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Blackstone gets back into the single-family rental game

Minority investment in Tricorn Residential comes after selling stake in Invitation Homes just months ago

Blackstone Group, which blazed a trail for Wall Street in 2012 when it formed Invitation Homes and became the largest owner of single-family rental homes in America, has returned to a familiar watering hole.

The financial firm is leading a syndicate of investors in a $300 million minority investment in Tricon Residential, which owns and manages more than 30,000 single family and multifamily rental homes in the U.S. and Canada.

“We continue to see strong underlying fundamentals in the rental-housing sector, and believe the company’s high-quality, income-generating assets are poised to generate stable performance under the leadership of its best-in-class management team,” said Frank Cohen, chief executive officer of Blackstone’s investment vehicle, a nontraded real estate investment trust called “BREIT.”

Blackstone’s re-entry comes just months after it sold its stake in Invitation Homes, which it brought public in 2017. Blackstone bought over 30,000 homes out of foreclosure for $10 billion and then spent another $2 billion fixing them up. At its peak, Blackstone spent over $100 million a week scooping up properties, often in the Sunbelt.

“The hardest part wasn’t buying the homes, it was building the business,” Blackstone President Jonathan Gray, who headed the company’s real-estate business when it launched Invitation, told the Wall Street Journal. “We created a company from scratch. It was created on a yellow pad. It was an idea. Now it’s a real business.”

As was the case last go-around, much of the inventory on Tricon’s books is in the Sunbelt. Interestingly, Tricon competes directly with Invitation Homes, though the Canadian company targets the middle market.

Blackstone’s minority investment in Tricon comes as urban renters with the financial means look to spread out in the suburbs, where they can enjoy back yards and work out of home offices. But large swaths of the economy still have not recovered from effects of the coronavirus pandemic. Millions of Americans are out of work, and reduced government assistance is expected to send eviction rates skyrocketing.

In related news, Invitation Homes plans to spend upward of $300 million buying homes. CEO Dallas Tanner said earlier this month that “housing fundamentals are spectacular in the U.S. right now.”

Invitation Homes, which has about 80,000 properties, has been criticized for evictions, rent hikes, delayed repairs and excessive fees. Tricon’s business practices have also been scrutinized by housing officials and nonprofits in Charlotte, North Carolina.

Blackstone made about $7 billion when it sold its stake last year.

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