A Fannie Mae spokesperson confirmed Wednesday the country’s largest owner of single-family rental homes recently won its backing.
The GSE agreed as of Tuesday to backstop up to $1 billion in debt from Blackstone Group's platform Invitation Homes, the first time a government sponsored entity has agreed to guarantee the debt of an institutional owner of single-family houses.
“This transaction is a great opportunity to continue to serve the growing single-family rental market,” said Pete Bakel, Financial and Executive Communications spokesman for Fannie Mae. “Today, single-family homes account for more than 50 percent of the rental market, offering individuals and families access to good neighborhoods, schools, and employment centers. Invitation Homes is a strong partner with deep experience managing a large volume of single-family rental properties. This transaction helps us gather data and test the market to ensure we are delivering the right solutions that meet the increasing demand for single-family rental housing across all demographics.”
Bakel said the collaboration with Blackstone serves their commitment to find new ways to meet the changing needs of families.
Invitation Homes went public Monday with the filing of its S-11 form to the Securities Exchange Commission.
Invitation homes indicated in the filing it has elected to qualify as a real estate investment trust (REIT) for U.S. federal income tax purposes. Invitation Homes plans to become a Maryland corporation after the completion of the offering, according to the filing.
“After the completion of this offering, affiliates of The Blackstone Group L.P. will continue to own a majority of the voting power of shares eligible to vote in the election of our directors,” Invitation Homes stated in the filing. “As a result, we will be a ‘controlled company’ within the meaning of the corporate governance standards of the NYSE.”
The company said in its filing that it spent roughly $1.2 billion in renovating the homes in its portfolio, at an average of approximately $25,000 per home.
“Our portfolio benefits from high occupancy and low turnover rates, and we are well positioned to drive strong rent growth, attractive margins and predictable cash flows,” the company said.
However, not all response to the news of Fannie Mae’s action was favorable. Robert Grossinger, President of the non-profit National Community Stabilization Trust, said he was confused by the GSE’s decision.
“These investors so far have had no trouble financing the purchase of tens of thousands of homes without government support,” Grossinger said. “But if Fannie Mae determines that a taxpayer subsidy of the private sector is necessary, at the very least the arrangement with Invitation Homes should contain provisions that strengthen protections for tenants living in these homes, support affordability, and prohibit the predatory rent-to-own and installment contract arrangements that are becoming increasingly common in the single-family rental market.”