Invitation Homes buys 1,900 homes, mostly in the Sun Belt, for about $650 million

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Invitation Homes buys 1,900 homes, mostly in the Sun Belt, for about $650 million

The Dallas-based company owned about 2,900 homes in Dallas-Fort Worth before the deal.

Aerial view of homes in the Harrington Mills subdivision of Plano on April 8.(Smiley Pool)

By Mitchell Parton

3:24 PM on Jul 27, 2023

 

The largest owner of rental houses in the U.S. is boosting its already large presence in the Sun Belt through a roughly $650 million deal.

Dallas-based Invitation Homes said it purchased a portfolio of nearly 1,900 single-family rental homes July 18. The funding included $495 million in cash.

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The company did not name the seller, but Bloomberg reported in June that Invitation Homes was nearing a deal to purchase a portfolio of roughly 2,000 rental homes owned by investment firm Starwood Capital Group.

Related:Starwood Capital explores sale of more than 2,000 rental homes

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Bloomberg previously reported that Starwood had been seeking to sell homes it acquired when prices for single-family rentals were near their peak.

Invitation Homes CEO Dallas Tanner said the company believes it purchased the homes at a meaningful discount and will add value that would have been impossible to replicate through one-off homebuying.

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“Essentially, this is a high-growth portfolio of exceptionally well-located homes that we bought at a pretty attractive price,” Tanner said.

More than 90% of the acquired homes are in Sun Belt regions including Texas and Florida as well as Las Vegas, Phoenix, Atlanta, North Carolina and South Carolina, according to Invitation. The average cost per home was $346,000.

“In particular, these are great homes within desirable infill neighborhoods that we believe will provide strong rent growth and value appreciation,” Tanner said.

As of the end of June, Invitation Homes owned 2,849 homes in Dallas-Fort Worth. While the company is headquartered in Dallas, the North Texas region only makes up less than 4% of its portfolio. Its largest markets are Atlanta, Phoenix, Tampa and South Florida.

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Related:8,500 homes, white sand beach proposed for one of D-FW’s largest communities ever

The company had more than $1.4 billion in liquidity at the end of the quarter between cash and a line of credit.

“We’ve often emphasized how we believe our strong balance sheet positions us well for desirable growth opportunities should they arise,” said Charles Young, Invitation’s president and chief operating officer.

 

Invitation made $138 million in net income in second-quarter 2022, up 24% from a year prior. Revenue increased 7.7% to $600 million. About 98% of its homes were occupied.

Large real estate investment firms have been increasing their share of the single-family home market in Dallas-Fort Worth in recent years, especially after 2020 as for-sale home prices soared.

Investors made about 30% of all single-family home purchases in the Dallas-Fort Worth area last year, according to research from national housing analyst John Burns Real Estate Consulting. Most were smaller owners. Investors with more than 1,000 properties made up just 1% of home purchases in the market at the end of last year.