- Sponsor is the largest owner of single-family homes in US
- Expects to exit portfolio through a public offering
- Platform acquisitions of houses down 80 pct from peak
Gray disclosed the firm’s likely exit strategy for the portfolio after delivering a presentation at The New Jersey State Investment Council’s July 23 meeting. Any IPO would likely occur at some point in the next few years, Gray said, adding that the platform is no longer buying houses at the same pace that it did in 2012 and 2013. Its acquisition activity is down 80 percent from its peak. The firm has invested $8.7 billion in the portfolio since 2012.
Blackstone Group formed its single-family rental investment platform, Invitation Homes, in 2012. The firm used the platform to acquire distressed and undervalued single-family properties, eventually amassing a portfolio that includes 45,000 houses, Gray said. The strategy has made the firm the largest owner of single-family homes in the United States.
“It’s hard to say for sure, but the most likely case is we take it public,” he said. “We’re trying to get our portfolio to a place where…it’s a pretty stable underlying company providing service to tenants and delivering regular dividends to shareholders.”
Gray cited the market’s acceptance of single-family home rental company American Homes 4 Rent, which held an IPO in August 2013, as paving the way for an eventual Invitation Homes offering. American Homes 4 Rent shares were trading at $18.40 on The New York Stock Exchange as of July 23, well above the $16 offering price.
“Our pace of buying has slowed down significantly. You know, 18 months ago, there was much more in the way of distressed housing,” he said. U.S. home prices rose 10.3 percent on an annual run-rate basis through the first three months of 2014, according to the S&P/Case-Shiller U.S. National Home Price Index.
The firm is in the process of filling out Invitation Homes’s management team and developing processes to enhance the company’s customer experience. To that end, the company hired former BRE Properties Chief Financial Officer John Schissel as its CFO in April. The platform also brought on American Residential Housing Communities chief operating officer Leslie Fox to be its COO.
In addition to its residential properties platform, Blackstone Group’s real estate business also invests in hotels, commercial real estate and debt strategies. The firm’s real estate platform had $80.4 billion of assets under management as of June 30, according to a second-quarter earnings presentation released last week.