Foreclosure Crisis Comes Full Circle? Biggest Buy-to-Rent Landlord Plans IPO (Despite Red Ink Everywhere)

The financialization of rents.
In the Fed-engineered asset price inflation since the Financial Crisis, the value of the US housing stock has ballooned to $35 trillion, as large private equity firms have muscled into the single-family housing market, long the domain of mom-and-pop investors. They have acquired about 160,000 single-family houses out of foreclosure for least $32 billion. In the process, the homeownership rate has dropped to the lowest since 1965. And now comes the time to sell it to the public.
The largest player in the field, Blackstone’s Invitation Homes, which spent about $10 billion since the Financial Crisis, or about $150 million a week during the heyday, on about 50,000 homes in 14 metropolitan areas, has confidentially filed for an IPO, according to The Wall Street Journal. But it will face some, let’s say, challenges.
Other players in the buy-to-rent scheme include American Homes 4 Rent, which got started in 2012 and now owns about 48,000 rental houses in 22 states. It went public in August 2013 at $16 a share. It produced a net loss every year since, sports negative EPS of -25 cents and and a whopping negative PE ratio of -84. But its stock closed today at $21.09 a share.
Starwood Waypoint Residential Trust, spun off from Starwood Property Trust Inc., a commercial-property investment and finance REIT, started trading in February 2014. It has merged this year with the portfolio of houses owned by real estate mogul Thomas Barrack, changed its name to Colony Starwood Homes, and is now the third-largest landlord in the US. It too has lost money every year, has negative EPS of -47 cents and a negative PE ratio of -64. And its stock too is up and today closed at $30.02 a share.

This post was published at Wolf Street on Dec 6, 2016.