Blackstone’s Invitation Homes gets $1B loan from Fannie Mae

Dive Brief:

  • Invitation Homes, the Blackstone Group-owned single-family home rental business, has snagged a 10-year loan from Fannie Mae and Wells Fargo valued at $1 billion, according to CoStar. 

  • The company, which earlier this month announced plans for an initial public offering, is set to use the proceeds from the loan to repay mortgage loans from two securitized bond offerings as well as existing credit facilities.

  • The loan by government-backed lender Fannie Mae is seen as offering longer-term support to the single-family rental market as many operators in the category are finding ways to manage the portfolios they amassed during and after the recession. 

Dive Insight:

Invitation Homes could launch its planned IPO this week and initial estimates value the Dallas-based company over the $5 billion mark. Proceeds from the sale of an expected 77 million shares are set to be used to help the company pay down some of its roughly $8 billion in debt, according to HousingWire.

The IPO and loan come as the single-family rental market continues to show signs of strong demand nationwide, with high home prices and low inventory levels leaving many potential homeowners seeking alternatives.

The rental market, meanwhile, is expected to remain well-supported in the near-term, with the Urban Institute reporting in June that the number of renters in the U.S. is expected to have risen from 40.7 million in 2010 to 54.1 million in 2030. Younger first-time buyers are among the most affected by head winds including rising home and rent prices, elevated mortgage rates and limited inventory on the lower-priced end of the market.

Real estate website Zillow reported earlier this month that qualifying for and getting competitive terms on a typical 20% down payment on a median-priced home in the U.S. requires more than two-thirds of a buyers’ average annual income.

Anchoring its position in the rental market, Invitation Homes has spent roughly $10 billion since 2008 purchasing 50,000 distressed homes and converting them into rentals.

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