Blackstone’s SFR business paring inventory

Blackstone Group’s Invitation Homes business reportedly plans to sell off 5 percent of its existing portfolio per year going forward, starting with 1,300 Atlanta-area homes it has agreed to sell -- the largest bulk sale for the company yet.

Blackstone Group’s Invitation Homes business reportedly plans to sell off 5 percent of its existing portfolio per year going forward, starting with 1,300 Atlanta-area homes it has agreed to sell — the largest bulk sale for the company yet.

Like other institutional owners of single-family rental (SFR) homes, Blackstone has begun to fine-tune its strategy and stabilize its portfolio after spending more than $9b and amassing nearly 50,000 homes after the recession.

Screenshot 2015-07-14 at 11.28.58 AMLandlords like American Homes 4 Rent (AMH), Colony Capital and now Blackstone have said they are seeking to increase efficiency and raise rents; their rate of acquisitions has slowed and they are selling off their weakest assets.

Last month, AMH said its pace of acquisitions had fallen to just 1,000 or so homes per quarter after having purchased some 38,000 homes since the recession.

“As time goes on our asset management strategy will be to always prune and optimize the size and/or efficiency [of the portfolio],” Diana Laing, CFO of American Homes 4 Rent, said at the time. “We have slowed down the acquisition machine… we are very focused on markets where we can buy 25 properties, improve NOI and not even have to add a person.”

Invitation Homes could be preparing for an initial public offering, which it has alluded to as an option in the past. Colony Capital executives have also hinted that the firm wants to go forward with postponed plans to go public “sooner than later.”

But several of the IPOs for SFR owners have been disappointing, and others have had limited success. American Homes 4 Rent (AMH) expected to raise $1.25bn through its IPO, but it generated $887m. Doug Brien, CEO of Starwood Waypoint Residential Trust, another institutional SFR owner, noted that “our stock price is not exactly where we’d like it to be.”

Invitation Homes is now spending about $20m to $25m per week buying properties, down from more than $100m in 2013, as the company focuses on homes with higher rents in more affluent areas. Most of the Atlanta houses are worth less than the typical Invitation Homes property.

 

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