Blackstone Group reveals IPO plans for Invitation Homes

Dive Brief:

  • Invitation Homes LP, the U.S. single-family home rental business owned by private equity firm Blackstone Group LP, has unveiled its plans for an IPO that could value the company over the $5 billion mark, according to Forbes.

  • Under the IPO, the Dallas-based company, which has the largest share of the rental homes market, will use proceeds from the public sale to pay down some of its debt, estimated at $8 billion. It will list shares on the New York Stock Exchange under ticker 'INVH.'

  • The Wall Street Journal reported in November that the company had filed confidentially for an IPO and planned to sell about $1.5 billion in its shares.

Dive Insight:

The move by Blackstone to push ahead with an IPO of its Invitation Homes division comes as home prices are expected to continue rising this year on strong market fundamentals, while the home rental market is showing no sign of easing as demand outpaces supply.

Recent figures from online apartment finder Zumper show that although rents fell in the country's largest markets, the median rent nationally was up 2.6% in January compared to the year-ago period.

It comes amid a shift following the recession from homeownership toward renting as the surge in home prices in the wake of tight inventory levels keeps many potential buyers on the sidelines of the market. These conditions are expected to persist in the near-term as the supply of homes is set to lag behind demand levels in many metro areas of the country, supporting elevated prices and preventing many buyers, particularly first-timers, from entering the market.

The Urban Institute forecast last summer that the number of renters will swell to almost 48 million in 2020 and 54.1 million in 2030. This compares to 40.7 million in 2010.

Through the IPO, Blackstone is indicating that it sees further strength in the residential construction market, particularly the rental sector, and since the 2008 housing crash, Invitation Homes has invested around $10 billion in buying up 50,000 distressed homes and switched them into rental units.

Bullish forecasts are also helping to attract more interest from investors and developers in single-family rentals, which has led to some consolidation in that market. It was reported in October that former Goldman Sachs Group executive Donald Mullen Jr. was seeking to raise $1 billion to purchase foreclosed single-family homes to convert to rentals.

Filed Under: Residential Building Economy Corporate News