Invitation Homes Seeks $1 Billion to Cash In on Housing Slowdown

Invitation Homes Inc., the single-family rental giant born in the aftermath of the US foreclosure crisis, is seeking a joint venture partner to take advantage of the latest dislocation in home prices.

The landlord, which owns more than 85,000 homes, is working with Eastdil Secured to find a partner for a $1 billion joint venture, according to people familiar with the effort, who asked not to be named because the matter is private. 

The company is turning to external capital in part because raising equity at current levels -- the stock price is down roughly 28% so far this year -- is less appealing. Invitation’s search for a joint venture partner is in its early stages, said one of the people, and there’s no guarantee an agreement will be reached.

A representative for Eastdil declined to comment. Invitation Homes didn’t immediately return messages seeking comment. 

The last two years have been a busy time for housing market investors. The pandemic unleashed torrents of capital to the US suburbs, as investors looked to profit from rapid household formation and work-from-home trends. But high home prices coupled with rising interest rates pushed investors to dramatically slow purchases earlier this year. 

Invitation has previously worked with Rockpoint Group, including a vehicle announced in March that focused on more expensive homes.

Invitation Homes was formed in 2012 and used backing from Blackstone Inc. to rapidly accumulate a portfolio of foreclosed properties. The business then merged with rental-house competitors to form an industry behemoth.

Few housing market observers expect as big a housing market correction this time around. Even so, the prospect of buying at lower prices -- either from regular homeowners, or from homebuilders looking to offload inventory -- has been on the radar for some time. 

In July, Invitation Chief Executive Officer Dallas Tanner told investors that he was slowing purchases and keeping an eye on better deals. 

“We think there could be some even better buying opportunities,” Tanner said at the time. “If we do see the market change in a way that’s favorable for us, we can take advantage of that.”