The Real Deal New York

Welcome to the neighborhood: Blackstone, Starwood merger to create nation’s biggest single-family landlord

Holdings include 9k homes in the Miami area and 8k in Southern California
August 10, 2017 11:30AM

Jonathan Gray and Barry Sternlicht (Credit: Getty Images)

Blackstone Group and Starwood Capital Group will merge their single-family rental businesses, creating a new landlord of 82,000 rental homes across 17 metro areas.

The deal is the largest for the single-family industry, the Wall Street Journal reported, since private equity investment in American homes shot up in the wake of the foreclosure crisis about a decade ago.

The new company will retain the name of Blackstone’s publicly-traded single family division, Invitation Homes, and will officially become the country’s largest single-family home owner, nearly two times larger than the closest competitor, Texas-based American Homes 4 Rent.

“This turned out to be a business,” Starwood chairman Barry Sternlicht told the Journal. “When we started out I think there were a lot of people who didn’t think it was a business. They thought it was a trade.”

Starwood previously merged its single-family business with Tom Barrack’s Colony Capital, creating Colony Starwood homes last year (the company changed the name to Starwood Waypoint after Barrack sold his stake).

The new Invitation Homes will be staffed with executives from both Blackstone and Starwood, and will include Sternlicht as well as Blackstone’e current head of real estate, Jonathan Gray. Holdings in the South Florida and Los Angeles areas account for a fair portion of Invitation Homes’ new portfolio, with more than 9,000 homes near Miami and 8,000 in the suburbs of Southern California.

Invitation Homes is at the vanguard of the single-family rental business’ rapid institutionalization. In January, Fannie Mae agreed to back $1 billion in Invitation Home’s single-family mortgage debt, an unprecedented transaction for the government-sponsored mortgage insurer. The move was criticized by the much of the home ownership lobby, particularly the National Association of Realtors, who saw the emerging industry as a threat to the market for home sales.

Invitation Homes held its initial public offering in January, raising more than $1.5 billion from investors.

President Trump recently appointed a veteran of the single-family rental business to be his top liaison to the Department of Housing and Urban Development. His choice for the senior post, Maren Kasper, was an executive at Roofstock, an online platform for single-family home investment. [WSJ]Will Parker