) to 710,600 shares. On the other hand, David E. Shaw‘s D E Shaw trimmed its stake in Starwood Waypoint by 15,400 shares to 899,600 shares.

Citadel raised its stake in Starwood Waypoint Residential Trust (NYSE:SWAY) after the company announced the pricing of a public offering of $150 million worth of 4.5% convertible senior notes due 2017. The notes are unsecured and they might be converted into cash, common stock, or a combination of both, at a conversion rate of around 33.29 shares per $1,000 principal amount, which is equal to some $30.04 per share and represents a premium of around 20% over the stock price.

Moreover, Starwood Waypoint Residential Trust (NYSE:SWAY) managed to increase its Net Asset Value by an annual 5.4% to $31.84 per share, which is significantly below the current price of the stock. The REIT also declared a 60% sequential increase in revenue to $34.3 million.

With Citadel Investment Group acquiring more shares of Starwood Waypoint Residential Trust (NYSE:SWAY), the REIT represent an investment that deserves more attention. The trust is still priced relatively cheaper than its peers among small cap diversified REITs and analysts have a consensus rating ‘Overweight’ on the stock. In addition, following bullish activity from large institutional investors can help smaller investors to find some insights, since research showed that this strategy can help outperforming the broad indices.

Disclosure: none