As Blackstone Group set terms for the IPO of its massive single family rental portfolio, it signals the strength of single-family rentals in today’s market. Invitation Homes will be the largest SFR REIT with a portfolio of 50,000 homes. According to a report by CNBC, the Dallas-based single-family rental real estate investment trust raised $1.54 billion in an initial public offering last week. John Bartling, president and CEO of Invitation Homes, was enthusiastic after the IPO while speaking to the network.
“We have a great product, the industry is finally getting recognized for what it’s doing, and we are driving the right margins. You see our core margins are about 62 percent right now, very competitive with multifamily. Top-line growth is competitive with multifamily and quite frankly, when you look at our fundamentals, it’s a very attractive time for investors and that’s why you see us come to the public market.”
Blackstone has made a large investment in single-family rentals, putting about $10 billion into distressed homes. Further strengthening its position, it recently received backing from mortgage giant Fannie Mae on up to $1 billion in debt. This will make it easier for Invitation Homes to expand its portfolio of homes in the future and could open the door for its rivals to grow more quickly as well. In a Bloomberg report, investors wanting to bet on the rental market for single-family houses, Invitation Homes’ portfolio is “superior” to its peers, John Pawlowski, senior associate with Green Street Advisors, wrote in a recent note.
“The company may benefit from having waited longer than some of its competitors to tap public markets. Potential investors now have more proof points for Invitation Homes than were available for rivals like Silver Bay Realty Trust Corp., which went public in 2012.”
Blackstone waited until it built out a concentrated portfolio — mostly in the western U.S. and Florida — and started refining its management strategy to cut costs and reduce turnaround times. The IPO marks a victory for Blackstone. Jonathan Gray, the company’s global head of real estate, told CNBC recently that housing is still a “bright spot” in the U.S. economy.
“We own about 100,000 either multifamily homes or single-family homes for rent. And across the board, across the country, we’re seeing strength in that area.”