Invitation Homes — a real estate investment firm that owns close to 50,000 single-family rental homes — raised $1.54 billion in an initial public offering, with the company’s valuation rising to over $6 billion today, according to media reports.
The IPO underlines Wall Street’s new role as a national landlord and comes shortly after the government signaled plans to begin subsidizing the institutionalized single-family rental market — by agreeing to back some debt from Invitation Homes.
Invitation Homes, which is operated by private-equity giant Blackstone, joins a handful of other Wall Street-backed real estate investors that sell shares to the public, including America Homes 4 Rent and Colony Starwood Homes.
These three companies alone own about 130,000 homes, according to Gary Beasley, CEO of single-family-rental marketplace Roofstock and the former co-CEO of Starwood Waypoint Residential Trust. (Starwood Waypoint Residential Trust merged with Colony American Homes to create Colony Starwood Homes.)
If defined as entities that own 100 single-family properties or more, institutional investors own a total of about 530,000 single-family properties, or 2.8 percent of all U.S. single-family rentals according to ATTOM Data Solutions.
Blanketing some markets with cash offers, institutional investors gobbled up many distressed properties during the housing slump, increasing competition for everyday homebuyers but also driving the recovery.
Having turned the properties into rental units, these companies later packaged debt collateralized by the rentals into bonds. Then the same firms that created the big rental investors also launched lending arms to finance smaller rental investors, as the big investors scaled by their own purchases. The lenders also packaged those loans into bonds.
Invitation Homes’ IPO comes shortly after the company revealed that Fannie Mae — a government-controlled mortgage guarantor that helps keep mortgage rates low for homebuyers — had agreed to guarantee up to $1 billion in debt backed by some of the Invitation Homes’ rental holdings.
If Fannie Mae regularly backs this sort of debt, it could fuel the conversion of more owner-occupied homes into rental units by making it cheaper for institutional investors to buy or hold such properties.
“Invitation Homes’ IPO is yet another feather in the cap for the rapidly maturing SFR [single-family rental] investment sector, further validating the asset class and attracting new investors into the space,” said Dennis Cisterna, chief revenue officer for single-family rental marketplace Investability.
Editor’s note: A previous version of this story incorrectly attributed a statement made by Dennis Cisterna to Britt Gottlieb. Cisterna is the chief revenue officer of Investability, and Gottlieb is a spokeswoman for Altisource, which owns Investability.
This story has been updated with data from ATTOM Data Solutions.