sfr-10q_20170930.htm

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 2, 2017, there were 128,355,035 of the registrant’s common shares, par value $0.01 per share, outstanding.

Except where the context suggests otherwise, the terms “we,” “us,” and “our” refer to Starwood Waypoint Homes (formerly Colony Starwood Homes and before that Starwood Waypoint Residential Trust (“SWAY”)), a Maryland real estate investment trust, together with its consolidated subsidiaries, including Starwood Waypoint Homes Partnership, L.P. (“SFR LP.”)(formerly Colony Starwood Homes Partnership, L.P. and before that Starwood Waypoint Residential Partnership, L.P.), a Delaware limited partnership through which we conduct substantially all of our business, which we refer to as “our operating partnership”; the term “CAH” refers to Colony American Homes, Inc., our predecessor for accounting purposes; the term “the Manager” refers to SWAY Management LLC, a Delaware limited liability company, our former external manager; the term “Starwood Capital Group” refers to Starwood Capital Group Global, L.P. (and its predecessors), together with all of its affiliates and subsidiaries, including the Manager prior to its internalization (the “Internalization”), other than us; and the term “INVH” refers to Invitation Homes Inc., a Maryland corporation.

This Quarterly Report on Form 10-Q contains, in addition to historical information, certain forward-looking statements that involve significant risks and uncertainties, which are difficult to predict, and are not guarantees of future performance. Such statements can generally be identified by words such as “anticipates,” “expects,” “intends,” “will,” “could,” “believes,” “estimates,” “continue,” and similar expressions. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are based on certain assumptions and discuss future expectations, describe future plans and strategies, and contain financial and operating projections or state other forward-looking information. Our ability to predict results or the actual effect of future events, actions, plans or strategies is inherently uncertain. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in, or implied by, the forward-looking statements. Factors that could materially and adversely affect our business, financial condition, liquidity, results of operations and prospects, as well as our ability to make distributions to our shareholders, include, but are not limited to:

When considering forward-looking statements, keep in mind the risk factors and other cautionary statements contained in our Annual Report on Form 10-K for the year ended December 31, 2016, our Current Report filed on Form 8-K filed on June 5, 2017 and in Exhibit 99.1 to this Quarterly Report on Form 10-Q and other cautionary statements in this Quarterly Report on Form 10-Q. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this Quarterly Report on Form 10-Q. We recommend that readers read this document in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2016, which was filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2017. Our actual results and performance may differ materially from those set forth in, or implied by, our forward-looking statements. Accordingly, we cannot guarantee future results or performance. Furthermore, except as required by law, we are under no duty to, and we do not intend to, update any of our forward-looking statements after the date of this Quarterly Report on Form 10-Q, whether as a result of new information, future events or otherwise.

On August 9, 2017, we entered into the INVH Merger Agreement with INVH to form a combined company in a stock-for-stock transaction. The INVH Merger Agreement provides that, upon the terms and subject to the conditions set forth in the INVH Merger Agreement, (i) we will be merged with and into IH Merger Sub, LLC, a wholly owned subsidiary of INVH (“REIT Merger Sub”), with REIT Merger Sub surviving as a subsidiary of INVH (the “REIT Merger”) and (ii) as promptly as practicable after the REIT Merger, our operating partnership will be merged with and into Invitation Homes Operating Partnership LP (“INVH LP”), with INVH LP surviving as a subsidiary of INVH (together with the REIT Merger, the “Proposed Mergers”). In connection with the Proposed Mergers, we filed with the SEC on October 16, 2017 the Merger Proxy, which includes more detailed information about the Proposed Mergers and the related transactions. See Note 1. Organization and Operations—The Proposed Mergers for further details.

On September 21, 2015, we and CAH announced the signing of the Agreement and Plan of Merger dated as of September 21, 2015, among us and certain of our subsidiaries and CAH and certain of its subsidiaries and certain investors in CAH (“the SWAY Merger Agreement”) to combine the two companies in a stock-for-stock transaction (the “SWAY Merger”). In connection with the transaction, we internalized the Manager. The SWAY Merger and the Internalization were completed on January 5, 2016.

Our common shares are listed and traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “SFR”.

	As of			As of
	September 30, 2017			December 31, 2016
ASSETS	(Unaudited)
Investments in real estate properties:
Land and land improvements	$	1,881,309		$	1,584,533
Buildings and building improvements		5,001,710			4,403,871
Furniture, fixtures and equipment		168,643			131,502
Total investments in real estate properties		7,051,662			6,119,906
Accumulated depreciation		(495,002	)		(370,394	)
Investments in real estate properties, net		6,556,660			5,749,512
Real estate held for sale, net		144,752			22,201
Cash and cash equivalents		187,659			109,097
Restricted cash		129,923			155,194
Investments in unconsolidated joint ventures		33,332			34,384
Asset-backed securitization certificates		153,115			141,103
Assets held for sale (Note 14)		19,585			76,870
Goodwill		260,230			260,230
Other assets, net		79,808			66,585
Total assets	$	7,565,064		$	6,615,176

LIABILITIES AND EQUITY
Liabilities
Accounts payable and accrued expenses	$	145,656		$	88,140
Resident prepaid rent and security deposits		64,988			57,823
Revolving credit facilities		—			108,501
Mortgage loans, net		3,432,277			3,333,241
Convertible senior notes, net		526,656			356,983
Liabilities related to assets held for sale (Note 14)		242			25,495
Other liabilities		6,624			—
Total liabilities		4,176,443			3,970,183
Commitments and contingencies (Note 15)
Equity
Preferred shares $.01 par value, 100,000,000 shares authorized, none issued and outstanding as of September 30, 2017 and December 31, 2016		—		—
Common shares $.01 par value, 500,000,000 shares authorized, 128,325,509 and 101,495,759 issued and outstanding as of September 30, 2017 and December 31, 2016		1,283			1,015
Additional paid-in capital		3,627,986			2,734,034
Accumulated deficit		(441,093	)		(319,828	)
Accumulated other comprehensive income		16,151			23,667
Total shareholders’ equity		3,204,327			2,438,888
Non-controlling interests		184,294			206,105
Total equity		3,388,621			2,644,993
Total liabilities and equity	$	7,565,064		$	6,615,176

The accompanying notes are an integral part of these condensed consolidated financial statements

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
REVENUE
Rental income	$	156,299		$	133,580		$	437,194		$	396,318
Other property income		12,682			9,366			31,648			22,858
Other income		706			3,153			6,260			9,022
Total revenues		169,687			146,099			475,102			428,198
EXPENSES
Property operating and maintenance		26,813			23,678			67,477			62,356
Real estate taxes, insurance and HOA costs		32,733			28,070			90,443			83,310
Property management		8,538			9,079			27,430			29,226
Interest expense		38,877			39,296			115,017			114,737
Depreciation and amortization		53,994			47,344			148,293			135,818
Impairment and other		13,077			356			13,734			530
Share-based compensation		2,387			824			5,584			1,922
General and administrative		10,932			11,333			32,717			39,809
Transaction-related		7,791			1,503			7,856			30,058
Total expenses		195,142			161,483			508,551			497,766
Net gain on sales of real estate		3,735			1,453			12,222			3,364
Equity in income from unconsolidated joint ventures		214			185			584			539
Loss on extinguishment of debt		(216	)		—			(10,906	)		—
Other (expense) income, net		(156	)		1,867			(2,907	)		(1,783	)
Loss before income taxes		(21,878	)		(11,879	)		(34,456	)		(67,448	)
Income tax expense		359			161			695			487
Net loss from continuing operations		(22,237	)		(12,040	)		(35,151	)		(67,935	)
(Loss) income from discontinued operations, net (Note 14)		(1,984	)		449			(2,205	)		(7,368	)
Net loss		(24,221	)		(11,591	)		(37,356	)		(75,303	)
Net loss attributable to non-controlling interests		1,062			691			1,801			4,529
Net loss attributable to common shareholders	$	(23,159	)	$	(10,900	)	$	(35,555	)	$	(70,774	)

Net loss per common share - basic and diluted:
Net loss from continuing operations attributable to common shareholders	$	(0.17	)	$	(0.11	)	$	(0.29	)	$	(0.63	)
Net (loss) income from discontinued operations attributable to common shareholders	$	(0.01	)	$	—		$	(0.02	)	$	(0.07	)
Net loss attributable to common shareholders	$	(0.18	)	$	(0.11	)	$	(0.31	)	$	(0.70	)

Dividends declared per common share	$	0.22		$	0.22		$	0.66		$	0.66

The accompanying notes are an integral part of these condensed consolidated financial statements

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016
Other Comprehensive Loss:
Net loss	$	(24,221	)	$	(11,591	)	$	(37,356	)	$	(75,303	)
Other comprehensive (loss) income:
Change in unrealized gains (losses) on cash flow hedges:
Unrealized (losses) gains		(360	)		9,215			(5,783	)		(7,609	)
Reclassifications to income		(2,154	)		1,246			(1,997	)		3,053
Other comprehensive (loss) income		(2,514	)		10,461			(7,780	)		(4,556	)
Comprehensive loss		(26,735	)		(1,130	)		(45,136	)		(79,859	)
Comprehensive loss attributable to non-controlling interests		1,171			70			2,191			4,798
Comprehensive loss attributable to common shareholders	$	(25,564	)	$	(1,060	)	$	(42,945	)	$	(75,061	)

The accompanying notes are an integral part of these condensed consolidated financial statements

															Accumulated
	Preferred								Additional						Other			Total			Non-
	Shares				Common Shares				Paid-in			Accumulated			Comprehensive			Shareholders'			controlling
	Shares		Amount		Shares		Amount		Capital			Deficit			Income (Loss)			Equity			Interests			Total Equity
Balances at December 31, 2016		—	$	—		101,495,759	$	1,015	$	2,734,034		$	(319,828	)	$	23,667		$	2,438,888		$	206,105		$	2,644,993
Capital distributions		—		—		—		—		—			—			—			—			(1,732	)		(1,732	)
Dividends declared of $0.66 per share		—		—		—		—		—			(85,710	)		—			(85,710	)		—			(85,710	)
Issuance of common shares for settlement of RSUs		—		—		119,131		1		—			—			—			1			—			1
Amortization of share-based compensation		—		—		—		—		5,521			—			—			5,521			—			5,521
Shares withheld for taxes related to settlement of RSUs		—		—		—		—		(1,385	)		—			—			(1,385	)		—			(1,385	)
Repurchase of 2017 Convertible Notes		—		—		—		—		(15,648	)		—			—			(15,648	)		—			(15,648	)
Issuance of 2022 Convertible Notes		—		—		—		—		17,827			—			—			17,827			—			17,827
Issuance of common shares, net		—		—		26,160,443		261		869,629			—			—			869,890			—			869,890
Redemption of OP Units for common shares		—		—		550,176		6		18,008			—			(126	)		17,888			(17,888	)		—
Net loss		—		—		—		—		—			(35,555	)		—			(35,555	)		(1,801	)		(37,356	)
Other comprehensive loss		—		—		—		—		—			—			(7,390	)		(7,390	)		(390	)		(7,780	)
Balances at September 30, 2017		—	$	—		128,325,509	$	1,283	$	3,627,986		$	(441,093	)	$	16,151		$	3,204,327		$	184,294		$	3,388,621

The accompanying notes are an integral part of these condensed consolidated financial statements

	Nine Months Ended
	September 30,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(37,356	)	$	(75,303	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		148,293			135,818
Amortization of debt discounts		14,361			16,106
Amortization of deferred financing costs		13,125			10,400
Amortization of leased vehicle deposits		123			134
Share-based compensation		5,584			1,922
Equity in income of unconsolidated joint ventures		(584	)		(539	)
Distributions from unconsolidated joint ventures		584			539
Bad debt expense		6,229			5,322
Net gain on sales of real estate		(12,952	)		(4,299	)
Gain on loan conversions, net (Note 14)		(1,515	)		(12,852	)
Gain on NPL sales (Note 14)		(204	)		(13,485	)
Loss on extinguishment of debt		10,906			—
Unrealized losses from derivative instruments		1,894			1,441
Impairment of real estate assets		950			530
Loss on insurance claims		12,784			—
Net changes in operating assets and liabilities:
Restricted cash		(9,945	)		(16,994	)
Other assets		3,129			(1,970	)
Accounts payable and accrued expenses		29,165			11,076
Resident prepaid rent and security deposits		1,508			2,641
Other liabilities		—			(310	)
Net cash provided by operating activities		186,079			60,177

CASH FLOWS FROM INVESTING ACTIVITIES
Cash acquired in mergers and acquisitions		3,649			56,144
Acquisition of real estate properties		(677,775	)		(127,585	)
Capital expenditures for real estate properties		(94,373	)		(66,410	)
Proceeds from sales of real estate		226,731			216,358
Proceeds from sales of loans and other proceeds on loans (Note 14)		407			346,464
Distributions from unconsolidated joint ventures		1,051			1,024
Payment of leasing costs		(5,686	)		(6,972	)
Net cash (used in) provided by investing activities		(545,996	)		419,023

The accompanying notes are an integral part of these condensed consolidated financial statements

	Nine Months Ended
	September 30,
	2017			2016
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings on revolving credit facilities	$	320,233		$	42,374
Payments on revolving credit facilities		(428,734	)		(667,406	)
Payments on secured term loan		(500,000	)		—
Payments on master repurchase facility (Note 14)		(19,286	)		(232,569	)
Proceeds from the issuance of mortgage loans, net		732,675			485,641
Payments on mortgage loans		(639,050	)		(12,251	)
Proceeds from the issuance of convertible senior notes		345,000			—
Payment of financing costs		(37,890	)		(10,978	)
Repurchase of convertible senior notes		(186,012	)		—
Proceeds from the issuance of common shares		891,776			—
Payment of offering costs		(20,701	)		(11,871	)
Change in escrow reserves for credit facilities and mortgage loans, net		62,012			(6,141	)
Repurchases of common shares		—			(44,550	)
Distributions to non-controlling interests		(1,732	)		(4,342	)
Payments of dividends and redemption of preferred shares		(79,812	)		(48,307	)
Net cash provided by (used in) financing activities		438,479			(510,400	)
Net change in cash and cash equivalents		78,562			(31,200	)
Cash and cash equivalents at beginning of the period		109,097			162,090
Cash and cash equivalents at end of the period	$	187,659		$	130,890

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest, net of amounts capitalized	$	84,833		$	92,112
Cash paid for income taxes	$	840		$	561
Income tax refunds	$	165		$	—

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Accrued capital expenditures	$	8,318		$	2,673
Investment in securitization certificates issued by subsidiaries	$	38,565		$	50,296
Loan basis converted to real estate properties (Note 14)	$	3,786		$	60,189
Accrued dividends to common shareholders	$	29,757		$	—
Discount on convertible senior notes	$	18,015		$	—
GI Portfolio Acquisition:
Restricted cash and other assets acquired	$	22,429		$	—
Secured credit facility assumed	$	500,000		$	—
Other liabilities assumed	$	14,782		$	—

The accompanying notes are an integral part of these condensed consolidated financial statements

Except where the context suggests otherwise, the terms “we,” “us,” and “our” refer to Starwood Waypoint Homes (formerly Colony Starwood Homes and before that Starwood Waypoint Residential Trust (“SWAY”)), a Maryland real estate investment trust, together with its consolidated subsidiaries, including Starwood Waypoint Homes Partnership, L.P. (“SFR LP”) (formerly Colony Starwood Homes Partnership, L.P. and before that Starwood Waypoint Residential Partnership, L.P.), a Delaware limited partnership through which we conduct substantially all of our business, which we refer to as “our operating partnership”; the term “CAH” refers to Colony American Homes, Inc., our predecessor for accounting purposes; the term “the Manager” refers to SWAY Management LLC, a Delaware limited liability company, our former external manager; the term “Starwood Capital Group” refers to Starwood Capital Group Global, L.P. (and its predecessors), together with all of its affiliates and subsidiaries, including the Manager prior to the Internalization, other than us; and the term “INVH” refers to Invitation Homes Inc., a Maryland corporation.

On August 9, 2017, we entered into the Agreement and Plan of Merger dated as of August 9, 2017, among us, and certain of our subsidiaries and INVH and certain of its subsidiaries (the “INVH Merger Agreement”) to form a combined company with INVH in a stock-for-stock transaction. The INVH Merger Agreement provides that, upon the terms and subject to the conditions set forth in the INVH Merger Agreement, (i) we will be merged with and into IH Merger Sub, LLC, a wholly owned subsidiary of INVH (“REIT Merger Sub”), with REIT Merger Sub surviving as a subsidiary of INVH (the “REIT Merger”) and (ii) as promptly as practicable after the REIT Merger, our operating partnership will be merged with and into Invitation Homes Operating Partnership LP (“INVH LP”), with INVH LP surviving as a subsidiary of INVH (together with the REIT Merger, the “Proposed Mergers”). In connection with the Proposed Mergers, we filed with the SEC on October 16, 2017 a definitive joint proxy statement/information statement and prospectus (the “Merger Proxy”), which includes more detailed information about the Proposed Mergers and the related transactions.

Under the terms of the INVH Merger Agreement and as described in the Merger Proxy, each of our outstanding common shares will be converted into 1.6140 shares of INVH’s common stock (the “Exchange Ratio”), and each outstanding unit of our operating partnership will be converted into the right to receive 1.6140 common units, representing limited partner interests, in INVH LP. Further, each outstanding restricted share unit (“RSU”) that vests as a result of the Proposed Mergers or the INVH Merger Agreement will automatically be converted into the right to receive INVH common stock based on the Exchange Ratio, plus any accrued but unpaid dividends (if any) and less certain taxes (if any). At the effective time of the REIT Merger, each RSU that does not vest as a result of the Proposed Mergers or the INVH Merger Agreement will be automatically assumed by INVH and converted into an equivalent stock-based incentive award unit with respect to INVH’s common stock and be subject to the same terms and conditions as applicable to such awards.

Upon the closing of the Proposed Mergers, INVH stockholders will own approximately 59% of the combined company’s stock, and our shareholders will own approximately 41% of the combined company’s stock. Based on the closing prices of our common shares and INVH’s common stock on October 13, 2017, the equity market capitalization of the combined company would be approximately $12.0 billion, and the total enterprise value (including debt) would be approximately $21.1 billion. Upon the closing of the Proposed Mergers, the Combined Company will be named “Invitation Homes Inc.” and its common stock will be listed and traded on the NYSE under the ticker symbol “INVH”.

The transaction has been approved by our board of trustees and INVH’s board of directors. Completion of the Proposed Mergers is subject to, among other things, approval by the holders of our common shares. Assuming approval is obtained, the Proposed Mergers are expected to close in the fourth quarter of 2017. We can give no assurance that the Proposed Mergers and related transactions will be completed in the above timeframe, if at all. Two putative class actions have been filed by our purported shareholders challenging the Proposed Mergers. The lawsuits seek, among other things, injunctive relief preventing consummation of the Proposed Mergers, rescission of the transactions contemplated by the INVH Merger Agreement should they be consummated and litigation costs, including attorneys’ fees. See Note 15. Commitments and Contingencies for additional information.

On September 21, 2015, we and CAH announced the signing of the SWAY Merger Agreement, to combine the two companies in a stock-for-stock transaction. In connection with the transaction, we internalized the Manager. The SWAY Merger and the Internalization were completed on January 5, 2016.

Upon consummation of the Internalization, Starwood Capital Group contributed the outstanding equity interests of the Manager to our operating partnership in exchange for 6,400,000 OP Units. The OP Units are redeemable at the election of the holder and we have the option, at our sole discretion, to redeem any such OP Units for cash or exchange such OP Units for common shares, on a one-for-one basis (see Note 8. Shareholders’ Equity). Subsequent to the Internalization and the SWAY Merger, we own all material assets and intellectual property rights of the Manager.

Under the SWAY Merger Agreement, CAH shareholders received an aggregate of 64,869,526 of our common shares in exchange for all shares of CAH. Upon completion of the transaction, our existing shareholders and Starwood Capital Group owned approximately 41% of our common shares, while former CAH shareholders owned approximately 59% of our common shares.

Since both SWAY and CAH had significant pre-combination activities, the SWAY Merger was accounted for as a business combination by the combined company in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Based upon consideration of a number of factors, CAH was designated as the accounting acquirer in the SWAY Merger (although SWAY was the legal acquirer), which resulted in a reverse acquisition of SWAY for accounting purposes.

We are an internally managed Maryland real estate investment trust and commenced operations in March 2012 primarily to acquire, renovate, lease and manage residential assets in select markets throughout the United States. Our objective is to generate attractive risk-adjusted returns for our shareholders over the long term through dividends and capital appreciation. Our primary strategy is to acquire single-family rental properties through a variety of channels, renovate these properties to the extent necessary and lease them to qualified residents. We measure properties by the number of rental units as compared to number of properties, taking into account our limited investments in multi-unit properties. We seek to take advantage of macroeconomic trends in favor of leasing properties by acquiring, owning, renovating and managing properties that we believe will generate substantial current rental revenue, which we expect to grow over time.

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. We owned 95.6% of the outstanding OP Units as of September 30, 2017.

As a result of the SWAY Merger, we have a joint venture with Prime Asset Fund VI, LLC (“Prime”), an entity managed by Prime Finance, an asset manager that specializes in acquisition, resolution and disposition of non-performing loans (“NPLs”). We own a greater than 98.75% interest in the joint venture. We have substantially exited the NPL business (which includes NPLs and related real estate owned (“REO”)) and are currently marketing all remaining assets of the joint venture for disposition (see Note 14. Discontinued Operations).

We intend to operate and to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes. 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 maintain our qualification as a REIT.

The accompanying interim condensed consolidated financial statements are unaudited. These interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the applicable rules and regulations of the SEC for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The December 31, 2016 condensed consolidated balance sheet was derived from our audited financial statements as of that date, but does not include all of the information and footnotes required by GAAP for complete financial statements. The condensed consolidated financial statements include our accounts and those of our wholly and majority owned subsidiaries. Intercompany amounts have been eliminated.

The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to state fairly our financial position as of September 30, 2017, and the results of operations and comprehensive loss for the three and nine months ended September 30, 2017 and 2016 and cash flows for the nine months ended September 30, 2017

and 2016. The interim results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017, or for any other future annual or interim period.

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations, Quantitative and Qualitative Disclosures About Market Risk, and the consolidated financial statements and notes thereto included in Items 7, 7A and 8, respectively, in our Annual Report on Form 10-K for the year ended December 31, 2016, as filed with the SEC on February 28, 2017.

We consolidate entities in which we retain a controlling financial interest or entities that meet the definition of a variable interest entity (“VIE”) for which we are deemed to be the primary beneficiary. In performing our analysis of whether we are the primary beneficiary, at initial investment and at each quarterly reporting period, we consider whether we individually have the power to direct the activities of the VIE that most significantly affect the entity’s economic performance and also have the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The determination of whether an entity is a VIE, and whether we are the primary beneficiary, involves significant judgments, including the determination of which activities most significantly affect the entities’ performance, estimates about the current and future fair values and performance of assets held by the VIE and/or general market conditions.

As described in Note 6. Debt, we entered into multiple mortgage loan arrangements with JP Morgan Chase Bank, N.A. (“JPMorgan”) and, in September 2017, with German American Capital Corporation (together, the “Loan Sellers”). As part of these arrangements, the loans were transferred into trusts that issued and sold pass-through certificates approximating the principal amount of the mortgage loans, and we retained or purchased certain of the certificates (the “Retained Certificates”). We have determined that the trusts are VIEs. We have evaluated the Retained Certificates as a variable interest in the trusts and concluded that the Retained Certificates will not absorb a majority of the trusts’ expected losses or receive a majority of the trusts’ expected residual returns. Additionally, we have concluded that the Retained Certificates do not provide us with the ability to direct activities that could impact the trusts’ economic performance. Accordingly, we do not consolidate the trusts and have recorded a mortgage loan liability at September 30, 2017 and December 31, 2016, which is included in mortgage loans, net in the accompanying condensed consolidated balance sheets. Separately, the Retained Certificates have been included and reflected as asset-backed securitization certificates in the accompanying condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016.

As described in Note 4. Investments in Unconsolidated Joint Ventures, we have a joint venture with the Federal National Mortgage Association (“Fannie Mae”), which is a voting interest entity. Since we do not hold a controlling financial interest in the joint venture but have significant influence over its operating and financial policies, we account for our investment using the equity method. Under the equity method, we initially record our investments at cost and adjust for our proportionate share of net earnings or losses and other comprehensive income or loss, cash contributions made and distributions received, and other adjustments, as appropriate. Distributions of operating profit from the joint venture are reported as part of operating cash flows while distributions related to a capital transaction, such as a refinancing transaction or sale, are reported as investing activities. We perform a periodic evaluation of our investment to determine whether the fair value of the investment is less than the carrying value, and, if so, whether such decrease in value is deemed to be other-than-temporary. There were no impairment losses recognized by us related to our Fannie Mae investment during the three and nine months ended September 30, 2017 and 2016.

Non-controlling interests represent (1) the portion of the equity (net assets) in Prime that is not attributable, directly or indirectly, to us and (2) the interests in our operating partnership held by Starwood Capital Group. Non-controlling interests are presented as a separate component of equity in the condensed consolidated balance sheets. In addition, the accompanying condensed consolidated statements of operations include the allocation of the net income or loss attributable to the non-controlling interest holders.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

The most significant estimates that we make are of the fair value of our properties with regards to impairment. While property values are typically not a highly subjective estimate on a per-unit basis, given the usual availability of comparable property sale and other market data, these fair value estimates significantly affect the condensed consolidated financial statements, including (1) whether certain assets are identified as being potentially impaired and then, if deemed to be impaired, the amount of the resulting impairment charges and (2) the allocation of purchase price to individual assets acquired as part of a pool, which have a significant impact on the

amount of gain or loss recognized from a subsequent sale, and the subsequent impairment assessment, of individual assets. As described further below in the description of our significant accounting policies, we determined the fair value of NPLs, at the time of the SWAY Merger, by using a discounted cash flow valuation model, which is significantly informed by the fair value of the underlying collateral property, and also applied the estimated effect of a bulk sale of the portfolio. These estimates of fair value are determined using methodologies similar to those described below.

Cash and cash equivalents include cash in banks and short-term investments. Short-term investments are comprised of highly liquid instruments with original maturities of three months or less. We maintain our cash and cash equivalents in multiple financial institutions with high credit quality in order to minimize our credit loss exposure. At times, these balances exceed federally insurable limits.

Restricted cash is primarily comprised of resident security deposits held by us and rental revenues held in accounts controlled by lenders on our debt facilities, as well as cash collateral held by the counterparties to certain of our interest rate swap contracts.

Effective in the fourth quarter of 2016, we adopted Accounting Standards Update (“ASU”) 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (see Recent Accounting Pronouncements below). Under the revised framework, acquisitions of properties or portfolios of properties are considered asset acquisitions, rather than business combinations, regardless of whether there is a lease in place, because substantially all of the fair value of the acquired assets is concentrated in a single identifiable asset or group of similar identifiable assets. As a result, we account for acquisitions and dispositions of properties as purchases or disposals of assets, rather than businesses. Prior to the adoption of this standard, we evaluated each purchase transaction to determine whether the acquired assets met the definition of a business within the scope of ASC Topic 805, Business Combinations. We recorded properties acquired with an existing lease as a business combination. For property acquisitions accounted for as business combinations, the land, building and improvements and the existing lease were recorded at fair value at the date of acquisition, with acquisition costs expensed as incurred. We accounted for properties acquired not subject to an existing lease as an asset acquisition, with the property recorded at the purchase price, including acquisition costs, allocated among land, building and improvements based upon their relative fair values at the date of acquisition. Transaction costs related to acquisitions that were not deemed to be businesses were included in the cost basis of the acquired assets.

We determine fair value in accordance with ASC Topic 820, Fair Value Measurements and Disclosures, primarily based on unobservable data inputs. In making estimates of fair values for purposes of allocating purchase price, we utilize various valuation studies, our own market knowledge, and published market data to estimate fair value of the assets acquired.

The nature of our business requires that in certain circumstances properties are acquired subject to existing liens. Liens that are expected to be extinguished in cash are estimated and accrued on the date of acquisition and recorded as a cost of the property.

Expenditures that improve or extend the life of an acquired property, including construction overhead, personnel and other allocated direct costs, along with related holding costs during the renovation period are capitalized and depreciated over their estimated useful life. Expenditures for ordinary maintenance and repairs are expensed to operations as incurred.

We evaluate our long-lived assets for impairment periodically or whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Examples of such events and changes in circumstances include, but are not limited to, significant and persistent declines in property values, rental rates and occupancy percentages, as well as significant macroeconomic changes in the economy. If an impairment indicator exists, we compare the expected future undiscounted cash flows from the use and eventual disposition of the property against the carrying amount of an asset. If the sum of the estimated undiscounted cash flows is less than the carrying amount of the asset, we record an impairment loss for the difference between the estimated fair value and the carrying amount of the asset. To determine the estimated fair value, we consider an independent valuation of the property from a third-party automated valuation model (“AVM”) service provider or we use local broker-pricing opinions (“BPOs”). In order to validate the BPOs received and used in our assessment of fair value of real estate, we perform an internal review to determine if an acceptable valuation approach was used to estimate fair value in compliance with the guidance under ASC Topic 820. Additionally, we undertake an internal review to assess the relevance and appropriateness of comparable transactions that have been used by the broker in its BPO and any adjustments to comparable transactions made by the broker in reaching its value opinion. Such values represent the estimated amounts at which the properties could be sold in their current condition, assuming the sale is completed within a period of time typically associated with non-distressed sales. Estimated values may be less precise, particularly in respect of any necessary repairs, where the interior of homes are not accessible for inspection by the broker performing the valuation.

The process whereby we assess our properties for impairment requires significant judgment and assessment of factors that are, at times, subject to significant uncertainty. We evaluate multiple information sources and perform a number of internal analyses, each of which are important components of our process with no one information source or analysis being necessarily determinative.

Since impairment of properties classified as held for use in our operations is evaluated on the basis of undiscounted cash flows, the carrying values of certain properties may exceed their fair value but no impairment loss is recognized as long as the carrying values are recoverable from future cash flows. However, if properties classified as held for use were subsequently classified as held for sale, they would be required to be measured at the lower of their carrying value or their fair value less estimated costs to sell, and the resulting impairment losses could be material.

We evaluate our long-lived assets on a regular basis to ensure that individual properties still meet our investment criteria. If we determine that an individual property no longer meets our investment criteria, we make a decision to dispose of the property. We then market the property for sale and classify it as real estate held for sale in the condensed consolidated financial statements. The properties that are classified as real estate held for sale are reported at the lower of their carrying value or their fair value less estimated costs to sell and are no longer depreciated. For the three months ended September 30, 2017 and 2016, we recorded impairment charges of $0.3 million and $0.4 million, respectively. For the nine months ended September 30, 2017 and 2016, we recorded impairment charges of $1.0 million and $0.5 million, respectively.

As a result of the SWAY Merger, we acquired a portfolio of NPLs held and administered through our joint venture with Prime. We have decided to exit the NPL business and we are currently marketing all remaining assets of the joint venture for disposition. The disposal of the assets and liabilities of our NPL business represents a strategic shift in operations and is expected to have a major effect on our operations and financial results and therefore the results of operations are presented separately as discontinued operations in all periods presented in the accompanying condensed consolidated statements of operations. See Note 14. Discontinued Operations for further disclosure.

We determined the fair value for NPLs, at the time of the SWAY Merger, by using a discounted cash flow valuation model and also applied the estimated effect of a bulk sale of the portfolio.

When we convert loans into REO through foreclosure or other resolution processes and have obtained title to the property, the property is initially recorded at fair value. The fair value of these assets at the time of loan conversion is estimated using BPOs. Gains are recognized in earnings immediately when the fair value of the acquired property exceeds our recorded investment in the loan. Conversely, any excess of the recorded investment in the loan over the fair value of the property would be immediately recognized as a loss. In situations where property foreclosure is subject to an auction process and a third party submits the winning bid, we recognize the resulting gain or loss. All remaining NPL and REO assets are classified as assets held for sale in our condensed consolidated

balance sheets and not depreciated. Upon the sale of REOs, we recognize the resulting gain or loss in (loss) income from discontinued operations, net in our condensed consolidated statements of operations.

We defer certain direct and indirect costs incurred to lease our properties and amortize them over the term of the lease, usually one year. Amortization of leasing costs is included in depreciation and amortization expense in our condensed consolidated statements of operations.

We routinely make various deposits relating to property acquisitions, including transactions where we have agreed to purchase a property subject to certain conditions being met before closing, such as satisfactory home inspections and title search results. Our purchase deposit balances are recorded in other assets, net in our condensed consolidated balance sheets.

We are exposed to certain risks arising from both our business operations and economic conditions. We principally manage our exposures to a wide variety of business and operational risks through the management of our core business activities. We manage economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of our debt funding and the use of derivative financial instruments. Specifically, we enter into derivative financial instruments to manage exposure that may arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing, and duration of our known or expected cash receipts and our known or expected cash payments, principally related to our borrowings.

As required by ASC Topic 815, Derivatives and Hedging, we record all derivatives in the condensed consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. We may enter into derivative contracts that are intended to economically hedge certain of our risks, even though hedge accounting does not apply or we elect not to apply hedge accounting. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income in our condensed consolidated balance sheet and is subsequently reclassified into interest expense in the period that the hedged forecasted transaction affects earnings.

Derivatives not designated as hedges are derivatives that do not meet the criteria for hedge accounting under GAAP or for which we have not elected to designate as hedges. We do not use these derivatives for speculative purposes, but instead they are used to manage our exposure to interest rate changes. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in other (expense) income, net in our condensed consolidated statements of operations.

We test goodwill for impairment on an annual basis, or more frequently if circumstances indicate that goodwill carrying values may exceed their fair values. We perform this evaluation at the reporting unit level. As of October 31, 2016 (the date we elected as our annual goodwill impairment test), we were comprised of two operating segments and reporting units, which are represented by (1) our portfolio of properties and (2) our portfolio of NPLs owned by the joint venture with Prime. However, for financial reporting purposes, we are comprised of one reporting segment, because the Prime joint venture’s revenues, net loss and total assets are each less than 10% of our consolidated totals. Goodwill was allocated only to our single-family rental home business.

As part of our goodwill impairment testing, we first assess a range of qualitative factors including, but not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for our products and services, regulatory and political developments, and entity-specific factors such as strategies and financial performance when evaluating

potential impairment for goodwill. If, after completing such assessment, it is determined that it is “more likely than not” that the fair value of a reporting unit is less than its carrying value, we proceed to a two-step impairment test, whereby the first step is comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered to not be impaired and the second step of the test is not performed. The second step of the impairment test is performed when the carrying amount of the reporting unit exceeds the fair value, in which case the implied fair value of the reporting unit goodwill is compared with the carrying amount of that goodwill. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to the excess.

Based on the results of our 2016 review, we qualitatively concluded that it was not more likely than not that the fair value of our reporting unit was less than its carrying value and therefore determined that goodwill was not impaired. We have noted no indications of impairment subsequent to our 2016 review that would change this conclusion.

ASC Topic 470-20, Debt with Conversion and Other Options, requires that the liability and equity components of convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement, be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. The initial proceeds from the sale of convertible notes are allocated between a liability component and an equity component in a manner that reflects interest expense at the rate of similar nonconvertible debt that could have been issued at such time. The equity component represents the excess initial proceeds received over the fair value of the liability component of the notes as of the date of issuance. We measure the fair value of the debt component of our convertible notes as of the issuance date based on our nonconvertible debt borrowing rate. In connection with the SWAY Merger, we adjusted our existing convertible senior notes to estimated fair value based on our nonconvertible debt borrowing rate as of the SWAY Merger date. The resulting discount from the outstanding principal balance, and the discount recorded in connection with the 2022 Convertible Notes (see Note 6. Debt), are being amortized using the effective interest rate method over the periods to maturity as noncash interest expense as the notes accrete to their respective par values.

We may periodically sell our financial assets. In connection with these transactions, we may retain or acquire senior or subordinated interests in the related assets. Gains and losses on such transactions are recognized using the guidance in ASC Topic 860, Transfers and Servicing, which is based on a financial components approach that focuses on control. Under this approach, if a transfer of financial assets meets the criteria for treatment as a sale – legal isolation, ability of transferee to pledge or exchange the transferred assets without constraint, and transferred control – an entity recognizes the financial assets it retains and any liabilities it has incurred, derecognizes the financial assets it has sold, and derecognizes liabilities when extinguished. Transfers that do not qualify for sales treatment are accounted for as secured financing arrangements. We determine the gain or loss on sale of the assets by allocating the carrying value of the sold asset between the sold asset and the interests retained based on their relative fair values, as applicable. The gain or loss on sale is the difference between the cash proceeds from the sale and the amount allocated to the sold asset.

Rental revenue, net of concessions, is recognized on a straight-line basis over the term of the lease. The initial term of our residential leases is generally one year, with renewals upon consent of both parties on an annual or monthly basis.

We periodically evaluate the collectability of our resident and other receivables and record an allowance for doubtful accounts for any estimated probable losses. This allowance is estimated based on payment history and probability of collection. We generally do not require collateral other than resident security deposits. Our allowance for doubtful accounts was $2.9 million and $2.5 million as of September 30, 2017 and December 31, 2016, respectively. Bad debt expense amounts are recorded as property operating and maintenance expenses in the condensed consolidated statements of operations. During the three months ended September 30, 2017 and 2016, we incurred bad debt expense of $2.3 million and $2.4 million, respectively. During the nine months ended September 30, 2017 and 2016, we incurred bad debt expense of $6.2 million and $5.3 million, respectively.

We recognize sales of real estate when a sale has closed, title has passed, adequate initial and continuing investment by the buyer is received, possession and other attributes of ownership have been transferred to the buyer, and we are not obligated to perform significant additional activities after closing. All these conditions are typically met at or shortly after closing.

We use the two-class method to calculate basic and diluted earnings per common share (“EPS”) as our RSUs are participating securities as defined by GAAP. We calculate basic EPS by dividing net income (loss) attributable to common shareholders for the period by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflect the potential dilution that could occur from shares issuable in connection with the RSUs, convertible senior notes, and redeemable OP Units, except when doing so would be anti-dilutive.

The fair value of our restricted shares and RSUs granted is recorded as expense over the vesting period for the award, with an offsetting increase in shareholders' equity. For grants to employees and trustees, the fair value of RSUs with only a service condition for vesting is determined based upon the share price on the grant date and expense is recognized on a straight-line basis. For RSUs with a performance condition for vesting, such as growth in net operating income, fair value is determined based upon the share price on the grant date and expense is recognized when it is probable the performance goal will be achieved. For RSUs with a market condition for vesting, such as growth in shareholder returns, fair value is estimated on the grant date using a binomial lattice model and expense is recognized on a straight-line basis. Performance goals are determined by our board of trustees. For non-employee grants, the fair value is based on the share price when the shares vest, which requires the amount to be adjusted in each subsequent reporting period based on the fair value of the award at the end of the reporting period until the award has vested.

We have elected to operate as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), and intend to comply with the Code with respect thereto. Accordingly, we will not be subject to federal income tax as long as certain asset, income, dividend distribution, and share ownership tests are met. Many of these requirements are technical and complex, and if we fail to meet these requirements, we may be subject to federal, state, and local income tax and penalties. A REIT's net income from prohibited transactions is subject to a 100% penalty tax. We have taxable REIT subsidiaries (“TRSs”) where certain investments may be made and activities conducted that (1) may have otherwise been subject to the prohibited transactions tax and (2) may not be favorably treated for purposes of complying with the various requirements for REIT qualification. The income, if any, within the TRSs is subject to federal and state income taxes as a domestic C corporation based upon the TRSs' net income. See Note 12. Income Taxes. We recorded income tax expense of approximately $0.4 million and $0.7 million during the three and nine months ended September 30, 2017 and approximately $0.2 million and $0.5 million during the three and nine months ended September 30, 2016, respectively.

We estimate the fair value of financial assets and liabilities using the three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The three levels of inputs that may be used to measure fair value, as defined in ASC Topic 820, are as follows:

Level II—Prices are determined using other significant observable inputs. Observable inputs are inputs that other market participants would use in pricing a security. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk and others.

Level III—Prices are determined using significant unobservable inputs. In situations where quoted prices or observable inputs are unavailable (for example, when there is little or no market activity for an investment at the end of the period), unobservable inputs may be used.

We record certain financial instruments at fair value on a recurring basis when required by GAAP. Certain other real estate assets are measured at fair value on a non-recurring basis. We have not elected the fair value option for any other financial instruments, which are carried at cost with fair value disclosed where reasonably estimable (see Note 10. Fair Value Measurements).

As of September 30, 2017, we are comprised of two operating segments, which are represented by (1) our portfolio of properties and (2) our portfolio of NPLs owned by the joint venture with Prime. However, for financial reporting purposes, we are comprised of one reportable segment, because the Prime joint venture’s revenues, net loss and total assets are each less than 10% of our consolidated total.

Certain line items in prior period financial statements have been reclassified to conform to the current period groupings. For the three months ended September 30, 2016, we reclassified $0.7 million of salaries and wages and other services from general and administrative to property management, $0.6 million of legal settlements from other expenses to general and administrative expense, net, and $2.0 million of adjustments for certain revenues (i.e. a reduction to revenues) from other property income to rental income in the condensed consolidated statements of operations. For the nine months ended September 30, 2016, we reclassified $2.0 million of salaries and wages and other services from general and administrative to property management, $0.2 million of services from general and administrative to real estate taxes, insurance and HOA costs, $0.4 million of legal settlements from general and administrative expenses to other expense, net, $1.1 million of bad debt expense from property operating and maintenance to rental income and other property income and $0.8 million of fees from property operating and maintenance to property management in the condensed consolidated statements of operations. In addition, for the three months ended March 31, 2017, we reclassified $1.8 million of adjustments for certain revenues from other property income to rental income in the condensed consolidated statements of operations.

We hold significant concentrations of properties in the following markets in excess of 10% of our total portfolio, based upon aggregate purchase price, and as such, are more vulnerable to any adverse macroeconomic developments in such areas:

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The new guidance will make more financial and nonfinancial hedging strategies eligible for hedge accounting. It also amends the presentation and disclosure requirements and changes how companies assess effectiveness. It is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting, and increase transparency as to the scope and results of hedging programs. This new standard will be effective for annual reporting periods beginning after December 15, 2018 and interim periods within that reporting period with early adoption permitted. We do not anticipate that the adoption of this standard will have a material impact on our condensed consolidated financial statements

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. This new standard will be effective for annual reporting periods beginning after December 15, 2017 and interim periods within that reporting period with early adoption permitted. We do not anticipate that the adoption of this standard will have a material impact on our condensed consolidated financial statements.

In February 2017, the FASB issued ASU 2017-05, Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. The new guidance clarifies that ASC 610-20, applies to the derecognition of nonfinancial assets and in substance nonfinancial assets unless other specific guidance applies. As a result, it will not apply to the derecognition of businesses, nonprofit activities, or financial assets (including equity method investments), or to revenue transactions (contracts with customers). The new guidance also clarifies that an in substance nonfinancial asset is an asset or group of assets for which substantially all of the fair value consists of nonfinancial assets and the group or subsidiary is not a business. In addition, transfers of nonfinancial assets to another entity in exchange for a noncontrolling ownership interest in that entity will be accounted for under ASC 610-20, removing specific guidance on such partial exchanges from ASC 845, Nonmonetary Transactions. As a result of the new guidance, the guidance specific to real estate sales in ASC 360-20, Real Estate Sales, will be eliminated. As such, sales and partial sales of real estate assets will now be subject to the same derecognition model as all other nonfinancial assets. This new standard will be effective at the same time an entity adopts the new revenue guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which is effective on January 1, 2018. We do not anticipate that the adoption of this standard will have a material impact on our condensed consolidated financial statements.

In October 2016, the FASB issued ASU 2016-17, Consolidation (Topic 810): Interests held through Related Parties that are under Common Control, which alters how a decision maker needs to consider indirect interests in a VIE held through an entity under common control. The new guidance amends ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, issued in February 2015. Under the new ASU, if a decision maker is required to evaluate whether it is the primary beneficiary of a VIE, it will need to consider only its proportionate indirect interest in the VIE held through a common control party. Currently, ASU 2015-02 directs the decision maker to treat the common control party’s interest in the VIE as if the decision maker held the interest itself (sometimes called the “full attribution approach”). Under ASU 2015-02, a decision maker applies the proportionate approach only in those instances when it holds an indirect interest in a VIE through a related party that is not under common control. The amendment eliminates this distinction. We adopted this new standard effective in the first quarter of 2017 and it did not have a material impact on our condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, which changes how companies will measure credit losses for certain financial assets. This guidance requires an entity to estimate its expected credit loss and record an allowance based on this estimate so that it is presented at the net amount expected to be collected on the financial asset. This new standard will be effective for annual reporting periods beginning after December 15, 2019 and interim periods within that reporting period with early adoption permitted beginning after December 15, 2018 and interim periods within that reporting period. We do not anticipate that the adoption of this standard will have a material impact on our condensed consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, which is intended to simplify the accounting for and presentation of certain aspects related to share-based payments to employees. The guidance changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. We adopted this standard effective in the first quarter of 2017 and it did not have a material impact on our condensed consolidated financial statements.

In March 2016, the FASB issued ASU 2016-05, Derivatives and Hedging (Topic 815): Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. This new guidance clarifies that the novation of a derivative contract (i.e., a change in the counterparty) in a hedge accounting relationship does not, in and of itself, require de-designation of that hedge accounting relationship, provided that all other hedge criteria continue to be met. We adopted this standard effective in the first quarter of 2017 and it did not have a material impact on our condensed consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard requires lessees to clarify leases as either finance or operating leases based on certain criteria and record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales-type leases, direct financing leases and operating leases. The standard also eliminates current real estate-specific provisions and changes of initial direct costs and lease executory costs for all entities. The new guidance will require lessees and lessors to capitalize, as initial direct costs, only those costs that are incurred due to the execution of a lease. Any other costs incurred, including allocated indirect costs, will no longer be capitalized and instead will be expensed as incurred. The guidance supersedes previously issued guidance under ASC Topic 840 Leases. This standard will be effective for annual reporting periods beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. We expect that the adoption of this standard will result in an increase in assets and liabilities on our balance sheet related to our leased office space. Allocated indirect costs incurred with acquisition and stabilization of properties, which amounted to $5.0 million for the nine months ended September 30, 2017, will be expensed as incurred rather than amortized over the lease terms, which are generally one year.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which will supersede nearly all existing revenue recognition guidance. The new standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. Companies will likely need to use more judgment and make more estimates than under current revenue recognition guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration, if any, to include in the transaction price and allocating the transaction price to each separate performance obligation. The new standard specifically excludes lease revenue. The new standard may be applied retrospectively to each prior period presented or prospectively with the cumulative effect, if any, recognized as of the date of adoption. We anticipate selecting the modified retrospective transition method with any cumulative effect recognized as of the date of adoption and will adopt the new standard effective January 1, 2018 as required. We are continuing to evaluate the standard; however, we do not expect its adoption to have a significant impact on the consolidated financial statements, as more than 90% of our total revenues consist of rental

income from leasing arrangements, which is specifically excluded from the standard. In addition, based on our preliminary assessment, we determined that there will not be a material impact on our other property income (fees and tenant chargebacks) or other income, which represents fees from management contracts.

The following table summarizes transactions within our property portfolio for the nine months ended September 30, 2017 (in thousands)⁽¹⁾:

In June 2017, we completed the acquisition of a portfolio of 3,106 properties (the “GI Portfolio”) pursuant to a securities purchase agreement with Waypoint/GI Venture, LLC (the “GI Portfolio Acquisition”). The consideration paid to Waypoint/GI Venture, LLC was approximately $814.9 million, including the assumption of a $500.0 million secured term loan (see Note 6. Debt), and the cost basis of the GI Portfolio was approximately $817.5 million, inclusive of capitalized third-party transaction costs.

We determined the fair values of the properties in the GI Portfolio primarily by reference to BPOs and allocated the purchase price among land and land improvements, building and building improvements and furniture, fixtures and equipment on our condensed consolidated balance sheets. We identified 386 homes in the portfolio that we do not intend to hold for the long term. The aggregate carrying value of these homes, $122.1 million, was included in real estate held for sale, net in the condensed consolidated balance sheet as of June 30, 2017. As of September 30, 2017, 373 of these homes with an aggregate carrying value of $115.4 million remain in real estate held for sale, net in the condensed consolidated balance sheet. See Note 2. Significant Accounting Policies—Real Estate Held for Use and —Real Estate Held for Sale. We accounted for the GI Portfolio Acquisition as an asset purchase, rather than a business combination, and did not acquire intangible assets.

On October 31, 2012, we acquired a 10% interest in a joint venture with Fannie Mae to operate, lease, and manage a portfolio of 1,176 properties primarily located in Arizona, California, and Nevada. We paid approximately $34.0 million to acquire our interest, and funded approximately $1.0 million in reserves to the joint venture.

A subsidiary of ours is the managing member and responsible for the operation and management of the properties, subject to Fannie Mae’s approval on major decisions. We evaluated the entity and determined that Fannie Mae held certain substantive participating rights that preclude the presumption of control by us. Accordingly, we account for our ownership interest using the equity method. As of September 30, 2017 and December 31, 2016, the joint venture owned 798 and 856 properties, respectively.

In April 2017, we entered into a new credit facility with JPMorgan and a syndicate of lenders (the “2017 JPMorgan Facility”). This $675.0 million senior secured revolving credit facility will mature in April 2020, with a one-year extension option subject to certain conditions. We have the option to increase the size of the 2017 JPMorgan Facility to up to $1.2 billion, subject to satisfying certain requirements and obtaining lender commitments. Borrowings under the 2017 JPMorgan Facility accrue interest at a floating rate equal to either the Adjusted London Interbank Offered Rate (“LIBOR”) or the Alternate Base Rate plus the Applicable Margin (each as defined in the credit agreement). The Applicable Margin varies based on the Total Leverage Ratio (as defined in the credit agreement), ranging from 0.75% to 1.30% for Alternative Base Rate loans and from 1.75% to 2.30% for Adjusted LIBOR loans. We are also required to pay customary fees on any outstanding letters of credit, and a facility fee to the lenders in respect of the unused commitments thereunder at a rate of either 0.35% or 0.20% per annum, depending on the level of usage. As of September 30, 2017, there were no borrowings outstanding under the 2017 JPMorgan Facility and $675.0 million was available for future borrowings subject to certain covenants and other borrowing limitations. The weighted-average interest rate for the period ended September 30, 2017 was 3.2%.

The 2017 JPMorgan Facility replaced our two then-existing secured revolving credit facilities, the Prior JPMorgan Facility and the CitiBank Facility, as defined below, which were terminated concurrently with the creation of the 2017 JPMorgan Facility. In connection with the termination of the Prior JPMorgan Facility and the CitiBank Facility, we recorded a loss of $0.9 million, which is included in loss on extinguishment of debt in the condensed consolidated statements of operations.

All amounts outstanding under the 2017 JPMorgan Facility are collateralized by the equity interests in certain of our property owning subsidiaries, or pledged subsidiaries. The pledged subsidiaries are separate legal entities, but continue to be reported in our condensed consolidated financial statements. As long as the 2017 JPMorgan Facility is outstanding, the assets of each pledged subsidiary are not available to satisfy debts and obligations of the pledged subsidiaries other than those of the 2017 JPMorgan Facility to which it is pledged and may not be available to satisfy its own debts and obligations or those of any affiliate unless expressly permitted under the applicable loan agreements and the pledged subsidiary’s governing documents.

The 2017 JPMorgan Facility contains certain covenants that may limit the amount of cash available for distribution and may, under certain circumstances, limit the amounts we may pay as dividends to those necessary to maintain our qualification as a REIT. There are various affirmative and negative covenants, including financial covenants that require the pledged subsidiaries to maintain minimum tangible net worth and liquidity levels (as defined in the credit agreement). As of September 30, 2017, the entities subject to these covenants were in compliance with these covenants.

The 2017 JPMorgan Facility also requires that we set aside funds for payment of insurance, property taxes and certain property operating and maintenance expenses associated with properties in the pledged subsidiaries’ portfolios, which are included in restricted cash in the condensed consolidated balance sheets. The agreement also contains customary events of default, including payment

defaults, covenant defaults, breaches of representations and warranties, bankruptcy and insolvency, judgments, change of control and cross-default with certain other indebtedness.

We were party to a secured revolving credit facility with JPMorgan and a syndicate of lenders (the “Prior JPMorgan Facility”). Borrowings under the Prior JPMorgan Facility accrued interest at the three-month LIBOR plus 3.00% and we paid unused commitment fees ranging from 0.50% to 1.00%. In March 2017, we elected to voluntarily reduce borrowing availability under the Prior JPMorgan Facility from $300.0 million to $125.0 million. This facility was terminated in April 2017. As of December 31, 2016, there was no outstanding balance under the Prior JPMorgan Facility. The weighted-average interest rate for the nine months ended September 30, 2017 and the year ended December 31, 2016 was 4.1% and 3.6%, respectively.

In connection with the SWAY Merger, we assumed SWAY’s secured revolving credit facility with CitiBank, N.A. and a syndicate of lenders (the “CitiBank Facility”). Borrowings under the CitiBank Facility accrued interest at LIBOR plus 2.95% and we paid unused commitment fees ranging from zero to 0.25%. In March 2017, we elected to voluntarily reduce borrowing availability under the CitiBank Facility from $300.0 million to $125.0 million. This facility was terminated in April 2017. As of December 31, 2016, $108.5 million was outstanding on the CitiBank Facility. The weighted-average interest rate for the nine months ended September 30, 2017 and the year ended December 31, 2016 was 3.7% and 3.4%, respectively.

In June 2017, in connection with the GI Portfolio Acquisition (see Note 3. Single-Family Real Estate Investments), we entered into an Amended and Restated Loan Agreement with the lenders party thereto, and Deutsche Bank AG, New York Branch, N.A. (“Deutsche Bank”), as administrative agent and the other parties thereto and assumed $500.0 million of indebtedness (the “DB Loan”) secured by the GI Portfolio and the equity securities of the indirect, wholly owned subsidiaries acquired in the GI Portfolio transaction. In September 2017, we paid off the balance in full and terminated the loan. The weighted-average interest rate for the period ended September 30, 2017 was 4.1%.

In connection with the SWAY Merger, we assumed SWAY’s liability (in its capacity as guarantor) in a repurchase agreement between a subsidiary of Prime and Deutsche Bank. The repurchase agreement was used to finance the acquired pools of NPLs secured by residential real property held by Prime. During the first quarter of 2017, we repaid the outstanding balance and terminated the repurchase agreement. As of December 31, 2016, the outstanding balance on this facility was approximately $19.3 million and is included in liabilities related to assets held for sale (see Note 14. Discontinued Operations) in our condensed consolidated balance sheets.

In July 2014, SWAY issued $230.0 million in aggregate principal amount of our 3.00% Convertible Senior Notes due 2019 (the “2019 Convertible Notes”). Interest on the 2019 Convertible Notes is payable semiannually in arrears on January 1 and July 1 of each year. The 2019 Convertible Notes will mature on July 1, 2019.

In October 2014, SWAY issued $172.5 million in aggregate principal amount of our 4.50% Convertible Senior Notes due 2017 (the “2017 Convertible Notes”). Interest on the 2017 Convertible Notes is payable semiannually in arrears on April 15 and October 15 of each year. The aggregate outstanding balance of the 2017 Convertible Notes as of September 30, 2017 was $3.6 million and the notes were settled for cash and common shares at maturity in October 2017.

In January 2017, we issued $345.0 million in aggregate principal amount of our 3.50% Convertible Senior Notes due 2022 (the “2022 Convertible Notes” and together with the 2017 Convertible Notes and the 2019 Convertible Notes, the “Convertible Senior Notes”). Interest on the 2022 Convertible Notes is payable semiannually in arrears on January 15 and July 15 of each year. The 2022 Convertible Notes will mature on January 15, 2022. We used the net proceeds to repurchase, in privately negotiated transactions, most of the 2017 Convertible Notes and to reduce outstanding borrowings under our revolving credit facilities. The repurchased 2017

Convertible Notes were cancelled in accordance with the terms of the indenture and a loss of $7.2 million was recorded in loss on extinguishment of debt in our condensed consolidated statements of operations.

The following tables summarize the terms of the Convertible Senior Notes outstanding as of September 30, 2017 (in thousands, except rates):

As of September 30, 2017, the conversion rate applicable to the 2017 Convertible Notes was 33.9836 common shares per $1,000 principal amount of the 2017 Convertible Notes (equivalent to a conversion price of approximately $29.43 per common share). The conversion rate for the 2017 Convertible Notes is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain events that occur prior to the maturity date, we will increase the conversion rate for a holder who elects to convert its 2017 Convertible Notes in connection with such an event in certain circumstances. At any time prior to April 15, 2017, holders could have converted the 2017 Convertible Notes at their option under specific circumstances as defined in the indenture agreement, dated as of October 14, 2014, between us and our trustee, Wilmington Trust, National Association (“the Convertible Notes Trustee”). On or after April 15, 2017 and until maturity, holders may convert all or any portion of the 2017 Convertible Notes at any time. Upon conversion, we will pay or deliver a combination of cash and common shares.

As of September 30, 2017, the conversion rate applicable to the 2019 Convertible Notes was 32.5048 common shares per $1,000 principal amount of the 2019 Convertible Notes (equivalent to a conversion price of approximately $30.76 per common share). The conversion rate for the 2019 Convertible Notes is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain events that occur prior to the maturity date, we will increase the conversion rate for a holder who elects to convert its 2019 Convertible Notes in connection with such an event in certain circumstances. At any time prior to January 1, 2019, holders may convert the 2019 Convertible Notes at their option only under specific circumstances (including as a result of the completion of the Proposed Mergers) as defined in the indenture agreement, dated as of July 7, 2014, between us and the Convertible Notes Trustee. On or after January 1, 2019 and until maturity, holders may convert all or any portion of the 2019 Convertible Notes at any time. Upon conversion, we will pay or deliver, as the case may be, cash, common shares, or a combination of cash and common shares, at our election.

As of September 30, 2017, the conversion rate applicable to the 2022 Convertible Notes was 27.1186 common shares per $1,000 principal amount of the 2022 Convertible Notes (equivalent to a conversion price of approximately $36.88 per common share). The conversion rate for the 2022 Convertible Notes is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain events that occur prior to the maturity date, we will increase the conversion rate for a

holder who elects to convert its 2022 Convertible Notes in connection with such an event in certain circumstances. At any time prior to July 15, 2021, holders may convert the 2022 Convertible Notes at their option only under specific circumstances (including as a result of the completion of the Proposed Mergers) as defined in the indenture agreement, dated as of January 4, 2017, between us and the Convertible Notes Trustee. On or after July 15, 2021 and until maturity, holders may convert all or any portion of the 2022 Convertible Notes at any time. Upon conversion, we will pay or deliver, as the case may be, cash, common shares, or a combination of cash and common shares, at our election.

We may not redeem the Convertible Senior Notes prior to their maturity dates except to the extent necessary to preserve our status as a REIT for U.S. federal income tax purposes, as further described in the indentures. If we undergo a fundamental change as defined in the indentures, holders may require us to repurchase for cash all or any portion of their Convertible Senior Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Convertible Senior Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The Proposed Mergers do not constitute a fundamental change under the indentures.

The indentures contain customary terms and covenants and events of default. If an event of default occurs and is continuing, the Convertible Notes Trustee by notice to us, or the holders of at least 25% in aggregate principal amount of the outstanding Convertible Senior Notes, by notice to us and the Convertible Notes Trustee, may, and the Convertible Notes Trustee at the request of such holders shall, declare 100% of the principal of and accrued and unpaid interest on all the Convertible Senior Notes to be due and payable. However, in the case of an event of default arising out of certain events of bankruptcy, insolvency or reorganization in respect to us (as set forth in the indentures), 100% of the principal of and accrued and unpaid interest on the Convertible Senior Notes will automatically become due and payable.

We, CAH and SWAY have completed multiple mortgage loans transactions, each of which involved the issuance and sale in a private offering of single-family rental pass-through certificates (“Certificates”) issued by a trust (a “Trust”) established by the respective companies. The Certificates represent beneficial ownership interests in a loan secured by a portfolio of single-family homes operated as rental properties (“Properties”) contributed to a newly-formed special purpose entity (“SPE”) indirectly owned by us.

The assets of each Trust consist primarily of a single componentized promissory note issued by an SPE (“Borrower”), evidencing a mortgage (“Loan”). Each Loan has a two or three-year term with two or three 12-month extension options, except for the mortgage loan transaction completed in September 2017 (“SWH 2017-1”), which has two 12-month extension options and one 15-month extension option. Each Loan is guaranteed by the Borrower’s sole member (the “Equity Owner”), also an SPE owned by us. Each Loan is secured by a pledge of all of the assets of the Borrower, including first-priority mortgages on its Properties, and the Equity Owner’s obligations under its guaranty is secured by a pledge of all of the assets of the Equity Owner, including a security interest in the sole membership interest in the Borrower.

Each loan agreement is between JPMorgan or German American Capital Corporation and the Borrower. The Loan Sellers sold each Loan to a separate wholly owned subsidiary of ours (each a “Depositor”), which then transferred the Loan to the trustee of a Trust in exchange for the issuance of the Certificates. In addition to the Certificates sold to investors in each offering (the “Offered Certificates”), five of the Trusts issued Certificates that were retained or purchased by us.

During the quarter ended June 30, 2017, we voluntarily repaid the outstanding principal balance of the SWAY 2014 mortgage loan in the amount of $522.5 million. In connection with this voluntary prepayment, we recorded a loss of $1.1 million, which is included in loss on extinguishment of debt in the condensed consolidated statements of operations. In June 2017, we also voluntarily reduced the outstanding principal balances of the CAH 2014-2 mortgage loan by $100.0 million. We recorded a $1.5 million loss on extinguishment of debt, which represents the pro rata write-off of deferred loan costs related to the CAH 2014-2 mortgage loan.

For purposes of computing, among other things, interest accrued on the Loan, each Loan is divided into five to seven components, each of which corresponds to one class of Certificates, which had, at inception, an initial component balance equal to the corresponding class of Offered Certificates. The following table sets forth the terms of each of the Loans:

			Blended				Principal Balance Outstanding
	Closing	Maturity	LIBOR				September 30,			December 31,
(Dollars in thousands)	Date	Date⁽¹⁾	Spread				2017			2016
CAH 2014-1	April 2014	May 2019		1.72	%	⁽²⁾	$	478,734		$	491,140
CAH 2014-2	June 2014	July 2019		1.76	%			437,156			548,503
CAH 2015-1	June 2015	July 2020		1.88	%			659,588			672,054
CSH 2016-1	June 2016	July 2021		2.31	%			533,746			535,474
CSH 2016-2	November 2016	December 2021		1.85	%			609,815			610,585
SWH 2017-1	September 2017	January 2023		1.55	%			769,754			—
SWAY 2014	December 2014	June 2017 ⁽³⁾		—				—			525,401
								3,488,793			3,383,157
Deferred financing costs, net								(54,995	)		(46,387	)
Unamortized discount								(1,521	)		(3,529	)
Carrying value							$	3,432,277		$	3,333,241

Each Loan is secured by first-priority mortgages on the Properties, which are owned by the Borrower. Each Loan is also secured by a first-priority pledge of the equity interests of the Borrower. The loan agreements require that the Borrower comply with various affirmative and negative covenants that are customary for loans of this type, including limitations on indebtedness Borrower can incur, limitations on sales and dispositions of the Properties, required maintenance of specified cash reserves, and various restrictions on the use of cash generated by the operations of the Properties while the Loan is outstanding. The loan agreement also includes customary events of default, the occurrence of which would allow the Loan Sellers to accelerate payment of all amounts outstanding thereunder and to require that all of the rental income associated with the real estate properties of the Borrower, after payment of specified operating expenses, asset management fees, and interest, be required to prepay the Loan. The Borrower is also required to furnish various financial and other reports to the Loan Sellers.

We evaluated the accounting for the mortgage loan transactions under ASC 860, Transfers and Servicing. Specifically, we considered ASC 860-10-40-4 in determining whether each Depositor had surrendered control over the Loan as part of transferring it to the mortgage loan trustee. In this evaluation, we first considered and concluded that the transferee (i.e., trustee), which is a fully separate and independent entity over which we have no control, would not be consolidated by the transferor (i.e., the Depositor). Next, as the Depositor has fully sold, transferred, and assigned all right, title, and interest in the Loan under terms of the Trust and Servicing Agreement, we have concluded that it has no continuing involvement in the Loan. Lastly, we have considered all other relevant arrangements and agreements related to the transfer of the Loan, noting no facts or circumstances inconsistent with the above analysis.

We have also evaluated the transfer of the Loan from the Depositor to the mortgage loan trustee under ASC 860-10-40-5, noting that the Loan has been isolated from the Depositor, even in bankruptcy or receivership, which has been supported by a true sale opinion obtained as part of the mortgage loan transaction. Additionally, the third-party holders of the Certificates are freely able to pledge or exchange their Certificates, and we maintain no other form of effective control over the Loan through repurchase agreements, cleanup calls, or otherwise. Accordingly, we have concluded that the transfer of each Loan from the Depositor to the Trust meets the conditions for a sale of financial assets under ASC 860-10-40-4 through ASC 860-10-40-5 and have therefore derecognized the Loan in accordance with ASC 860-20. As such, our condensed consolidated financial statements, through the Borrowers, our consolidated subsidiaries, reflect the Properties at historical cost basis and a loan payable is recorded in an amount equal to the principal balance outstanding on each Loan.

We have also evaluated the Retained Certificates as a variable interest in the respective Trust and concluded that the Retained Certificates will not absorb a majority of the Trust's expected losses or receive a majority of the Trust's expected residual returns. Additionally, we have concluded that the Retained Certificates do not provide us with any ability to direct activities that could impact the Trust's economic performance. Accordingly, we do not consolidate the Trusts but do consolidate, at historical cost basis, the properties placed as collateral for each Loan and have included the corresponding mortgage loan components in the net mortgage loan liability at September 30, 2017 and December 31, 2016, in the accompanying condensed consolidated balance sheets. Separately, the $153.1 million and $141.1 million of Retained Certificates have been reflected as asset-backed securitization certificates in the condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016, respectively.

In order to mitigate our exposure to potential future increases in LIBOR rates, we have purchased interest rate caps and entered into interest rate swap contracts. See Note 11. Derivatives and Hedging for the details of our derivative financial instruments.

As of September 30, 2017, we had total outstanding borrowings of $4.1 billion, of which the total amount related to mortgage loans was $3.5 billion and the total amount related to the Convertible Senior Notes was $578.6 million. As of September 30, 2017, we had approximately $70.3 million in net deferred financing costs, which we amortize using the effective interest rate method. As of September 30, 2017, we were in compliance with all of our debt covenant requirements.

The following table outlines our total gross interest, including unused commitment and other fees, accretion of discounts and amortization of deferred financing costs, and capitalized interest for the three and nine months ended September 30, 2017 and 2016 (in thousands):

The following table summarizes the contractual maturities of our debt as of September 30, 2017; maturity dates assume exercise of optional extension terms of mortgage loans (in thousands):

Since the date of the SWAY Merger, our shares trade on the NYSE under the ticker symbol “SFR.” In our calculation of EPS, the numerator for both basic and diluted EPS is net earnings (loss) attributable to common shareholders. We use the two-class method in calculating basic and diluted EPS.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(In thousands, except per share data)	2017			2016			2017			2016
Numerator:
Net loss from continuing operations	$	(22,237	)	$	(12,040	)	$	(35,151	)	$	(67,935	)
Less: Net loss from continuing operations attributable to the non-controlling interests		975			718			1,695			4,086
Net loss from continuing operations attributable to common shareholders		(21,262	)		(11,322	)		(33,456	)		(63,849	)
(Loss) income from discontinued operations, net		(1,984	)		449			(2,205	)		(7,368	)
Less: Net loss (income) from discontinued operations attributable to the non-controlling interests		87			(27	)		106			443
Net (loss) income from discontinued operations attributable to common shareholders		(1,897	)		422			(2,099	)		(6,925	)
Net loss attributable to common shareholders	$	(23,159	)	$	(10,900	)	$	(35,555	)	$	(70,774	)
Denominator:
Basic and diluted weighted-average shares outstanding		128,308			101,490			116,389			101,680
Earnings (loss) per share:
Net loss from continuing operations	$	(0.17	)	$	(0.12	)	$	(0.30	)	$	(0.67	)
Less: Net loss from continuing operations attributable to the non-controlling interests		0.01			0.01			0.01			0.04
Net loss from continuing operations attributable to common shareholders		(0.17	)		(0.11	)		(0.29	)		(0.63	)
(Loss) income from discontinued operations, net		(0.02	)		—			(0.02	)		(0.07	)
Less: Net loss (income) from discontinued operations attributable to the non-controlling interests		—			—			—			—
Net (loss) income from discontinued operations attributable to common shareholders		(0.01	)		—			(0.02	)		(0.07	)
Net loss attributable to common shareholders	$	(0.18	)	$	(0.11	)	$	(0.31	)	$	(0.70	)

The dilutive effect of outstanding RSUs is calculated using the treasury stock method, which includes consideration of share-based compensation required by GAAP.

As we reported a net loss for the three and nine months ended September 30, 2017 and 2016, both basic and diluted net loss per share are the same. For the three and nine months ended September 30, 2017, the dilutive effect of 0.8 million of our common shares subject to RSUs were excluded from the computation of diluted net loss per share, as the RSUs do not participate in losses. For the three and nine months ended September 30, 2016, the dilutive effect of 0.5 million of our common shares subject to RSUs were excluded from the computation of diluted net loss per share. For the three and nine months ended September 30, 2017 and 2016, the potential common shares contingently issuable upon the conversion of the Convertible Senior Notes were also excluded from the computation of diluted net loss per share as we have the intent and ability to settle the obligations in cash or, as with the 2019 Convertible Notes and the 2022 Convertible Notes, they were not convertible as of the end of the period. For the three and nine months ended September 30, 2017, the potential common shares issuable upon the redemption of 5.8 million OP Units were excluded from the computation of diluted net loss per share. For the three and nine months ended September 30, 2016, the potential common shares issuable upon the redemption of 6.4 million OP Units were excluded from the computation of diluted net loss per share. The OP Units are excluded from the computation of diluted net loss per share because their inclusion would have an antidilutive effect.

In connection with the SWAY Merger, we assumed (1) the Starwood Waypoint Residential Trust Equity Plan (the “Equity Plan”), which provided for the issuance of our common shares and common share-based awards to persons providing services to us, including without limitation, our trustees, officers, advisors, and consultants and employees of the Manager, (2) the Starwood Waypoint Residential Trust Manager Equity Plan (the “Manager Equity Plan” and, together with the Equity Plan, the “Equity Plans”), which provided for the issuance of our common shares and common share-based awards to the Manager, and (3) the Starwood Waypoint Residential Trust Non-Executive Trustee Share Plan (the “Non-Executive Trustee Share Plan”), which provided for the issuance of common shares and common share-based awards to our independent trustees. All unvested RSUs and restricted shares issued pursuant to the Equity Plans and the Non-Executive Trustee Share Plan prior to the SWAY Merger became fully vested upon the completion of the SWAY Merger. The Manager Equity Plan was terminated in connection with the completion of the SWAY Merger on January 5, 2016. In May 2017, our shareholders approved an amendment to the Equity Plan (i) increasing the number of our common shares available to be awarded under the Equity Plan by 2,500,000 and (ii) changing the name of the Equity Plan to the Colony Starwood Homes Equity Plan.

Under the Equity Plan, during the nine months ended September 30, 2017, we granted 405,829 RSUs to certain employees, which vest over three years, 118,151 RSUs vested and 7,076 RSUs were forfeited. Under the Non-Executive Trustee Share Plan, during the nine months ended September 30, 2017, we granted 36,239 restricted shares to our non-executive trustees, including 9,449 restricted shares that were granted to non-executive members of our board of trustees in lieu of trustee fees with an aggregate grant value of approximately $0.3 million and 14,870 restricted shares that were granted to trustees for services rendered to the special transaction committee in connection with the Proposed Mergers with an aggregate grant value of approximately $0.5 million, 39,663 shares vested and no shares were forfeited. The remaining 11,920 awards of restricted shares vest in one annual installment in May 2018.

We have both time-vested and performance-based RSUs. Time-vested RSUs are awarded to eligible grantees and entitle the grantee to receive common shares at the end of a vesting period. The completion of the Proposed Mergers alone will not cause an acceleration of the vesting of the time-vested RSUs. However, the occurrence of certain other conditions, in addition to the completion of the Proposed Mergers, may cause an acceleration of vesting of certain of the time-vested RSUs. The maximum number of time-vested RSUs subject to such conditions is 588,447 as of September 30, 2017. Included in the RSUs granted in the nine months ended September 30, 2017 are 164,817 performance-based RSUs granted to our senior executives, the payment of which is subject to performance and market vesting (“Performance Shares”). The number of common shares, if any, deliverable to award recipients depends on our performance during the three-year period (the “Performance Period”) that commenced on January 1, 2017 and that ends on December 31, 2019. Performance for (1) one-third of the Performance Shares will be based on our aggregate three-year Same Store Core NOI absolute growth (as defined in the applicable award agreements) during the Performance Period, (2) one-third of the Performance Shares will be based on our total shareholder return during the Performance Period (the “Shareholder Return”) as compared to the return on the SNL US REIT Multifamily Index during the Performance Period and (3) one-third of the Performance Shares will be based on the absolute Shareholder Return. The number of RSUs granted, for accounting purposes, assumes achievement of target performance for each of the three measurement criteria. The minimum number of RSUs that could be earned pursuant to the Performance Shares, upon achievement of the threshold criteria, is 41,190 and the maximum number of RSUs that could be earned pursuant to the Performance Shares is 288,450. The amended award agreements for the Performance Shares include change of control provisions, in which case the Performance Shares will vest based on our actual performance from the beginning of the Performance Period through the date of the change of control. The completion of the Proposed Mergers will constitute a change of control under the amended award agreements and cause an acceleration of the vesting of the Performance Shares.

After giving effect to activity described above and summarized in the table below, as of September 30, 2017, we have 3,266,771 and 90,776 shares available for grant for the Equity Plan and Non-Executive Trustee Share Plan, respectively.

The following table summarizes our RSU and restricted share award activity during the nine months ended September 30, 2017:

						Non-Executive
	Equity Plan					Trustee Share Plan					Total
				Weighted-					Weighted-					Weighted-
				Average					Average					Average
				Grant date		Restricted			Grant date					Grant date
	Units			Fair Value		Shares			Fair Value		Shares			Fair Value
Nonvested shares, December 31, 2016		472,662		$	24.34		15,344		$	22.81		488,006		$	24.29
Granted		405,829		$	30.71		36,239		$	33.97		442,068		$	30.98
Vested		(118,151	)	$	24.34		(39,663	)	$	29.78		(157,814	)	$	25.71
Forfeited		(7,076	)	$	29.32		—		$	—		(7,076	)	$	29.32
Nonvested shares, September 30, 2017		753,264		$	27.73		11,920		$	33.56		765,184		$	27.82

During the three and nine months ended September 30, 2017, we recorded $2.4 million and $5.6 million of share-based compensation expense, respectively, in our condensed consolidated statements of operations. During the three and nine months ended September 30, 2016, we recorded $0.8 million and $1.9 million of share-based compensation expense, respectively, in our condensed consolidated statements of operations. As of September 30, 2017, we had $17.0 million of total unrecognized compensation cost related to unvested RSUs and restricted shares, which is expected to be recognized over a weighted-average period of 2.4 years.

Since April 2017, we have offered our employees the opportunity for share ownership pursuant to the 2017 Employee Stock Purchase Plan. During the three and nine months ended September 30, 2017, we issued 5,479 shares and 5,479 shares, respectively, and expensed approximately $17,000 and $45,000, respectively, of share-based compensation pursuant to this plan. There were no shares issued or expenses recorded pursuant to this plan in the corresponding periods in 2016.

As discussed in Note 1. Organization and Operations, as consideration for the SWAY Merger, CAH shareholders received an aggregate of 64,869,526 of our common shares in exchange for all shares of CAH. In addition, upon consummation of the Internalization, Starwood Capital Group contributed the outstanding equity interests of the Manager to our operating partnership in exchange for 6,400,000 OP Units. The OP Units are redeemable at the election of the holder and we have the option, at our sole discretion, to execute the redemption of such OP Units for cash or exchange such OP Units for common shares, on a one-for-one basis. As of September 30, 2017, Starwood Capital Group owned 5,849,824 OP Units.

In June 2017, we completed a registered underwritten public offering of 26,488,165 of our common shares. We sold 15,054,978 common shares and certain selling shareholders sold 11,433,187 common shares. The selling shareholders included affiliates of Colony NorthStar, Inc. The resulting net proceeds to us from the offering were approximately $521.2 million, after deducting offering expenses payable by us. We contributed the net proceeds from the offering to our operating partnership in exchange for OP Units. Our operating partnership used the net proceeds from the offering to fund a portion of the GI Portfolio Acquisition, to repay certain of our existing indebtedness and for general corporate purposes. We did not receive any of the proceeds from the sale of common shares by the selling shareholders.

In March 2017, we completed a registered underwritten public offering of 23,088,424 of our common shares. We sold 11,105,465 common shares and certain selling shareholders sold 11,982,959 common shares. The selling shareholders included affiliates of Colony NorthStar, Inc. and Starwood Capital Group. The resulting net proceeds to us from the offering were approximately $348.8 million, after deducting the underwriting discount and other offering expenses payable by us. We contributed the net proceeds from the offering to our operating partnership in exchange for OP Units. Our operating partnership used the net proceeds from the offering to fund acquisitions, to repay certain of our existing indebtedness and for general corporate purposes. We did not receive any of the proceeds from the sale of common shares by the selling shareholders.

During the nine months ended September 30, 2017, Starwood Capital Group has exchanged 550,176 OP Units for the same number of our common shares. The effect of this redemption on additional paid-in capital in the condensed consolidated balance sheet is as follows:

In January 2016, our board of trustees authorized a $100.0 million increase and an extension to our share repurchase program (the “2015 Program”). The 2015 Program expired in May 2017. Under the 2015 Program, we could have repurchased up to $250.0 million of our outstanding common shares. During the nine months ended September 30, 2017, we did not repurchase any of our common shares. As of September 30, 2017, we can no longer repurchase our outstanding common shares under this program.

The following table summarizes our dividends declared from January 1, 2016 through September 30, 2017:

As the managing member of a joint venture with Fannie Mae (see Note 4. Investments in Unconsolidated Joint Ventures), one of our wholly owned subsidiaries earns a management fee based upon the venture’s gross receipts. For the three months ended September 30, 2017 and 2016, we earned management fees of approximately $0.7 million and $0.7 million, respectively. For the nine months ended September 30, 2017 and 2016, we earned management fees of approximately $2.2 million and $2.2 million, respectively. Management fees earned from the Fannie Mae joint venture are included in other income in the accompanying condensed consolidated statements of operations.

In connection with the SWAY Merger and Internalization, we assumed a management agreement with Waypoint Real Estate Group HoldCo, LLC (“Waypoint Manager”), under which we earned fees and were reimbursed for certain expenses in exchange for the operation and management of properties owned by multiple private funds. Certain of our officers and employees have minority ownership interests in Waypoint Manager. The management agreement between us and Waypoint Manager was terminated in connection with the GI Portfolio Acquisition in June 2017. For the three months ended September 30, 2017, no management fees and expense reimbursements were earned under this agreement. For the three months ended September 30, 2016, management fees and expense reimbursements under this agreement totaled approximately $2.4 million. For the nine months ended September 30, 2017 and 2016, management fees and expense reimbursements under this agreement totaled approximately $4.1 million and $6.8 million, respectively, and are included in other income in the accompanying condensed consolidated statements of operations.

In June 2017, we completed a transaction to purchase the GI Portfolio of 3,106 homes from Waypoint/GI Ventures LLC for approximately $814.9 million. Waypoint/GI Ventures LLC is managed by the Waypoint Manager, in which certain of our officers and

employees have minority interests. The management agreement between us and Waypoint Manager was terminated in connection with the GI Portfolio Acquisition.

GAAP establishes a hierarchy of valuation techniques based on the observability of inputs utilized in measuring financial assets and liabilities at fair values (see Note 2. Basis of Presentation and Significant Accounting Policies). GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs.

Our interest rate derivative contracts are recorded at fair value on a recurring basis and are classified as Level II. See Note 11. Derivatives and Hedging.

Our assets measured at fair value on a nonrecurring basis are those assets for which we have recorded impairments. See Note 2. Basis of Presentation and Significant Accounting Policies for information regarding significant considerations used to estimate the fair value of our investments in real estate.

The assets for which we have recorded impairments, measured at fair value on a nonrecurring basis, are summarized below (in thousands):

For a summary of our real estate activity during the nine months ended September 30, 2017, refer to Note 3. Single-Family Real Estate Investments.

We have not elected the fair value option for any of our financial instruments. Fair values of cash and cash equivalents, resident and other receivables, restricted cash and purchase deposits approximate carrying values due to their short-term nature.

The following table presents the fair value of our financial instruments not carried at fair value in the condensed consolidated balance sheets (in thousands):

		September 30, 2017				December 31, 2016
		Carrying		Fair		Carrying		Fair
		Value		Value		Value		Value
Assets carried at historical cost on the condensed consolidated balance sheet
Non-performing loans (Note 14)	Level III	$	1,848	$	1,848	$	5,837	$	5,837
Asset-backed securitization certificates	Level III		153,115		153,115		141,103		141,103
Total		$	154,963	$	154,963	$	146,940	$	146,940
Liabilities carried at historical cost on the condensed consolidated balance sheet
Revolving credit facilities	Level III	$	—	$	—	$	108,501	$	108,501
Master repurchase facility (Note 14)	Level III		—		—		19,286		19,286
Mortgage loans⁽¹⁾	Level III		3,488,793		3,496,706		3,383,157		3,383,157
Convertible senior notes⁽¹⁾	Level III		578,602		555,942		402,500		397,484
Total		$	4,067,395	$	4,052,648	$	3,913,444	$	3,908,428

We determined the fair value for NPLs, at the time of the SWAY Merger, by using a discounted cash flow valuation model and considering alternate loan resolution probabilities, including modification, liquidation or conversion to rental property or a bulk sale of the portfolio.

The carrying values of our asset-backed securitization certificates, revolving credit facilities, master repurchase agreement and secured term loan and mortgage loans approximate their fair values as they were recently obtained or have had their terms recently amended, or their interest rates reflect market rates since they are indexed to LIBOR. The fair value of our mortgage loans is estimated by using a discounted cash flow methodology based on market interest rate data and other market factors available at the end of the period. The fair value of our convertible senior notes is estimated by discounting the contractual cash flows at the interest rate we estimate such notes would bear if sold in the current market.

Our objective in using derivative instruments is to manage our exposure to interest rate movements impacting interest expense on our borrowings. We use interest rate caps and swaps to hedge the variable cash flows associated with our existing variable-rate Loans, revolving credit facility and secured term loan. The interest rate swaps we have entered into involve the receipt of variable-rate interest amounts from a counterparty in exchange for us making payments based on a fixed interest rate over the life of the swap contracts.

We entered into interest rate caps to limit the exposure of increases in interest rates on our LIBOR-indexed debt (see Note 6. Debt). In February 2016, we de-designated three of our interest rate caps, resulting in reclassifications from accumulated other comprehensive income to interest expense of $0.1 million and $0.6 million for the three and nine months ended September 30, 2017, respectively. The reclassifications for the corresponding periods in 2016 are $0.1 million and $0.3 million, respectively. While some of these interest rate caps were initially designated as cash flow hedges, as of September 30, 2017, we had no interest rate caps that were designated as cash flow hedges.

We entered into interest rate swap contracts that effectively convert $2.6 billion of floating rate debt to fixed rate debt. The table below summarizes our interest rate swap contracts as of September 30, 2017 (dollars in thousands):

Counterparty

Notional Amount

Effective Date

Maturity Date

Strike Rate

Index

JPMorgan

800,000

March 15, 2017

March 15, 2018

0.85200%

One-month LIBOR

JPMorgan

800,000

March 15, 2018

March 15, 2019

1.09800%

One-month LIBOR

Morgan Stanley

800,000

March 15, 2017

March 15, 2018

0.80450%

One-month LIBOR

Morgan Stanley

800,000

March 15, 2018

March 15, 2019

1.05500%

One-month LIBOR

JPMorgan

450,000

July 15, 2017

July 15, 2018

0.93250%

One-month LIBOR

JPMorgan

450,000

July 15, 2018

July 15, 2019

1.11750%

One-month LIBOR

JPMorgan

450,000

July 15, 2019

July 15, 2020

1.29850%

One-month LIBOR

JPMorgan

450,000

July 15, 2020

July 15, 2021

1.47250%

One-month LIBOR

JPMorgan

550,000

January 15, 2017

January 15, 2018

1.04050%

One-month LIBOR

JPMorgan

550,000

January 15, 2018

January 15, 2019

1.57650%

One-month LIBOR

JPMorgan

550,000

January 15, 2019

January 15, 2020

1.92850%

One-month LIBOR

JPMorgan

550,000

January 15, 2020

January 15, 2021

2.12950%

One-month LIBOR

JPMorgan

550,000

January 15, 2021

July 15, 2021

2.23250%

One-month LIBOR

Goldman Sachs

800,000

March 15, 2019

March 15, 2022

2.20625%

One-month LIBOR

In connection with certain interest rate swap contracts, we have posted cash collateral with the counterparties which amounted to $21.1 million as of September 30, 2017.

Changes in fair value of the designated portion of our interest rate caps and swaps that qualify for hedge accounting, which includes all of our interest rate swaps and none of our interest rate caps, are recorded in other comprehensive loss, resulting in unrealized losses of $0.4 million and unrealized gains of $9.2 million for the three months ended September 30, 2017 and 2016, and unrealized losses of $5.8 million and $7.6 million for the nine months ended September 30, 2017 and 2016, respectively. In addition, reclassifications from other comprehensive loss, including amounts resulting from the de-designation of interest rate caps, resulted in a $2.2 million decrease in interest expense and a $1.2 million increase in interest expense for the three months ended September 30, 2017 and 2016; interest expense decreased by $2.0 million and increased by $3.1 million for the nine months ended September 30, 2017 and 2016 respectively. During the next 12 months, we estimate that an additional $10.4 million will be reclassified from accumulated other comprehensive income to earnings.

Non-designated hedges are derivatives that do not meet the criteria for hedge accounting or for which we did not elect to designate as accounting hedges. We do not enter into derivative transactions for speculative or trading purposes, but to manage the economic risk of changes in interest rates. Changes in the fair value of derivatives not designated as accounting hedges are recorded in other loss, net in the condensed consolidated statements of operations.

We are party to a number of interest rate caps that are not designated as accounting hedges. For the three months ended September 30, 2017 and 2016, unrealized losses of $8,000 and $18,000, respectively, are included in other loss, net in the condensed consolidated statements of operations related to our non-designated interest rate caps. For the nine months ended September 30, 2017 and 2016, unrealized losses of $0.2 million and $0.1 million, respectively, are included in other loss, net in the condensed consolidated statements of operations related to our non-designated interest rate caps.

The fair values of derivative instruments included in other assets, net and other liabilities in our condensed consolidated balance sheets are as follows:

	September 30, 2017									December 31, 2016
	Asset Derivatives				Liability Derivatives					Asset Derivatives				Liability Derivatives
(In thousands)	Notional Amount		Estimated Fair Value		Notional Amount		Estimated Fair Value			Notional Amount		Estimated Fair Value		Notional Amount		Estimated Fair Value
Derivatives designated as hedging instruments:
Interest rate caps	$	—	$	—	$	—	$	—		$	440,292	$	—	$	—	$	—
Interest rate swaps		6,100,000		22,862		2,450,000		(6,624	)		2,050,000		25,708		—		—
Total derivatives designated as hedging instruments		6,100,000		22,862		2,450,000		(6,624	)		2,490,292		25,708		—		—
Derivatives not designated as hedging instruments:
Interest rate caps		4,055,773		45		—		—			3,448,671		64		—		—
Total derivatives not designated as hedging instruments		4,055,773		45		—		—			3,448,671		64		—		—
Total	$	10,155,773	$	22,907	$	2,450,000	$	(6,624	)	$	5,938,963	$	25,772	$	—	$	—

Our TRSs are subject to corporate level federal, state and local income taxes. The following is a summary of our income tax expense:


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(In thousands)	2017		2016			2017		2016
Current
Federal	$	200	$	(68	)	$	200	$	7
State		159		229			495		480
Total current tax expense		359		161			695		487
Deferred
Federal		—		—			—		—
State		—		—			—		—
Total deferred tax expense		—		—			—		—
Total income tax expense	$	359	$	161		$	695	$	487

Deferred tax assets and liabilities arise from temporary differences in income recognition for GAAP and tax purposes, primarily related to our investments in real estate. As of September 30, 2017 and December 31, 2016, we had no deferred tax assets or liabilities.

We maintain a 401(k) retirement savings plan for all employees that meet certain minimum employment criteria. The plan provides that the participants may defer eligible compensation on a pre-tax basis subject to certain maximum amounts specified in the Code. We make matching contributions in amounts equal to 50.0% of the employee’s contribution to the plan, up to a maximum of 6.0% of contributed compensation. Additional discretionary contributions in an amount to be determined by our board of trustees may also be made for each plan year. For the three months ended September 30, 2017 and 2016, our expense related to the plan was $0.1 million and $0.2 million, and for the nine months ended September 30, 2017 and 2016, our expense related to the plan was $0.6 million and $0.7 million, respectively.

We account for discontinued operations in accordance with ASC 205-20, Presentation of Financial Statements—Discontinued Operations. Only disposals representing a strategic shift in operations that have a major effect on a company’s operations and financial results may be presented as discontinued operations.

From time-to-time and in the normal course of business, we dispose of individual real estate assets in order to optimize the performance of our portfolio of real estate assets. We have concluded that these individual dispositions do not qualify for discontinued operations reporting as they do not represent, individually or in aggregate, a strategic shift that will have a major effect on our operations and financial results. Our real estate assets that meet the held-for-sale criteria as of September 30, 2017 and December 31, 2016 are classified as real estate assets held for sale, net in the condensed consolidated balance sheets.

On May 4, 2016, our board of trustees approved a strategic shift to exit the NPL business acquired as a result of the SWAY Merger. The disposal of the assets and liabilities of our NPL business represents a strategic shift in operations and is expected to have a major effect on our operations and financial results and therefore the results of operations are presented separately as discontinued operations in all periods presented in the condensed consolidated statements of operations. In August 2016, Prime sold substantially all of its NPLs. The sale price was $265.3 million resulting in a gain on sale, net of selling costs, of approximately $3.5 million.

The following table summarizes transactions resulting in income and expense within our NPL business for the three and nine months ended September 30, 2017 and 2016:

The assets and liabilities are presented separately as assets held for sale and liabilities related to assets held for sale in the condensed consolidated balance sheets. The following table summarizes the components of such assets and related liabilities as of September 30, 2017 and December 31, 2016:

Pursuant to the terms of our credit facility agreements and mortgage loan agreements (see Note 6. Debt), laws and regulations of the jurisdictions in which our properties are located, and general business practices, we are required to procure insurance on our properties. For the nine months ended September 30, 2017 and 2016, no material uninsured losses have been incurred with respect to the properties except as described below.

Hurricane Harvey made landfall along the coast of Texas on August 25, 2017. Hurricane Irma made landfall in Southern Florida on September 10, 2017, traveled through Florida and was downgraded to a tropical storm before entering Georgia. Our current assessment is that approximately 29% of our 19,645 properties in the impacted markets sustained damage, primarily limited to roofing, fencing, and landscaping issues, and a total of 25 properties incurred severe damage, which rendered the properties uninhabitable. We have recorded $17.4 million in estimated damages to our properties from these two hurricanes, which is reflected as a reduction in the carrying value of the affected properties and included in buildings and building improvements in the condensed consolidated balance sheet. Our insurance policies provide coverage for wind damage, flood damage and business interruption, but are subject to deductibles and other terms and conditions. Of the foregoing estimated damages, $4.6 million is deemed to be recoverable through our insurance policies, and is included in other assets, net in the condensed consolidated balance sheet. Total casualty losses and hurricane-related damages of $12.8 million, net of expected insurance recoveries, are included in impairment and other expense in the condensed consolidated statements of operations.

As of September 30, 2017, we had executed multiple agreements to purchase a total of 498 properties for an aggregate purchase price of $121.4 million.

Two putative class actions have been filed by our purported shareholders challenging the Proposed Mergers. The first suit, styled as Berg v. Starwood Waypoint Homes, et al., No. 1:17-cv-02896, was filed in the United States District Court for the District of Maryland on September 29, 2017, and is against us, our operating partnership, our trustees, INVH, INVH LP and REIT Merger Sub (the “Berg Lawsuit”). The second suit, styled as Bushansky v. Starwood Waypoint Homes, et al., No. 1:17-cv-02936, was filed in the United States District Court for the District of Maryland on October 4, 2017, and is against us, our operating partnership and our trustees (the “Bushansky Lawsuit” and, collectively with the Berg Lawsuit, the “Lawsuits”). The Lawsuits allege that we and our trustees violated Section 14(a) of the Securities and Exchange Act of 1934, as amended (“Exchange Act”), and Rule 14a-9 promulgated thereunder by allegedly disseminating a false and misleading Form S-4 containing a joint proxy statement/prospectus. The Lawsuits further allege that our trustees allegedly violated Section 20(a) of the Exchange Act by failing to exercise proper control over the person(s) who violated Section 14(a) of the Exchange Act. The Berg Lawsuit additionally alleges that INVH violated Section 20(a) of the Exchange Act. The Lawsuits seek, among other things, injunctive relief preventing consummation of the Proposed Mergers, rescission of the transactions contemplated by the INVH Merger Agreement should they be consummated and litigation costs, including attorneys’ fees. The Berg Lawsuit also seeks injunctive relief directing our trustees to disseminate a registration statement that does not contain any untrue statements of material fact and declaratory relief that defendants violated Sections 14(a) and/or 20(a) of the Exchange Act. The Bushansky Lawsuit also seeks rescissory damages in the event of a merger and requests that the action be maintained as a class action. We and INVH intend to defend vigorously against the Lawsuits.

SEC Investigation “In the Matter of Certain Single Family Rental Securitizations”

Radian Group Inc. (“Radian”), the indirect parent company of Green River Capital LLC (“GRC”), which is a service provider that provides certain BPOs to us, disclosed in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017 that GRC had received a letter in March 2017 from the staff of the SEC stating that it is conducting an investigation captioned “In the Matter of Certain Single Family Rental Securitizations” and requesting information from market participants. Radian disclosed that the letter asked GRC to provide information regarding BPOs that GRC provided on properties included in single family rental securitization transactions (“Securitizations”).

In September 2017, we received a letter from the staff of the SEC stating that it is conducting an investigation captioned “In the Matter of Certain Single Family Rental Securitizations.” The letter enclosed a subpoena that requests the production of certain documents and communications related to our Securitizations (and those of our predecessors), respectively, including, without limitation: transaction documents and offering materials; agreements with providers of BPOs and/or due diligence services for Securitizations; identification of employees primarily responsible for handling BPOs; documents provided to rating agencies or third-party BPO providers regarding capital expenditures and/or renovation costs for properties underlying Securitizations; communications with certain transaction parties regarding BPOs in Securitizations; and documents regarding BPO orders and documents and communications with BPO providers regarding requests that a BPO be reviewed, re-done, analyzed, modified, corrected and/or adjusted. The SEC’s letter indicates that its investigation is a fact-finding inquiry to determine whether there have been any violations of the federal securities laws and does not mean that the SEC has a negative opinion of any person or security. As the SEC’s investigation is ongoing, we cannot currently predict the timing, the outcome or the scope of such investigation. We are cooperating with the SEC. We understand that other transaction parties in securitizations have received requests in this matter. See the risk factor entitled “SEC investigation “In the Matter of Certain Single Family Rental Securitizations”” in Exhibit 99.1 to this Quarterly Report on Form 10-Q.

Between October 26, 2015 and October 28, 2015, our board of trustees received two litigation demand letters on behalf of our purported shareholders. The letters alleged, among other things, that our trustees breached their fiduciary duties by approving the SWAY Merger and the Internalization, and demanded that our board of trustees take action, including by pursuing litigation against our trustees. Our board of trustees referred these letters to the special committee of our board of trustees formed in connection with the Internalization for review and a recommendation. On November 5, 2015, after considering the allegations made in the letters, and upon the recommendation of the special committee, our board of trustees (with Barry Sternlicht, Douglas R. Brien and Andrew J. Sossen recusing themselves) voted to reject the demands.

On October 30, 2015, a putative class action was filed by one of our purported shareholders (“Plaintiff”) against us, our trustees, the Manager, SWAY Holdco, LLC, Starwood Capital Group and CAH (“Defendants”) challenging the SWAY Merger and the Internalization. The case is captioned South Miami Pension Plan v. Starwood Waypoint Residential Trust, et al., Circuit Court for Baltimore City, State of Maryland, Case No. 24C15005482. The complaint alleged, among other things, that some or all of our trustees breached their fiduciary duties by approving the SWAY Merger and the Internalization, and that the other defendants aided and abetted those alleged breaches. The complaint also challenged the adequacy of the public disclosures made in connection with the SWAY Merger and the Internalization. Plaintiff sought, among other relief, an injunction preventing our shareholders from voting on the Internalization or the SWAY Merger, rescission of the transactions contemplated by the SWAY Merger Agreement, and damages, including attorneys’ fees and experts’ fees.

On December 4, 2015, Plaintiff filed a motion seeking a preliminary injunction preventing our shareholders from voting on whether to approve the SWAY Merger and the Internalization. On December 16, 2015, the day before the shareholder vote, the Court denied Plaintiff’s preliminary injunction motion. Plaintiff thereafter notified the Defendants that it intended to file an amended complaint. Plaintiff filed its amended complaint on February 3, 2016, asserting substantially similar claims and seeking substantially similar relief as in its earlier complaint. In response, Defendants filed a motion to dismiss the amended complaint on March 21, 2016, on which the Court held a hearing June 1, 2016. We believe that this action has no merit and intend to defend vigorously against it.

From time to time, we are party to claims and routine litigation arising in the ordinary course of our business. We do not believe that the results of any such claims or litigation individually or in the aggregate will have a material adverse effect on our business, financial position or results of operations.

On October 13, 2017, our board of trustees declared a pro-rata quarterly dividend of $0.11 per common share. Payment of the dividend was made on November 7, 2017 to shareholders of record at the close of business on October 24, 2017.

Subsequent to September 30, 2017, we have continued to purchase and sell properties in the normal course of business. For the period from October 1, 2017 through October 31, 2017, we purchased 129 properties with an aggregate acquisition cost of approximately $30.5 million. For the period from October 1, 2017 through October 31, 2017, we sold 69 properties with a gross aggregate selling price of $13.8 million.

On October 15, 2017, the 2017 Convertible Notes matured. As certain of the 2017 Convertible Notes were converted prior to maturity, we settled the outstanding balance of the 2017 Convertible Notes with a combination of $3.6 million in cash and the issuance of 23,026 common shares on October 16, 2017.

On October 25, 2017, we voluntarily reduced the outstanding principal balance of the CAH 2014-2 mortgage loan by $50.0 million.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the information included elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2016. In addition to historical information, the following discussion contains forward-looking statements that are subject to risks and uncertainties. Actual results may differ substantially from those referred to herein due to a number of factors, including, but not limited to, risks described under (i) the heading Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2016 filed on February 28, 2017, (ii) the heading Item 8.01 Other Events in our Current Report filed on Form 8-K filed on June 5, 2017 and (iii) the caption “Risk Factors” in the Merger Proxy, which risk factors referenced in clause (iii) are filed as Exhibit 99.1 to this Quarterly Report on Form 10-Q, as well as the factors described in this section.

On September 21, 2015, we and CAH announced the signing of the SWAY Merger Agreement, to combine the two companies in the SWAY Merger. In connection with the transaction, we internalized the Manager. The SWAY Merger and the Internalization were completed on January 5, 2016.

We are an internally managed Maryland real estate investment trust and commenced operations in May 2012 primarily to acquire, renovate, lease and manage residential assets in select markets throughout the United States. Our objective is to generate attractive risk-adjusted returns for our shareholders over the long term through dividends and capital appreciation. Our primary strategy is to acquire single-family rental properties through a variety of channels, renovate these properties to the extent necessary and lease them to qualified residents. We measure properties by the number of rental units as compared to number of properties, taking into account our limited investments in multi-unit properties. We seek to take advantage of macroeconomic trends in favor of leasing properties by acquiring, owning, renovating and managing properties that we believe will generate substantial current rental revenue, which we expect to grow over time.

When pursuing property 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. We identify and pursue individual property acquisition opportunities through a number of sources including multiple-listing services listings, foreclosure auctions and short sales. In addition, we may opportunistically identify and pursue bulk portfolios of properties from other single-family rental companies, government sponsored enterprises, private investors, banks, mortgage servicers and other financial institutions. We also have acquired, and expect to continue to acquire, newly constructed homes through build-to-rent arrangements with home builders.

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. We own 95.6% of the outstanding OP Units as of September 30, 2017.

We have a joint venture with Prime, an entity managed by Prime Finance, an asset manager that specializes in acquisition, resolution and disposition of NPLs. We own a greater than 98.75% interest in the joint venture. We have substantially exited the NPL business and are currently marketing all remaining assets of the joint venture for disposition (see Note 14. Discontinued Operations.)

We intend to operate and to be taxed as a REIT for U.S. federal income tax purposes. 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 maintain our qualification as a REIT.

On August 9, 2017, we entered into the INVH Merger Agreement with INVH to form a combined company in a stock-for-stock transaction. The INVH Merger Agreement provides that, upon the terms and subject to the conditions set forth in the INVH Merger Agreement, (i) we will be merged with and into REIT Merger Sub, with REIT Merger Sub surviving as a subsidiary of INVH and (ii) as promptly as practicable after the REIT Merger, our operating partnership will be merged with and into INVH LP, with INVH LP surviving as a subsidiary of INVH. In connection with the Proposed Mergers, we filed with the SEC on October 16, 2017 the Merger Proxy, which includes more detailed information about the Proposed Mergers and the related transactions.

any). At the effective time of the REIT Merger, each RSU that does not vest as a result of the Proposed Mergers or the INVH Merger Agreement will be automatically assumed by INVH and converted into an equivalent stock-based incentive award unit with respect to INVH’s common stock and be subject to the same terms and conditions as applicable to such awards.

The transaction has been approved by our board of trustees and INVH’s board of directors. Completion of the Proposed Mergers is subject to, among other things, approval by the holders of our common shares. Assuming approval is obtained, the Proposed Mergers are expected to close in the fourth quarter of 2017. We can give no assurance that the Proposed Mergers and related transactions will be completed in the above timeframe, if at all. Two putative class actions have been filed by our purported shareholders challenging the Proposed Mergers. The lawsuits seek, among other things, injunctive relief preventing consummation of the Proposed Mergers, rescission of the transactions contemplated by the INVH Merger Agreement should they be consummated and litigation costs, including attorneys’ fees. See Part II, Item I. Legal Proceedings-Litigation Relating to the Proposed Mergers in this Quarterly Report on Form 10-Q for more details.

As of September 30, 2017, our portfolio consisted of 34,699 owned properties, including 33,788 rental properties, 815 properties that we do not intend to hold for the long term and 96 properties down from operations. As of September 30, 2017, approximately 93.8% of our rental properties were occupied, and approximately 95.3% of our stabilized rental properties were occupied.

The following table provides a summary of our portfolio of properties as of September 30, 2017:

													Average						Average		Weighted				Average
			Non-		Number					Total			Acquisition		Average		Aggregate		Home Size		Average		Average		Monthly Rent
	Stabilized		Stabilized		of		Stabilized			Portfolio			Cost		Investment		Investment		(square		Age		Year		Per Occupied
Markets	Properties⁽¹⁾		Properties		Properties⁽²⁾⁽³⁾		Occupancy			Occupancy			Per Property⁽⁴⁾		Per Property		(in millions)		feet)		(years)		Purchased⁽⁵⁾		Property⁽⁶⁾
Atlanta		5,000		45		5,045		96.1	%		95.2	%	$	139,439	$	157,783	$	796		2,022		23		2014	$	1,405
Tampa		3,900		12		3,912		93.6	%		93.4	%	$	156,444	$	180,372	$	704		1,703		30		2014	$	1,509
Miami		3,697		11		3,708		95.4	%		95.1	%	$	209,010	$	229,846	$	851		1,719		40		2015	$	1,870
Southern California		3,552		5		3,557		96.0	%		95.9	%	$	280,925	$	309,042	$	1,095		1,677		41		2014	$	2,073
Houston		2,443		7		2,450		96.3	%		96.0	%	$	154,142	$	159,668	$	391		1,951		21		2015	$	1,524
Dallas		2,162		39		2,201		95.9	%		94.2	%	$	181,535	$	190,812	$	420		2,112		22		2015	$	1,709
Denver		2,118		45		2,163		95.0	%		93.1	%	$	213,707	$	233,755	$	505		1,777		34		2015	$	1,843
Phoenix		1,899		77		1,976		95.9	%		92.2	%	$	160,145	$	174,522	$	345		1,723		26		2015	$	1,283
Orlando		1,936		5		1,941		95.5	%		95.3	%	$	142,014	$	170,058	$	330		1,725		31		2014	$	1,462
Las Vegas		1,739		6		1,745		94.9	%		94.6	%	$	187,775	$	205,191	$	358		2,024		18		2013	$	1,471
Charlotte-Raleigh		1,461		171		1,632		94.1	%		84.3	%	$	205,636	$	225,743	$	368		2,331		12		2016	$	1,677
Northern California		1,619		5		1,624		96.4	%		96.1	%	$	282,577	$	294,529	$	478		1,456		48		2016	$	1,940
Chicago		1,136		6		1,142		93.0	%		92.6	%	$	158,834	$	162,081	$	185		1,545		40		2016	$	1,715
Nashville		602		90		692		93.0	%		80.9	%	$	263,029	$	277,441	$	192		2,179		10		2016	$	1,882
Total / Average		33,264		524		33,788		95.3	%		93.8	%	$	189,577	$	207,918	$	7,018		1,841		29		2015	$	1,654

Our results of operations and financial condition are affected by numerous factors, many of which are beyond our control. The key factors we expect to impact our results of operations and financial condition include our pace of acquisitions and ability to deploy our capital, the time and cost required to stabilize a newly acquired property, rental rates, occupancy levels, rates of resident turnover, our expense ratios and capital structure.

We continue to grow our portfolio of single-family rental properties. Our ability to identify and acquire properties that meet our investment criteria may be affected by property prices in our target markets, the inventory of properties available through our acquisition channels and competition for our target assets. We have accumulated a substantial amount of recent data on acquisition costs, renovation costs and time frames for the conversion of properties to rental. We utilize the acquisition process developed by the members of our executive team who employ both top-down and bottom-up analyses to underwrite each acquisition opportunity we consider. The underwriting process is supported by our highly scalable technology platform, market analytics and a local, cross-functional team.

Before an acquired property becomes an income-producing, or rent-ready, asset, we must take possession of the property (to the extent it remains occupied by a hold-over property owner), renovate, market and lease the property. We refer to this process as property stabilization. The acquisition of properties involves the outlay of capital beyond payment of the purchase price, including payments for property inspections, closing costs, title insurance, transfer taxes, recording fees, broker commissions, and property taxes and HOA fees in arrears. The time and cost involved in stabilizing our newly acquired properties will affect our financial performance and will be affected by the time it takes for us to take possession of the property, the time involved and cost incurred for renovations, and time needed for leasing the property for rental.

Possession can be delayed by factors such as the exercise of applicable statutory or rescission rights by hold-over owners or unauthorized occupants living in the home at the time of purchase and legal challenges to our ownership. The cost associated with transitioning an occupant from an occupied property varies significantly depending on the steps taken to transition the occupant (i.e., willfully vacate, cash for keys, court-ordered vacancy). In some instances, where we have purchased a property that is occupied, we have been able to convert the occupant to a short-term or long-term resident.

We expect to control renovation costs and the time to renovate a newly acquired or vacated, following a resident move-out, property by following a standardized process to prepare the property for residency to our rent-ready standards. The renovation scope for each property is developed and managed through a technology enabled process that incorporates proprietary systems, property level data, pre-established specifications, standards and pricing and expertise from our in-market personnel. Our field project managers are responsible for managing the day-to-day operations of our property renovation process. This includes the overall supervision and management of property renovations, including conducting pre-acquisition diligence, developing scopes of work, cost estimating and value engineering, directing the bid award process, managing the scope verification process, performing inspections and, ultimately, bringing the renovations to completion. Renovating a property to our standards typically requires expenditures on kitchen remodeling, flooring, painting, plumbing, electrical, heating and landscaping. We also make targeted capital improvements, such as electrical, plumbing, HVAC and roofing work, that we believe increase resident satisfaction and lower future repair and maintenance costs.

We expect to continue to control renovation costs by leveraging our supplier relationships to negotiate attractive rates and rebates on items such as appliances, flooring, hardware, paint and other material components. The time to renovate a newly acquired property may vary significantly among properties depending on the acquisition channel by which it was acquired and the age and condition of the property. Upon completion of construction, we perform rigorous quality control and scope verification with our field project managers to ensure our properties have been completed to a rent-ready standard and are deemed ready for occupancy. During this process, we coordinate and communicate with our local property management and leasing teams on the timing and availability of the properties so that marketing and leasing activities can begin while the property is being prepared for occupancy.

Similarly, the time to market and lease a property will be driven by local demand, our marketing techniques and the supply of properties in the market. We utilize a fully integrated marketing and leasing strategy that leverages technologies to maximize occupancy, resident quality and rental rates. We showcase our available properties on our website, which is integrated with our proprietary platform to ensure that available properties are marketed from the moment they are rent-ready. Leads are funneled to our internal leasing teams who work to qualify the leads and identify potential residents. Our lead scoring system is used to efficiently cultivate, prioritize and qualify leads. We maintain a centralized call center in Scottsdale and regional staff in several other markets. Market-specific factors, including our residents’ finances, the unemployment rate, household formation and net population growth,

income growth, size and make-up of existing and future housing stock, prevailing market rental and mortgage rates and credit availability will also impact the single-family real estate market. Growth in demand for rental housing in excess of the growth of rental housing supply will generally drive higher occupancy rates and rental price increases. Negative trends in our target markets with respect to these metrics or others could adversely impact our rental income.

As of September 30, 2017, the 33,264 properties we owned in our stabilized property portfolio were approximately 95.3% occupied. As of December 31, 2016, the 30,653 properties we owned in our stabilized property portfolio were approximately 95.6% occupied.

We capitalize certain costs incurred in connection with successful property acquisitions and associated stabilization activities, including tangible property improvements and replacements of existing property components. Included in these capitalized costs are certain personnel and other costs incurred in connection with the planning, execution, and oversight of all capital addition activities at the property level as well as third-party acquisition fees. We capitalized $0.8 million and $1.9 million of such personnel costs for the three and nine months ended September 30, 2017, respectively, and $0.2 million and $0.6 million for the corresponding periods in 2016, to building and improvements in the accompanying condensed consolidated balance sheet. Indirect costs are allocations of certain costs, including personnel costs that directly relate to capital additions activities. We also capitalize property taxes, insurance, interest and HOA fees incurred during the periods in which property stabilization is in progress. We charge to expense as incurred costs that do not relate to capital addition activities, including ordinary repairs, maintenance, resident turnover costs and general and administrative expenses. We also defer successful leasing costs and amortize them over the life of the lease, which is typically one year. Deferred leasing costs are included in other assets in the accompanying condensed consolidated balance sheets and include $2.2 million and $2.3 million of certain personnel costs, which were capitalized for the three months ended September 30, 2017 and 2016, respectively. Deferred leasing costs of $6.2 million and $6.2 million were capitalized for the nine months ended September 30, 2017 and 2016, respectively.

Our revenue is generated primarily from rents collected under lease agreements for our properties. The most important drivers of revenue (aside from portfolio growth) are rental and occupancy rates. Our rental and occupancy rates are affected by macroeconomic factors and local and property-level factors, including market conditions, seasonality and resident defaults, the amount of time that it takes us to renovate properties upon acquisition and the amount of time it takes us to renovate and re-lease vacant properties.

In each of our markets, we monitor a number of factors that may affect the single-family real estate market and our residents’ finances, including the unemployment rate, household formation and net population growth, income growth, size and make-up of existing and anticipated housing stock, prevailing market rental and mortgage rates, rental vacancies and credit availability. Growth in demand for rental housing in excess of the growth of rental housing supply, among other factors, will generally drive higher occupancy and rental rates. Negative trends in our markets with respect to these metrics or others could adversely affect our rental revenue.

In the near term, our ability to drive revenue growth will depend in large part on our ability to acquire additional properties, both leased and vacant, efficiently renovate and lease those newly acquired properties, maintain occupancy in the rest of our portfolio and increase monthly rental rates upon renewal and rollover.

Our ability to acquire, renovate, lease and maintain our portfolio in a cost-effective manner will be a key driver of our operating performance. We monitor the following categories of expenses that we believe most significantly affect our results of operations.

Once we acquire and renovate a property, we have ongoing property-related expenses, including HOA fees (when applicable), property taxes, insurance, ongoing costs to maintain the property and expenses associated with resident turnover. Certain of these expenses are not under our control, including HOA fees, property insurance and real estate taxes. We expect that certain of our costs, including insurance costs and property management costs, will account for a smaller percentage of our revenue as we expand our portfolio, achieve larger scale and negotiate additional volume discounts with third-party service providers and vendors.

We believe that our business and related operating results will be impacted by seasonal factors throughout the year. In particular, we have historically experienced lower occupancy rates and higher levels of tenant turnover during the summer months, which impacts both our rental revenues and related turnover costs. Further, our property operating costs are seasonally impacted in certain markets for expenses such as HVAC repairs, turn costs and landscaping expenses during the summer season.

As a result of the SWAY Merger, we have a joint venture with Prime, an entity managed by Prime Finance, an asset manager that specializes in acquisition, resolution and disposition of NPLs. We own a greater than 98.75% interest in the joint venture, which owns all of our NPLs. We have substantially exited the NPL business and are currently marketing all remaining assets of the joint venture for disposition. The joint venture exists for the purposes of: (1) converting NPLs to performing residential mortgage loans through modifications, holding such loans, selling such loans or converting such loans to properties; (2) acquiring properties through foreclosure, deed-in-lieu of foreclosure or other similar process; and (3) selling properties. Prime has contributed less than 1.26% of the cash equity to the joint venture and Prime, in accordance with our instructions (which are based in part on the use of certain analytic tools included in our proprietary platform), coordinates the resolution or disposition of loans for the joint venture. Our NPLs 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 NPLs and properties 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 NPLs and properties not segregated into Rental Pool Assets (“Non-Rental Pool Assets”). Although we have the exclusive right to transfer any Rental Pool Assets from the joint venture to us, we intend to sell all remaining properties converted from loans through the joint venture. Prime earns a one-time fee from us, equal to a percentage of the value of the NPLs and properties we originally designated as Rental Pool Assets upon disposition or resolution of such assets. We have substantially exited the NPL business and are currently marketing all remaining assets of the joint venture for disposition and Prime earns additional incentive fees related to such dispositions.

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 in arrears for all Non-Rental Pool Assets acquired.

We intend to operate and to be taxed as a REIT for federal income tax purposes. Our qualification as a REIT depends on our satisfaction of certain asset, income, organizational, distribution, shareholder ownership and other requirements on a continuing basis. Our ability to satisfy the asset tests depends upon our analysis of the characterization and fair values of our assets, some of which are not susceptible to a precise determination, and for which we will not obtain independent appraisals. Our compliance with the REIT income and quarterly asset requirements also depends upon our ability to successfully manage the composition of our income and assets on an ongoing basis.

If we were to fail to qualify as a REIT in any taxable year, we would be subject to federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates, and dividends paid to our shareholders would not be deductible by us in computing our taxable income. Any resulting corporate tax liability could be substantial and would reduce the amount of cash available for distribution to our shareholders, which in turn could have an adverse impact on the value of our common shares. Unless we were entitled to relief under certain Code provisions, we also would be disqualified from taxation as a REIT for the four taxable years following the year in which we failed to qualify as a REIT.

Significant accounting policies are those that we believe are both most important to the portrayal of our financial condition and results of operations, and require our difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Judgments and uncertainties affecting the application of those policies may result in our reporting materially different amounts under different conditions or using different assumptions.

The preparation of financial statements in accordance with GAAP requires us to make certain judgments and assumptions, based on information available at the time of our preparation of the financial statements, in determining accounting estimates used in preparation of the statements. We believe that our accounting policies regarding investments in real estate and goodwill are the most

critical in understanding the judgments involved in the preparation of our financial statements. Our financial statements reflect our revisions to such estimates in income in the period in which the facts that give rise to the revision become known. Our significant accounting policies are described in Item 8. Financial Statements and Supplementary Data—Note 2. Basis of Presentation and Significant Accounting Policies in our Annual Report on Form 10-K filed on February 28, 2017.

Accounting estimates are considered critical if the estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made and if different estimates reasonably could have been used in the reporting period or changes in the accounting estimate are reasonably likely to occur from period to period that would have a material impact on our financial condition, results of operations or cash flows.

During the nine months ended September 30, 2017, we increased our portfolio by 3,015 homes, net of sales activities, primarily as a result of the GI Portfolio Acquisition. The table below summarizes our portfolio holdings as of September 30, 2017 and December 31, 2016.

Refer to Note 16. Subsequent Events for disclosure regarding significant transactions that occurred subsequent to September 30, 2017.

The main components of our net loss of $23.2 million and $35.6 million for the three and nine months ended September 30, 2017, as compared to our net loss of $10.9 million and $70.8 million, respectively, for the three and nine months ended September 30, 2016, were as follows:

Our revenues come primarily from rents collected under lease agreements for our properties. The most important drivers of our revenues (aside from portfolio growth) are rental and occupancy rates. Our rental and occupancy rates are affected by macroeconomic factors and local and property-level factors, including market conditions, seasonality and resident defaults, and the amount of time that it takes us to renovate and lease properties upon acquisition and the amount of time it takes us to renovate and re-lease vacant properties.

For the three and nine months ended September 30, 2017, we experienced an increase in total revenues of 16% and 11%, respectively, as compared to the same periods in 2016. These increases are primarily due to an increase in rental revenues, which is primarily attributable to an increase in our average monthly rent and to an increase in the number of leased properties. Other property income includes tenant charge-backs, late charges and early-termination charges and other income includes management fees earned in the operations and management of the Fannie Mae joint venture and, prior to the current quarter, the operation and management of the assets of private funds. We anticipate that rental income will increase in future periods as a result of the GI Portfolio Acquisition and that other income will decrease in future periods as a result of the termination of our management agreement with Waypoint Manager in connection with the GI Portfolio Acquisition in June 2017.

	Three Months Ended September 30,				Amount of			Percent
(in thousands, except for percentages)	2017		2016		Change			Change
Property operating and maintenance	$	26,813	$	23,678	$	3,135			13	%
Real estate taxes, insurance and HOA costs		32,733		28,070		4,663			17	%
Property management		8,538		9,079		(541	)		-6	%
Interest expense		38,877		39,296		(419	)		-1	%
Depreciation and amortization		53,994		47,344		6,650			14	%
Impairment and other		13,077		356		12,721			3573	%
Share-based compensation		2,387		824		1,563			190	%
General and administrative		10,932		11,333		(401	)		-4	%
Transaction-related		7,791		1,503		6,288			418	%
Total expenses	$	195,142	$	161,483	$	33,659			21	%

	Nine Months Ended September 30,				Amount of			Percent
(in thousands, except for percentages)	2017		2016		Change			Change
Property operating and maintenance	$	67,477	$	62,356	$	5,121			8	%
Real estate taxes, insurance and HOA costs		90,443		83,310		7,133			9	%
Property management		27,430		29,226		(1,796	)		-6	%
Interest expense		115,017		114,737		280			0	%
Depreciation and amortization		148,293		135,818		12,475			9	%
Impairment and other		13,734		530		13,204			2491	%
Share-based compensation		5,584		1,922		3,662			191	%
General and administrative		32,717		39,809		(7,092	)		-18	%
Transaction-related		7,856		30,058		(22,202	)		-74	%
Total expenses	$	508,551	$	497,766	$	10,785			2	%

For the three months ended September 30, 2017, we experienced an increase in total expenses of 21% as compared to the same period in 2016. For the nine months ended September 30, 2017, we experienced an increase of 2% as compared to the same period in 2016. The increase in the current quarter expense is primarily attributable to transaction-related expenses incurred in connection with the Proposed Mergers and hurricane losses (see Note 15. Commitments and Contingencies). We also incurred higher real estate tax, insurance and HOA costs and higher depreciation and amortization expenses in the current quarter as a result of the GI Portfolio Acquisition. Relative to total revenues, total expenses increased to 115% for the three months ended September 30, 2017, from 111% for the corresponding period in 2016. This increase in rate of expenditure is primarily attributable to the $12.8 million hurricane losses (see Note 15. Commitments and Contingencies). Relative to total revenues, total expenses decreased to 107% for the nine months ended September 30, 2017, from 116% for the corresponding period in 2016. This reduction in rate of expenditures, as further discussed below, is primarily attributable to improvements in efficiency, which are primarily driven by economies of scale and improvements in business processes and a reduction in transaction-related expenses relative to those incurred during 2016 resulting from the Internalization and the SWAY Merger. We anticipate that transaction-related expenses will increase in future periods as a result of the Proposed Mergers.

Included in property operating and maintenance expenses are utilities and landscape maintenance, repairs and maintenance on leased properties, third-party management fees, bad debt expense and other expenses associated with resident turnover in vacancy periods between lease dates. During the three and nine months ended September 30, 2017, property operating and maintenance expense increased by $3.1 million and $5.1 million, respectively, from the same periods in 2016 resulting from increases related to the growth in the size of our portfolio of leased and unleased properties. Relative to rental and other property revenues, property operating and maintenance expenses decreased to 16% and 14%, respectively, for the three and nine months ended September 30, 2017, from 17%, and 15%, respectively, for the three and nine months ended September 30, 2016. We expect to recognize improvements in property operating expense efficiency, primarily due to growth in the size of our portfolio.

Real estate taxes, insurance and HOA costs are expensed once a property is rent ready. During the three and nine months ended September 30, 2017, real estate taxes, insurance and HOA costs increased $4.7 million and $7.1 million, respectively, as compared to the same periods in 2016. This increase was primarily attributable to growth in the size of our portfolio of properties that are rent ready, as well as increased value assessments from taxation authorities. We expect these expenses to continue to grow, primarily due to continued growth in the size of our portfolio and increased assessed values of our properties due to home price appreciation.

Property management expenses consist primarily of salaries, wages, and other personnel-related expenses for property management personnel as well as rent and other facilities-related expenses for property management offices. During the three and nine months ended September 30, 2017, property management expenses decreased $0.5 million and $1.8 million, respectively, as compared to the same periods in 2016. This decrease was primarily attributable to improvements in business processes and is offset in part by increases resulting from growth in the size of our portfolio and we expect these expenses to continue to increase with growth in the size of our portfolio.

Interest expense decreased by $0.4 million and increased by $0.3 million, respectively, during the three and nine months ended September 30, 2017 as compared to the same periods in 2016. See Note 6. Debt, and Liquidity and Capital Resources-Capital

Resources below for a description of the debt instruments we were party to during the nine months ended September 30, 2017. Interest expense will fluctuate in future periods primarily as a result of changes in the amount of our aggregate borrowings and interest rates.

Depreciation and amortization primarily includes depreciation on real estate assets placed in service and amortization of deferred leasing costs. During the three and nine months ended September 30, 2017, depreciation and amortization increased by $6.7 million and $12.5 million, respectively, as compared to the same periods in 2016, primarily as a result of the increased number of in-service properties in our portfolio. We expect depreciation and amortization expense to continue to increase as a result of the continued growth in the aggregate investment in our properties.

We evaluate our long-lived assets for impairment periodically or whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. During the three and nine months ended September 30, 2017, impairment and other expense increased by $12.7 million and $13.2 million, respectively, as compared to the same periods in 2016, primarily as a result of hurricane related losses incurred during the three months ended September 30, 2017 (see Note 15. Commitments and Contingencies). Impairment and other expense may fluctuate widely in the future as a result of macroeconomic and other factors.

As discussed in Note 8. Shareholders’ Equity, SWAY adopted the Equity Plan and the Non-Executive Trustee Share Plan in January 2014. Grants issued under these plans prior to the SWAY Merger fully vested as a result of the SWAY Merger and had no impact on share-based compensation expense during 2017 or 2016.

Grants issued under these plans for the three and nine months ended September 30, 2017 resulted in an increase of $1.6 million and $3.7 million, respectively, of share-based compensation expense as compared to the same periods in 2016. The increase is also due in part to 14,870 restricted shares granted to trustees for services rendered to the special transaction committee in connection with the Proposed Mergers with an aggregate grant value of approximately $0.5 million. As of September 30, 2017, $17.0 million of total unrecognized compensation cost related to unvested RSUs, Performance Shares and restricted shares is expected to be recognized over a weighted-average period of 2.4 years as compared to $9.3 million of total unrecognized compensation cost expected to be recognized over a weighted-average period of 3.2 years as of December 31, 2016. Share-based compensation expense may fluctuate in the future as a result of the issuance of additional grants, changes in the price of our common shares, changes in estimated forfeiture rates and, in the case of Performance Shares, the potential acceleration of vesting due to the Proposed Mergers.

General and administrative expenses are primarily composed of personnel costs, office rent and facility-related expenses, and standard professional service costs such as legal and audit fees. During the three and nine months ended September 30, 2017, general and administrative expense decreased by $0.4 million and $7.1 million, respectively, as compared to the same periods in 2016, primarily as a result of decreased headcount related to the elimination of redundant expenses resulting from the SWAY Merger and by improvements in efficiency primarily attributable to economies of scale.

Transaction-related expenses are primarily composed of professional fees, consulting services fees, severance costs and other expenses incurred in connection with the Internalization, SWAY Merger and Proposed Mergers, as well as bulk acquisitions and dispositions of properties and dead deal costs, which are expenses incurred to purchase properties which fell out of escrow or otherwise were not acquired. These expenses include fees for legal, accounting and investment banking services, due diligence activities, and other services that are customary to be incurred in connection with bulk acquisition, disposition, or merger transactions. During the three and nine months ended September 30, 2017, transaction-related expenses increased $6.3 million and decreased $22.2 million, respectively, as compared to the corresponding periods of 2016. We expect to incur additional transaction-related expenses in connection with the Proposed Mergers in the future.

Other income and expense consists primarily of gains or losses related to our sales of investments in real estate, changes in the fair value of our non-designated hedging instruments, losses related to extinguishment of debt and losses related to insurance claims. During the three and nine months ended September 30, 2017, these activities resulted in net income of $3.6 million and net expense of $1.0 million, respectively, compared to net income of $3.5 million and $2.1 million, respectively, during the same periods in 2016.

The change in the nine months ended September 30, 2017 as compared to 2016 is primarily attributable to a $10.9 million loss resulting from the repurchase of the 2017 Convertible Notes in January 2017 and other early extinguishment of debt in 2017. There were no such losses recorded in the nine months ended September 30, 2016.

In connection with the SWAY Merger, we acquired SWAY’s portfolio of NPLs. We hold our NPLs within a consolidated subsidiary jointly owned with Prime. As discussed in Note 14. Discontinued Operations, on May 4, 2016, our board of trustees authorized a strategic shift in our business operations and an exit from the NPL business. The net impact from discontinued operations resulting from these activities were losses of $2.0 million and $2.2 million for the three and nine months ended September 30, 2017, respectively. The net impact from discontinued operations was a gain of $0.4 million and a loss of $7.4 million for the three and nine months ended September 30, 2016, respectively.

Liquidity is a measure of our ability to meet potential cash requirements, fund and maintain our assets and operations, make interest payments and make distributions to our shareholders and other general business needs. Our liquidity and capital resources as of September 30, 2017 and December 31, 2016 included cash and cash equivalents of $187.7 million and $109.1 million, respectively. Our liquidity, to a certain extent, is subject to general economic, financial, competitive and other factors that are beyond our control. Our near-term liquidity requirements consist primarily of acquiring and renovating properties, funding our operations and making interest payments and distributions to our shareholders.

Our long-term liquidity requirements consist primarily of funds necessary to pay for the acquisition of and non-recurring capital expenditures for our properties and principal payments on our indebtedness. The acquisition of properties involves the outlay of capital beyond payment of the purchase price, including payments for property inspections, closing costs, title insurance, transfer taxes, recording fees, broker commissions, property taxes or HOA fees in arrears. In addition, we also regularly make significant capital expenditures to renovate and maintain our properties. Our ultimate success will depend in part on our ability to make prudent, cost-effective decisions measured over the long term with respect to these expenditures.

We seek to satisfy our liquidity needs through cash provided by operating activities, long-term secured and unsecured borrowings, the issuance of debt and equity securities and property dispositions. We believe our rental income, net of operating expenses, will generally provide cash flow sufficient to fund our operations and dividend distributions. However, our real estate assets are illiquid in nature. A timely liquidation of assets may not be a viable source of short-term liquidity should a cash flow shortfall arise, and we may need to source liquidity from other financing alternatives, such as our 2017 JPMorgan Facility.

To qualify as a REIT, we will be required to distribute annually at least 90% of our REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and to pay tax at regular corporate rates to the extent that we annually distribute less than 100% of our net taxable income. The table below reflects our dividends declared in 2016 and the nine months ended September 30, 2017. Any future distributions payable are indeterminable at this time except as disclosed in Note 16. Subsequent Events.

As of September 30, 2017, we have completed the following debt and equity transactions (for further disclosure, see Note 6. Debt, Note 8. Shareholders’ Equity and Note 16. Subsequent Events).

Since April 2017, we are party to the 2017 JPMorgan Facility. The 2017 JPMorgan Facility provides for a $675.0 million senior secured revolving credit facility, which will mature in April 2020, with a one-year extension option subject to certain conditions. The 2017 JPMorgan Facility is used for acquisitions, working capital requirements and general corporate purposes.

The 2017 JPMorgan Facility includes an accordion feature to increase the borrowing capacity up to $1.2 billion, subject to satisfying certain requirements and obtaining lender commitments. Borrowings under the 2017 JPMorgan Facility accrue interest at a floating rate equal to either Adjusted LIBOR or the Alternate Base Rate plus the Applicable Margin (each as defined in the credit agreement). The Applicable Margin varies based on the Total Leverage Ratio, ranging from 0.75% to 1.30% for Alternative Base Rate loans and from 1.75% to 2.30% for Adjusted LIBOR loans. As of September 30, 2017, there was no outstanding balance under the 2017 JPMorgan facility and $675.0 million was available for future borrowings subject to certain covenants and other borrowing limitations. The weighted-average interest rate for the nine months ended September 30, 2017 was 3.2%.

The 2017 JPMorgan Facility replaced our two then-existing secured revolving credit facilities, the Prior JPMorgan Facility and the CitiBank Facility, which were terminated concurrently with the creation of the 2017 JPMorgan Facility.

We were party to the Prior JPMorgan Facility until April 2017, when we terminated the facility in connection with the establishment of the 2017 JPMorgan Facility. The Prior JPMorgan Facility was used for the acquisition, financing, and renovation of properties and other general purposes. Borrowings under the Prior JPMorgan Facility accrued interest at the three-month LIBOR plus 3.00%. As of December 31, 2016, no balance was outstanding under the Prior JPMorgan Facility.

In connection with the SWAY Merger, we assumed SWAY’s CitiBank Facility. We terminated the facility in April 2017 in connection with the establishment of the 2017 JPMorgan Facility. The CitiBank Facility was used for the acquisition, financing, and renovation of properties and other general purposes. Borrowings under the CitiBank Facility accrued interest at LIBOR plus 2.95%. As of December 31, 2016, approximately $108.5 million was outstanding under the CitiBank Facility.

In connection with the GI Portfolio Acquisition in June 2017, we assumed the DB Loan. We paid off the balance in full and terminated the loan in September 2017. The DB Loan provided for up to $500.0 million of indebtedness.

In connection with the SWAY Merger, we assumed SWAY’s liability (in its capacity as guarantor) in a repurchase agreement between a subsidiary of Prime and Deutsche Bank AG. The repurchase agreement was used to finance the acquired pools of NPLs secured by residential real property by Prime. During the first quarter of 2017, we repaid the outstanding balance and terminated the agreement.

In July 2014, SWAY issued $230.0 million in aggregate principal amount of our 2019 Convertible Notes. Interest on the 2019 Convertible Notes is payable semiannually in arrears on January 1 and July 1 of each year at the coupon rate of 3.00%. The 2019 Convertible Notes will mature on July 1, 2019.

In October 2014, SWAY issued $172.5 million in aggregate principal amount of our 2017 Convertible Notes. Interest on the 2017 Convertible Notes is payable semiannually in arrears on April 15 and October 15 of each year at the coupon rate of 4.50%. The outstanding balance of the 2017 Convertible Notes as of September 30, 2017 was $3.6 million and the notes were settled for cash and common shares at maturity in October 2017.

In January and February 2017, we issued $345.0 million in aggregate principal amount of our 2022 Convertible Notes. Interest on the 2022 Convertible Notes is payable semiannually in arrears on January 15 and July 15 of each year at the coupon rate of 3.50%. The 2022 Convertible Notes will mature on January 15, 2022. We used the net proceeds to repurchase, in privately negotiated transactions, most of the 2017 Convertible Notes and to reduce outstanding borrowings under our secured credit facilities.

We generally have the option to settle any conversions in cash, common shares or a combination thereof. As of September 30, 2017, the 2017 Convertible Notes are convertible. The 2019 and 2022 Convertible Senior Notes did not meet the criteria for

conversion as of September 30, 2017. Pursuant to certain terms and conditions defined in their respective indenture agreements, the 2019 Convertible Notes and 2022 Convertible Notes may be converted as a result of the Proposed Mergers for period of 35 trading days following the effective date of such transaction.

We, CAH and SWAY have completed multiple mortgage loan transactions, each of which involved the issuance and sale in a private offering of Certificates issued by a Trust established by the respective companies. The Certificates represent beneficial ownership interests in a loan secured by a portfolio of Properties contributed to a newly-formed SPE Borrower indirectly owned by us.

The assets of each Trust consist primarily of a single componentized promissory note issued by a Borrower, evidencing a Loan. Each Loan has a two- or three-year term with two or three 12-month extension options, except for SWH 2017-1, which has two 12-month extension options and one 15-month extension option. Interest accrues based on LIBOR plus a spread, which on average ranged from 1.55% to 2.31% as of September 30, 2017.

In addition to the Offered Certificates, five of the Trusts issued Certificates that were retained or purchased by us. As of September 30, 2017, the aggregate principal balance of our mortgage loans was $3.5 billion.

In June 2017, we completed a registered underwritten public offering of 26,488,165 of our common shares. We sold 15,054,978 common shares and certain selling shareholders sold 11,433,187 common shares. The resulting net proceeds to us from the offering were approximately $521.2 million, after deducting the estimated offering related expenses paid by us. We used the net proceeds from the offering to fund a portion of the GI Portfolio Acquisition, to repay certain of our existing indebtedness and for general corporate purposes. We did not receive any of the proceeds from the sale of its common shares by the selling shareholders.

In March 2017, we completed a registered underwritten public offering of 23,088,424 of our common shares. We sold 11,105,465 common shares and certain selling shareholders sold 11,982,959 common shares. The resulting net proceeds to us from the offering were approximately $348.8 million, after deducting the estimated offering related expenses paid by us. We used the net proceeds from the offering to fund acquisitions, to repay certain of our existing indebtedness and for general corporate purposes. We did not receive any of the proceeds from the sale of its common shares by the selling shareholders.

The following table summarizes our cash flows for the nine months ended September 30, 2017 and 2016:

Our cash flows from operating activities primarily depend upon the occupancy level of our properties, the rental rates achieved on our leases, the collectability of rent from our residents and the level of our operating expenses and other general and administrative costs. Before any property we own begins generating revenue, we must take possession of, renovate, market and lease the property. In the meantime, we also incur both operating and overhead expenses, without corresponding revenue, which contributes to the use of cash in operating activities. Additionally, cash used in operating activities during the nine months ended September 30, 2017 and 2016 included transaction-related expenses totaling $7.9 million and $30.1 million, respectively. Our net cash flows provided by operating activities for the periods indicated reflect such activities.

Our net cash used in investing activities is generally used to fund property acquisitions and capital expenditures for the renovation and other capital improvements to our real estate. Net cash used in investing activities was $546.0 million for the nine months ended September 30, 2017 due primarily to $677.8 million spent on the acquisition of properties, including the GI Portfolio Acquisition, and $94.4 million spent on the renovation of properties and other capital improvements to our real estate, offset in part by $226.7 million of proceeds from the sales of real estate. For the nine months ended September 30, 2016, our investing activities produced positive cash flows of $419.0 million due primarily to the net $56.1 million acquired in the SWAY Merger and CAH reorganization, $216.4 million of proceeds from the sale of real estate and $346.5 million received from liquidation, principal repayments and other proceeds on NPLs, offset in part by $127.6 million spent on the acquisition of properties and $66.4 million spent on the renovation of properties and other capital improvements to our real estate.

Our net cash related to financing activities is generally affected by any borrowings and capital activities, net of any dividends and distributions paid to our common shareholders and non-controlling interests. Net cash provided by financing activities was $438.5 million for the nine months ended September 30, 2017 primarily as a result of $871.1 million of net proceeds from the sale of our common shares, $712.9 million of net proceeds from the issuance of mortgage loans, $335.8 million of net proceeds from the issuance of our 2022 Convertible Notes, and the release of $62.0 million of restricted cash related to reserves on our credit facilities and mortgage loans, offset in part by $639.1 million of payments on our mortgage loans, $500.0 million to pay our secured term loan in full, $108.5 million of net payments on revolving credit facilities, the repurchase of 2017 Convertible Notes totaling $186.0 million, and $79.8 million used for dividend payments to common shareholders. Net cash used in financing activities totaled $510.4 million during the nine months ended September 30, 2016, primarily resulting from $44.6 million used to repurchase our common shares, $857.6 million of net payments against our secured credit facilities and master repurchase facility, $48.3 million used for dividend payments and $11.9 million used for a payment of deferred offering costs that was accelerated by the SWAY Merger, offset in part by $485.6 million of net proceeds from the issuance of mortgage loans.

See Note 2. Basis of Presentation and Significant Accounting Policies for disclosure of recent accounting pronouncements that may have an impact on our condensed consolidated financial statements, their presentation or disclosures.

We have relationships with entities and/or financial partnerships, such as entities often referred to as SPEs or VIEs, in which we are not the primary beneficiary and therefore none of these such relationships or financial partnerships are consolidated in our operating results. We are not obligated to provide, nor have we provided, any financial support for any SPEs or VIEs. As such, the risk associated with our involvement is limited to the carrying value of our investment in these entities. Refer also to Note 6. Debt for further discussion and for discussion of guarantees and/or obligations arising from our financing activities.

The following table summarizes the effect on our liquidity and cash flows from certain contractual obligations, including estimated interest, as of September 30, 2017:

	September 30,
(in millions)	2017		2018		2019		2020		2021		After 2021		Total
Property purchase obligations⁽¹⁾	$	121.4	$	—	$	—	$	—	$	—	$	—	$	121.4
CAH 2014-1 mortgage loan⁽²⁾		3.5		14.1		483.7		—		—		—		501.3
CAH 2014-2 mortgage loan⁽²⁾		3.2		13.1		442.6		—		—		—		458.9
CAH 2015-1 mortgage loan⁽²⁾		5.1		20.5		20.5		668.1		—		—		714.2
CSH 2016-1 mortgage loan⁽²⁾		4.7		18.9		18.9		18.9		543.8		—		605.2
CSH 2016-2 mortgage loan⁽²⁾		4.6		18.8		18.8		18.8		628.7		—		689.7
CSH 2017-1 mortgage loan⁽²⁾		5.3		21.4		21.4		21.4		21.4		793.2		884.1
2017 Convertible Senior Notes		3.6		—		—		—		—		—		3.6
2019 Convertible Senior Notes		—		6.9		233.5		—		—		—		240.4
2022 Convertible Senior Notes		—		12.1		12.1		12.1		12.1		345.0		393.4
	$	151.4	$	125.8	$	1,251.5	$	739.3	$	1,206.0	$	1,138.2	$	4,612.2

The table above does not give effect to the subsequent events described in Note 16. Subsequent Events.

Funds from operations is used by industry analysts and investors as a supplemental performance measure of an equity REIT. Funds from operations is defined by the National Association of Real Estate Investment Trusts (“NAREIT FFO”) as net income or loss (computed in accordance with GAAP) excluding gains or losses from sales of previously depreciated real estate assets, plus depreciation and amortization of real estate assets, impairment of real estate assets, discontinued operations and adjustments for unconsolidated partnerships and joint ventures.

We believe that NAREIT FFO is a meaningful supplemental measure of the operating performance of our single-family business because historical cost accounting for real estate assets in accordance with GAAP assumes that the value of real estate assets diminishes predictably over time, as reflected through depreciation. Because real estate values have historically risen or fallen with market conditions, management considers NAREIT FFO an appropriate supplemental performance measure because it excludes historical cost depreciation, as well as gains or losses related to sales of previously depreciated homes, from GAAP net income. By excluding depreciation, gains or losses on sales of real estate, impairment of real estate assets, discontinued operations and adjustments for unconsolidated partnerships and joint ventures, management uses NAREIT FFO to measure returns on its investments in real estate assets. However, because NAREIT FFO excludes depreciation and amortization and captures neither the changes in the value of the properties that result from use or market conditions nor the level of capital expenditures to maintain the operating performance of the properties, all of which have real economic effect and could materially affect our results from operations, the utility of NAREIT FFO as a measure of our performance is limited.

We believe that “Core FFO” is a meaningful supplemental measure of our operating performance for the same reasons as NAREIT FFO and is further helpful to investors as it provides a more consistent measurement of our performance across reporting periods by removing the impact of certain items that are not comparable from period to period. Our Core FFO begins with NAREIT FFO as defined above and is adjusted for share-based compensation, transaction-related expenses, transitional (duplicative post-SWAY Merger) expenses, gain or loss on derivative financial instruments, amortization of derivative financial instruments, severance expense, non-cash interest expense related to amortization of deferred financing costs and discounts on convertible senior notes, hurricane losses, and other non-comparable items, as applicable.

Management also believes that NAREIT FFO and Core FFO, combined with the required GAAP presentations, are useful to investors in providing more meaningful comparisons of the operating performance of a company’s real estate assets between periods or as compared to other companies. NAREIT FFO and Core FFO do not represent net income or cash flows from operations as defined by GAAP and are not intended to indicate whether cash flows will be sufficient to fund cash needs. It should not be considered an alternative to net income as an indicator of the REIT’s operating performance or to cash flows as a measure of liquidity. Our NAREIT FFO and Core FFO may not be comparable to the NAREIT FFO or Core FFO of other REITs due to the fact that not all REITs use the NAREIT or similar Core FFO definitions.

The following table sets forth a reconciliation of our net loss attributable to common shareholders as determined in accordance with GAAP and its calculation of NAREIT FFO and Core FFO for the three and nine months ended September 30, 2017 and 2016:

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share data)	2017			2016			2017			2016
Reconciliation of net loss to NAREIT FFO

Net loss attributable to common shareholders	$	(23,159	)	$	(10,900	)	$	(35,555	)	$	(70,774	)
Add (deduct) adjustments from net loss to derive NAREIT FFO:
Depreciation and amortization on real estate assets		53,981			46,838			148,145			134,922
Impairment on depreciated real estate investments		293			356			950			530
Gain on sales of previously depreciated investments in real estate		(3,735	)		(1,453	)		(12,222	)		(3,364	)
Non-controlling interests		(1,062	)		(691	)		(1,801	)		(4,529	)
Loss (income) on discontinued operations, net		1,984			(449	)		2,205			7,368
Subtotal - NAREIT FFO		28,302			33,701			101,722			64,153
Add (deduct) adjustments to NAREIT FFO to derive Core FFO:
Amortization of deferred financing costs and debt discounts, non-cash interest expense from interest rate caps and loss on extinguishment of debt		9,258			9,866			40,283			27,946
Share-based compensation		2,387			824			5,584			1,922
Transaction-related expenses		7,791			1,503			7,856			30,058
Transitional expenses		—			294			—			7,677
Hurricane losses		12,784			—			12,784			—
Core FFO	$	60,522		$	46,188		$	168,229		$	131,756

Core FFO per common share, diluted	$	0.45		$	0.43		$	1.37		$	1.22
Dividends declared per common share	$	0.22		$	0.22		$	0.66		$	0.66
Weighted-average FFO shares and units:
Common shares outstanding		128,308			101,490			116,389			101,680
Unvested RSUs		589			232			596			239
Exchangeable OP Units		5,850			6,400			5,998			6,400
Total weighted-average FFO shares and units		134,747			108,122			122,983			108,319

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. The primary market risk that we are exposed to is interest rate risk.

We are exposed to interest rate risk primarily from our debt financing activities. Interest rate risk is highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control. Changes in interest rates may affect our financing interest rate expense.

We have and may undertake risk mitigation activities with respect to our debt financing interest rate obligations. Most of our currently outstanding debt financing is, and we expect that portions of our future debt financing may at times be, based on a floating rate of interest calculated on a fixed spread over the relevant index, as determined by the particular financing arrangement. A significantly rising interest rate environment could have an adverse effect on the cost of our financing. To mitigate this risk, we use derivative financial instruments such as interest rate swaps and interest rate caps in an effort to reduce the variability of earnings caused by changes in the interest rates we pay on our debt.

These derivative transactions are entered into solely for risk management purposes, not for investment purposes. When undertaken, these derivative instruments likely will expose us to certain risks such as price and interest rate fluctuations, timing risk, volatility risk, credit risk, counterparty risk and changes in the liquidity of markets. Therefore, although we expect to transact in these derivative instruments purely for risk management, they may not adequately protect us from fluctuations in our financing interest rate obligations.

We currently borrow funds at variable rates using secured financings. As of September 30, 2017, we had $3.3 billion of variable rate debt outstanding, of which $2.6 billion was effectively converted to fixed rate through swap contracts not directly associated with the indebtedness and $4.1 billion was protected by interest rate caps as required by the terms of the indebtedness. The estimated aggregate fair market value of this debt was $3.4 billion. If the weighted-average interest rate on this variable rate debt had been 100 basis points higher or lower, the annual interest expense would have increased or decreased by $7.4 million, respectively.

Our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding disclosure. The chief executive officer and the chief financial officer, with assistance from other members of management, have reviewed the effectiveness of our disclosure controls and procedures as of September 30, 2017 and, based on their evaluation, have concluded that the disclosure controls and procedures were not effective as of such date, due to a material weakness in our general information technology controls which are a component of internal controls over financial reporting.

As disclosed in Part II. Item 9A. Controls and Procedures in our Annual Report on Form 10-K for the year ended December 31, 2016, during the fourth quarter of 2016, we identified a material weakness in internal controls over financial reporting related to ineffective general information technology controls in the areas of user access and program change management over certain information technology systems that are relevant to our financial reporting processes and system of internal controls over financial reporting and ineffective controls over the validation of the completeness and accuracy of certain data extracted from such systems.

Management believes that our condensed consolidated financial statements included in this Form 10-Q have been prepared in accordance with GAAP. Our chief executive officer and chief financial officer have certified that, based on such officer’s knowledge, the financial statements and other financial information included in this Form 10-Q fairly present in all material respects our financial condition, results of operations and cash flows as of, and for, the periods presented in this Form 10-Q. In addition, we continue to implement the remediation plan described below for the material weakness disclosed in Part II. Item 9A. Controls and Procedures in our Annual Report on Form 10-K for the year ended December 31, 2016.

Except for changes in connection with our implementation of the remediation plan described below, there were no changes in our internal controls over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act during the three months ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Management is continuing to implement the remediation plan disclosed in Part II. Item 9A. Controls and Procedures in our Annual Report on Form 10-K for the year ended December 31, 2016 to ensure that control deficiencies contributing to the material weakness are remediated such that these controls will operate effectively.

Actions taken under the remediation plan have included enhancing the design of existing controls and establishing new controls. We believe the improvements we expect to achieve as a result of the remediation plan will effectively remediate the material weakness. However, the material weakness will not be considered remediated until the remediated controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Control systems, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control systems’ objectives are being met. Further, the design of any control systems must reflect the fact that there are resource constraints, and the benefits of all controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Control systems can also be circumvented by the individual acts of some persons, by

collusion of two or more people, or by management override of the controls. The design of any system of controls is based, in part, on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Two putative class actions have been filed by our purported shareholders challenging the Proposed Mergers. The first suit, styled as Berg v. Starwood Waypoint Homes, et al., No. 1:17-cv-02896, was filed in the United States District Court for the District of Maryland on September 29, 2017, and is against us, our operating partnership, our trustees, INVH, INVH LP and REIT Merger Sub. The second suit, styled as Bushansky v. Starwood Waypoint Homes, et al., No. 1:17-cv-02936, was filed in the United States District Court for the District of Maryland on October 4, 2017, and is against us, our operating partnership and our trustees. The Lawsuits allege that we and our trustees violated Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder by allegedly disseminating a false and misleading Form S-4 containing a joint proxy statement/prospectus. The Lawsuits further allege that our trustees allegedly violated Section 20(a) of the Exchange Act by failing to exercise proper control over the person(s) who violated Section 14(a) of the Exchange Act. The Berg Lawsuit additionally alleges that INVH violated Section 20(a) of the Exchange Act. The Lawsuits seek, among other things, injunctive relief preventing consummation of the Proposed Mergers, rescission of the transactions contemplated by the INVH Merger Agreement should they be consummated and litigation costs, including attorneys’ fees. The Berg Lawsuit also seeks injunctive relief directing our trustees to disseminate a registration statement that does not contain any untrue statements of material fact and declaratory relief that defendants violated Sections 14(a) and/or 20(a) of the Exchange Act. The Bushansky Lawsuit also seeks rescissory damages in the event of a merger and requests that the action be maintained as a class action. We and INVH intend to defend vigorously against the Lawsuits.

SEC Investigation “In the Matter of Certain Single Family Rental Securitizations”

Radian, the indirect parent company of GRC, which is a service provider that provides certain BPOs to us, disclosed in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2017 that GRC had received a letter in March 2017 from the staff of the SEC stating that it is conducting an investigation captioned “In the Matter of Certain Single Family Rental Securitizations” and requesting information from market participants. Radian disclosed that the letter asked GRC to provide information regarding BPOs that GRC provided on properties included in Securitizations.

Between October 26, 2015 and October 28, 2015, our board of trustees received two litigation demand letters on behalf of our purported shareholders. The letters alleged, among other things, that our trustees breached their fiduciary duties by approving the SWAY Merger and the Internalization, and demanded that our board of trustees take action, including by pursuing litigation against our trustees. Our board of trustees referred these letters to the special committee of our board of trustees formed in connection with the Internalization for review and a recommendation. On November 5, 2015, after considering the allegations made in the letters, and upon the recommendation of the special committee, our board of trustees (with Messrs. Sternlicht, Brien and Sossen recusing themselves) voted to reject the demands.

On October 30, 2015, a putative class action was filed by Plaintiff (i.e., one of our purported shareholders) against the Defendants (i.e., us, our trustees, the Manager, SWAY Holdco, LLC, Starwood Capital Group and CAH) challenging the SWAY Merger and the Internalization. The case is captioned South Miami Pension Plan v. Starwood Waypoint Residential Trust, et al., Circuit Court for Baltimore City, State of Maryland, Case No. 24C15005482. The complaint alleged, among other things, that some or all of our

trustees breached their fiduciary duties by approving the SWAY Merger and the Internalization, and that the other defendants aided and abetted those alleged breaches. The complaint also challenged the adequacy of the public disclosures made in connection with the SWAY Merger and the Internalization. Plaintiff sought, among other relief, an injunction preventing our shareholders from voting on the Internalization or the SWAY Merger, rescission of the transactions contemplated by the SWAY Merger Agreement, and damages, including attorneys’ fees and experts’ fees.

On December 4, 2015, Plaintiff filed a motion seeking a preliminary injunction preventing our shareholders from voting on whether to approve the SWAY Merger and the Internalization. On December 16, 2015, the day before the shareholder vote, the Court denied Plaintiff’s preliminary injunction motion. Plaintiff thereafter notified the Defendants that it intended to file an amended complaint. Plaintiff filed its amended complaint on February 3, 2016, asserting substantially similar claims and seeking substantially similar relief as in its earlier complaint. In response, Defendants filed a motion to dismiss the amended complaint on March 21, 2016, on which the Court held a hearing on June 1, 2016. We believe that this action has no merit and intend to defend vigorously against it.

From time to time, we are party to claims and routine litigation arising in the ordinary course of our business. We do not believe that the results of any such claims or litigation individually, or in the aggregate, will have a material adverse effect on our business, financial position or results of operations. See Note 15. Commitments and Contingencies.

For a discussion of our potential risks or uncertainties, you should carefully read and consider the risk factors previously disclosed under (i) the heading Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2016 filed on February 28, 2017, (ii) the heading Item 8.01 Other Events in our Current Report filed on Form 8-K filed on June 5, 2017 and (iii) the caption “Risk Factors” in the Merger Proxy, which risk factors referenced in clause (iii) are filed as Exhibit 99.1 to this Quarterly Report on Form 10-Q and incorporated herein by reference.

On May 6, 2015 and January 27, 2016, our board of trustees authorized and amended, respectively, the 2015 Program. The 2015 Program expired on May 6, 2017. Under the 2015 Program, we could have repurchased up to $250.0 million of our common shares beginning May 6, 2015 and ending May 6, 2017. During the three months ended September 30, 2017, we did not repurchase any common shares. As of September 30, 2017, none of our common shares may be repurchased under the 2015 Program.

Exhibits required by Item 601 of Regulation S-K are filed herewith or incorporated herein by reference and are listed below.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Maryland		80-6260391
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

8665 East Hartford Drive Scottsdale, AZ		85255
(Address of principal executive offices)		(Zip Code)

Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐ (Do not check if a small reporting company)	Small reporting company	☐

Emerging growth company	☐

Part I.	Financial Information

Item 1.	Financial Statements (Unaudited)	1

	Condensed Consolidated Balance Sheets	1

	Condensed Consolidated Statements of Operations	2

	Condensed Consolidated Statements of Other Comprehensive Loss	3

	Condensed Consolidated Statements of Equity	4

	Condensed Consolidated Statements of Cash Flows	5

	Notes to the Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50

Item 4.	Controls and Procedures	51

Part II.	Other Information

Item 1.	Legal Proceedings	53

Item 1A.	Risk Factors	54

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54

Item 3.	Defaults Upon Senior Securities	54

Item 4.	Mine Safety Disclosures	54

Item 5.	Other Information	54

Item 6.	Exhibits	55

Signatures		57

Balance as of December 31, 2016	$	6,144,008
Acquisitions		1,166,482
Capitalized expenditures		75,981
Basis of real estate sold		(185,993	)
Impairment of real estate		(950	)
Balance as of September 30, 2017	$	7,199,528

	As of		As of
	September 30,		December 31,
	2017		2016
Deferred financing costs, net	$	7,776	$	2,490
Purchase and other deposits		17,345		1,698
Deferred leasing costs, net		4,646		4,437
Furniture, fixtures and equipment, net		3,346		3,366
Derivative contracts		22,907		25,772
Receivables, net		10,258		10,071
Prepaid expenses		10,322		14,229
Other		3,208		4,522
Total other assets	$	79,808	$	66,585

												Remaining
	Principal		Coupon			Effective			Conversion		Maturity	Period of
	Amount		Rate			Rate⁽¹⁾			Rate⁽²⁾		Date	Amortization
2017 Convertible Notes	$	3,602		4.50	%		9.22	%		33.9836	10/15/17	0.04 years
2019 Convertible Notes	$	230,000		3.00	%		11.06	%		32.5048	7/1/19	1.75 years
2022 Convertible Notes	$	345,000		3.50	%		5.28	%		27.1186	1/15/22	4.30 years

	September 30,
	2017
Total principal	$	578,602
Net unamortized fair value adjustment		(44,395	)
Deferred financing costs, net		(7,551	)
Carrying amount of debt components	$	526,656

					Total Amount Paid
	Record Date	Amount per Share		Pay Date	(millions)
Q3-2017	September 29, 2017	$	0.22	October 13, 2017	$	29.6
Q2-2017	June 30, 2017	$	0.22	July 14, 2017	$	29.6
Q1-2017	March 31, 2017	$	0.22	April 14, 2017	$	26.3
Q4-2016	December 30, 2016	$	0.22	January 13, 2017	$	23.8
Q3-2016	September 30, 2016	$	0.22	October 14, 2016	$	23.8
Q2-2016	June 30, 2016	$	0.22	July 15, 2016	$	23.8
Q1-2016	March 31, 2016	$	0.22	April 15, 2016	$	23.9

Exhibit No.		Exhibit Description

2.1		Separation and Distribution Agreement, dated January 16, 2014, by and between Starwood Property Trust, Inc. and Starwood Waypoint Residential Trust (incorporated by reference to Exhibit 2.1 of Starwood Waypoint Homes’ Current Report on Form 8-K filed January 21, 2014)

2.2		Contribution Agreement, dated as of September 21, 2015, among Starwood Waypoint Residential Trust, Starwood Capital Group Global, L.P., Starwood Waypoint Residential Partnership, L.P. and SWAY Management LLC (incorporated by reference to Exhibit 2.1 of Starwood Waypoint Homes’ Current Report on Form 8-K filed September 21, 2015)

2.3		Agreement and Plan of Merger, dated as of September 21, 2015, among Starwood Waypoint Residential Trust, Starwood Waypoint Residential Partnership, L.P., SWAY Holdco, LLC, Colony American Homes, Inc., CAH Operating Partnership, L.P., and the parties identified therein as the Colony Stockholders, the Colony Unitholders and the Colony Investors (incorporated by reference to Exhibit 2.2 of Starwood Waypoint Homes’ Current Report on Form 8-K filed September 21, 2015)

2.4		Amendment to Contribution Agreement, dated as of November 13, 2015, among Starwood Waypoint Residential Trust, Starwood Capital Group Global, L.P., Starwood Waypoint Residential Partnership, L.P. and SWAY Management LLC (incorporated by reference to Exhibit 2.3 of Starwood Waypoint Homes’ Current Report on Form 8-K filed January 8, 2016)

2.5		Agreement and Plan of Merger, dated August 9, 2017, by and among Invitation Homes Inc., Invitation Homes Operating Partnership LP, IH Merger Sub, LLC, Starwood Waypoint Homes and Starwood Waypoint Homes Partnership, L.P. (incorporated by reference to Exhibit 2.1 of Starwood Waypoint Homes’ Current Report on Form 8-K filed August 14, 2017)

3.1		Articles of Amendment and Restatement of Declaration of Trust of Starwood Waypoint Homes (incorporated by reference to Exhibit 3.1 of Starwood Waypoint Homes’ Current Report on Form 8-K filed January 8, 2016)

3.2		Amendment of Articles of Amendment and Restatement of Declaration of Trust of Starwood Waypoint Homes (incorporated by reference to Exhibit 3.1 of Starwood Waypoint Homes’ Current Report on Form 8-K filed July 28, 2017)

3.3		Second Amended and Restated Bylaws of Starwood Waypoint Homes (incorporated by reference to Exhibit 3.2 of Starwood Waypoint Homes’ Current Report on Form 8-K filed July 28, 2017)

10.1		Form of Amendment to Performance Share Award Agreement (incorporated by reference to Exhibit 10.1 of Starwood Waypoint Homes’ Current Report on Form 8-K filed August 15, 2017)

10.2		Loan Agreement, dated as of September 29, 2017, between SWH 2017-1 Borrower, LP, as Borrower, and German American Capital Corporation, as Lender (incorporated by reference to Exhibit 10.1 of Starwood Waypoint Homes’ Current Report on Form 8-K filed September 29, 2017)

31.1		Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002

31.2		Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002

32.1		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

99.1		The section entitled “Risk Factors” in Starwood Waypoint Homes’ Joint Proxy Statement/Information Statement and Prospectus filed on Schedule 14A on October 16, 2017

EX – 101.INS		XBRL Instance document

EX – 101.SCH		XBRL Taxonomy extension schema document

EX – 101.CAL		XBRL Taxonomy extension calculation linkbase document

EX – 101.DEF		XBRL Taxonomy extension definition linkbase document

EX – 101.LAB		XBRL Taxonomy extension labels linkbase document

Exhibit No.		Exhibit Description

EX – 101.PRE		XBRL Taxonomy extension presentation linkbase document

	STARWOOD WAYPOINT HOMES

Date: November 9, 2017	By:	/s/ Frederick C. Tuomi
		Frederick C. Tuomi
		Trustee and Chief Executive Officer
		(Principal Executive Officer)

Date: November 9, 2017	By:	/s/ Arik Y. Prawer
		Arik Y. Prawer
		Chief Financial Officer
		(Principal Financial and Accounting Officer)