Invitation Homes eyes expansion with PulteGroup partnership

Firm will purchase 7,500 new homes from construction giant as single-family rental market remains hot

Invitation Homes CEO Dallas Tanner and PulteGroup Ryan Marshall (Invitation Homes, LinkedIn)
Invitation Homes CEO Dallas Tanner and PulteGroup Ryan Marshall (Invitation Homes, LinkedIn)

The nation’s largest single-family rental player is expanding.

Invitation Homes will buy 7,500 new homes over the next five years from PulteGroup, the third-largest homebuilder in the U.S., in a bid to capture explosive demand from renters seeking more space.

The partnership will not yield a significant change in the firm’s overall strategy, it said, but will grow Invitation Homes’ portfolio by nearly 10 percent — the company owns just over 80,000 homes across the U.S. as of June 30.

“We’re going to collaborate and find ways to take these first 7,500 [homes] and hopefully grow it well beyond there,” CEO Dallas Tanner said on the company’s second-quarter earnings call.

Invitation Homes’ portfolio spans much of the country apart from the Northeast, but Florida, Georgia, Arizona, California and Washington are among its most heavily concentrated markets.

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In the single-family rental business, scale is vital for grappling with property management costs, and companies like Invitation Homes are increasingly working with homebuilders to “move the needle for both companies over time and distance,” Tanner said.

“Our preference from the beginning has been to partner with the best homebuilders rather than compete with them directly, and this strategic relationship [with PulteGroup] greatly strengthens that approach,” Tanner said.

Single-family rentals emerged as one of the hottest REIT segments during the pandemic as people fled so-called “shutdown cities” for the suburbs. Roughly 27 percent of Invitation Homes’ new demand is coming from renters leaving big metros for greener pastures, chief operating officer Charles Young said on the call.

Invitation Homes raised rents by 8 percent across its portfolio during the second quarter. On new leases, the company saw year-over-year rent growth of 13.8 percent year. The company also reported 98.3 percent occupancy at its existing properties.