Blackstone Group LP’s Invitation Homes, after spending more than $9 billion in a U.S. property-buying spree, is starting to sell some houses as it shifts focus from rapid expansion to fine-tuning its holdings.
The housing landlord has agreed to sell about 1,300 Atlanta-area residences that don’t fit its strategy, which targets communities with higher rents and quality schools, according to Chief Executive Officer John Bartling. The transaction would be the biggest bulk sale for the 3-year-old company, the largest U.S. owner of single-family homes.
“It’s that stage in our lives where we’re now in a position of looking at dispositions as an active part of portfolio balance,” Bartling said in an interview. “You should expect us to sell 5 percent of our portfolio every year.”
Blackstone led private equity firms, hedge funds and other large investors in buying thousands of houses after the real estate crash, creating a new asset class of single-family rentals. With the market recovering, landlords are seeking ways to increase profitability by raising rents and making operations more efficient. For Invitation Homes, paring its portfolio may also help it in preparation for a potential initial public offering, which Blackstone has said it could be ready for in the next two years.
Most of the Atlanta houses in the sale are worth less than the average Blackstone-owned home. Lower-value properties tend to have higher vacancy, turnover and capital spending rates, according to Brian Grow, managing director in the credit-ratings unit of Morningstar Inc.
“The lower-value properties are much higher touch,” Grow said. “If you own a huge portfolio nationwide and you want consistency on how you manage the properties and you don’t want as high touch, I think the higher-value properties can be beneficial.”