Investment firm Blackstone Group LP [1] plans to go public with its Invitation Homes [2] unit, the country’s largest single-family rental landlord, sometime during the first half of 2017, according to a Bloomberg report [3] citing “two people familiar with the matter.”
Invitation Homes would go public as a real estate investment trust (REIT), or a company that owns or finances income-producing real estate and is modeled after mutual funds. The size of the initial public offering (IPO) and the exact timing of when it will happen are not known; when reached by email, a Blackstone spokeswoman told MReport the company declined to comment.
Blackstone created the Invitations Homes unit in response to the housing crisis in 2008 as a way to capitalize on the unprecedented demand for rentals coming largely from people who lost homes to foreclosure in the crisis and were unable to obtain mortgage credit to buy another home. According to Bloomberg, Blackstone made the largest investment in buyers who attempted to institutionalize the single-family leasing business by buying distressed single-family homes at large discounts and offering them as rental properties to those displaced by foreclosure.
Invitation Homes currently oversees about 50,000 single-family homes nationwide, according to Bloomberg.
As earnings have improved and apartment owners are losing favor with investors, shares of single-family home rental companies have rallied this year, Bloomberg reports. The second-largest SFR landlord, American Homes 4 Rent (with about 48,000 homes), has gained about 26 percent year-to-date; the third-largest SFR landlord, Colony Starwood Homes (31,000 properties) has gained about 44 percent; and the first of the group to go public, Silver Bay Realty Trust, has gained about 12 percent so far in 2016, Bloomberg said.
According to Bloomberg, Blackstone was waiting to take Invitation Homes public because the first few SFR landlords that went public before many of their homes were rented out failed to deliver strong shareholder returns. The report stated that Blackstone’s global head of real estate, Jon Gray, said in April 2015 that Blackstone would likely go public with Invitation Homes sometime in the next two years.
The single-family rental market has seen unprecedented growth since the crisis eight years ago. In order to provide tools and training and foster business opportunities within the single-family rental market, the Five Star Institute’s Second Annual Single-Family Rental Summit [4] will be November 1-3 in Frisco, Texas.