Blackstone Exits Single-Family Rental Bet Slammed by Warren

(Bloomberg) -- Blackstone Group Inc. is exiting its post-recession bet on single-family rental homes, selling off an investment in Invitation Homes Inc. that has drawn the fire of Democratic presidential candidate Elizabeth Warren.

The sale of Blackstone’s remaining stake in the single-family landlord is for $30.10 per share, according to a statement, and will bring in roughly $1.7 billion. The firm controlled more than 40% of Invitation Homes before it starting selling shares in March. It made about $7 billion from the stock sales and dividends, more than twice what it invested.

The timing of the sale, coming days after Warren criticized Blackstone, was “merely coincidental,” according to a note from Bloomberg Intelligence analyst Jeffrey Langbaum.

Blackstone and other firms started buying homes in the aftermath of the foreclosure crisis and turned them into rentals at a time when many Americans were struggling financially. The private equity giant took Invitation Homes public in 2017. The same year, Invitation merged with Starwood Waypoint Homes, creating a rental-house behemoth comparable in size to all but the largest apartment landlords.

Prior to private equity’s single-family rental push, institutional investors had shied from that corner of the housing market. Blackstone helped prove the case that the properties could be managed efficiently. These days, there’s little distress in the housing market, meaning investors can no longer build portfolios with cheap homes. Still, a shortage of starter homes for younger buyers has Wall Street firms eyeing new bets on the asset.

“Blackstone has been an exceptional partner, nurturing the growth of our industry,” Dallas Tanner, chief executive officer of Invitation Homes, said in a statement.

Warren accused Blackstone and other firms on Nov. 18 of “shamelessly” profiting from the housing crisis, arguing that Wall Street’s investment in single-family homes was a “huge loss for America’s renters.”

Blackstone countered that its investment in rental homes helped stabilize housing markets, creating better options for families who needed to rent. The $10 billion spent acquiring homes and $2 billion more for repairs spurred economic growth and created jobs, it said in response.

“We are proud that our investment provided a high quality rental housing option, helped stabilize local housing markets, spurred economic growth, and built a $25 billion company, while delivering value to our investors, which include retirement systems for millions of teachers, firefighters and other pensioners,” Ken Caplan, Global Co-Head of Blackstone Real Estate, said in a statement.

--With assistance from Brandon Kochkodin.

To contact the reporter on this story: Patrick Clark in New York at pclark55@bloomberg.net

To contact the editor responsible for this story: Craig Giammona at cgiammona@bloomberg.net

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