Dallas-based Invitation Homes, the country’s largest rental home owner, is forming a joint venture with a private equity firm to buy up to $1 billion in single-family homes in Dallas, Seattle, South Florida and a dozen other U.S. markets.
Invitation Homes, which owns 80,000 homes, announced the venture with Rockpoint Group LLC on Wednesday. The companies will initially invest $375 million, with Rockpoint putting $300 million into the buying spree.
“We believe both the fundamentals in our sector and the need for high-quality rental housing in the U.S. are as strong as they have been in our company’s history,” said a statement from Invitation Homes CEO Dallas Tanner.
Single-family home rental companies grew out of the 2008 financial crisis, with Wall Street titans like Blackstone Group Inc. investing heavily in buying up distressed properties. Blackstone launched Invitation Homes but cashed out last year, netting billions in profit.
This year, Invitation Homes narrowed its focus to suburbs close to the city center in 16 markets. It bids on homes as they hit the market, competing with first-time homebuyers and other single-family landlords.
The joint venture expects to deploy as much as $1 billion, including debt, to buy and renovate homes.
Invitation Homes will handle asset and property management for the venture, and will collect management fees in the process, according to the companies.
Real estate investors have poured billions into the rental home industry in recent months, betting that more Americans will flee dense city living for the suburbs as a result of the COVID-19 pandemic. It’s Boston-based Rockpoint’s first move into rental homes.
Rockpoint co-founder Keith Gelb said the firm is “thrilled to be investing alongside Invitation Homes and to be part of the housing solution in America by expanding quality of choice for those seeking homes for lease in areas with attractive supply and demand fundamentals.”
Invitation Homes, the 49th largest public company in Dallas-Fort Worth, employs 1,150 and recorded $1.8 billion in revenue last year. It raised $448 million in a June stock sale, committing most of the proceeds to buy more homes.