Private Equity Giant Blackstone Sees Promise in Single Family Homes Even as Prices Keep Rising High
Posted on 06/22/2021
The Blackstone Group took a bet on U.S. single-family housing after the financial crisis of 2008, creating Invitation Homes. The move was at a market trough for U.S. housing. Invitation Homes went public in 2017. Blackstone exited its position in Invitation Homes in 2019. In 2020, Blackstone invested US$ 240 million in a preferred stock investment in Toronto-listed Tricon Residential.
Now, Blackstone is making a similar bet at a market peak in U.S. single-family housing. Blackstone moved to pay US$ 6 billion for Home Partners of America, a Chicago-based owner of more than 17,000 single-family homes.
Home Partners of America, a non-traded real estate investment trust, is owned by a group of investors including BlackRock and KKR. In November 2014, BlackRock and KKR bought a majority stake in Home Partners of America (formerly called Hyperion Homes). Home Partners of America was initially backed by Lewis S. Ranieri (Lew Ranieri), a pioneer in the mortgage-backed securities industry, back in November 2012. Ranieri was the former Vice Chairman of Solomon Brothers and was strongly criticized for his role in the U.S. subprime mortgage crisis of 2007-2009.
BlackRock, the world’s largest manager, which preaches ESG and inclusion in its marketing materials, faced heat from a June 2021 viral Wall Street Journal article depicting rich-Wall Street firms buying single-family homes at the detriment of Middle Class America (being priced out of the American dream).
Earlier, KKR and BlackRock explored taking Home Partners of America public with talks between Goldman Sachs and Morgan Stanley.
Home Partners of America has preset purchase prices in its lease agreements, giving renters an option to buy the home.
With KKR exiting out of Home Partners of America, the private equity firm is forming a single-family landlord platform called My Community Homes.