Blackstone’s Big Bet on Single-Family Rentals

Blackstone is banking on bright days ahead for the single-family rental sector, agreeing to acquire major landlord Tricon Residential for $3.5 billion.
January 24, 2024
Blackstone has finalized a deal to acquire Tricon Residential for a substantial sum of $3.5 billion

Blackstone has struck a deal to acquire Tricon Residential for $3.5 billion, marking a vote of confidence for a sector that the world’s largest property investor helped launch after the 2008 mortgage meltdown.

What happened: Blackstone’s offer of $11.25 per share for Tricon represents a generous premium over the company’s recent trading price, underscoring Blackstone’s belief in the SFR market. This acquisition is a collaborative effort involving Blackstone Real Estate Partners X and Blackstone Real Estate Income Trust. But this isn’t Blackstone’s first involvement with Tricon; the investment giant will maintain an 11% ownership stake, marking a four-year partnership continuation.

Zoom in: Tricon Residential’s portfolio comprises approximately 38,000 single-family rental homes in the U.S. Sun Belt region and multi-family apartments in Toronto, Canada. According to data from Parcl Labs, Tricon’s most prominent U.S. markets include Atlanta, Charlotte, Dallas, Phoenix, and Tampa, boasting thousands of single-family homes.

Familiar territory: Blackstone’s history in the single-family rental housing market dates back to its pioneering role in purchasing SFR houses after the 2008 foreclosure crisis. Although it was divested from Invitation Homes in 2019, Blackstone has re-entered the single-family residential space with acquisitions such as Home Partners of America in 2021 and now Tricon Residential. This move reaffirms Blackstone’s position as a major player in the residential sector.

Future plans: Blackstone has ambitious plans for Tricon, intending to advance its existing project pipeline valued at $3.5 billion and inject an additional $1 billion into capital projects in the coming years. While the single-family rental market faced challenges with rising interest rates in 2022, the persisting housing shortage, particularly in the single-family segment, continues to offer opportunities. Renting remains a viable option in high-price areas, driving demand in this market.

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