Blackstone's Invitation Homes prepares $1.5 billion IPO

The initial public offering for Blackstone Group’s single-family rental operator, Invitation Homes, is one step closer to reality, as the company disclosed the terms of its initial public offering on Monday.

Per a filing with the Securities and Exchange Commission, Invitation Homes will offer 77 million shares in its IPO, with an estimated share price of between $18 and $21 per share.

According to a report from Renaissance Capital, a manager of IPO-focused ETFs, Invitation Homes’ IPO will raise approximately $1.5 billion.

Additionally, at the midpoint of the expected price range, Invitation Homes would have a fully diluted market value of $5.9 billion and an enterprise value of $11.8 billion, Renaissance Capital said in its report.

While Invitation Homes is offering up 77 million shares, Blackstone will still be the company’s majority owner once the IPO is concluded.

According to the company’s SEC filing, the IPO will cover 25.49% of the shares in Invitation Homes, while the company’s previous owners will retain 74.51% of the company’s shares.

Another interesting piece of Invitation Homes IPO is the fact that its doing so with the backing of Fannie Mae, as noted in the Wall Street Journal.

From the WSJ report:

Fannie Mae has agreed to backstop up to $1 billion in debt from the country’s largest owner of single-family rental homes, the first time the government-sponsored entity has agreed to guarantee the debt of an institutional owner of single-family houses.

Fannie Mae’s involvement is a sign that it believes homeownership will remain out of reach for many Americans and that Wall Street’s housing wager will be become a long-term business, not just an opportunistic trade made after the foreclosure crisis.

The support represents a shift from about four years ago, when Fannie’s regulator blocked another government-sponsored entity from backing bulk buyers of foreclosed homes. Fannie’s support will likely make it cheaper for buyers like Blackstone to add homes in the future.

As the company’s prospectus notes, Invitation Homes has significantly grown since its founding in 2012.

Invitation Homes now has more than 48,000 homes in its portfolio, making it the largest single-family rental operator in the U.S.

The company has properties in 13 markets, including Atlanta, Phoenix, Seattle, and Tampa.

Two of the companies biggest markets are Southern California, which it defines as Anaheim-Santa Ana-Irvine, Los Angeles-Long Beach-Glendale, Oxnard-Thousand Oaks-Ventura, Riverside-San Bernardino-Ontario, and San Diego-Carlsbad-San Marcos; and South Florida, which it defines as Fort Lauderdale-Pompano Beach-Deerfield Beach, Key West, Miami-Miami Beach-Kendall, and West Palm Beach-Boca Raton-Delray Beach.

Those two areas alone make up more than 25% of the company’s revenue.

Overall, Invitation Homes’ portfolio of homes is 95% occupied.

Renaissance Capital said that it expects Invitation Homes’ IPO to price next week.

To read Invitation Homes full prospectus, click here.

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