Blackstone buys home partners in America for $ 6 billion

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Real estate is hot product in this day and age, where consumers across the country are caught up in a bidding war that drives up the prices of a limited number of single-family homes even further. By betting that the market will continue this sacred streak of growth, Blackstone Group Inc. announced today (June 22) that it has agreed to buy Home Partners of America, a company that buys dysfunctional single-family homes, rebuilds them, and then re-leases them to tenants. The price of this transaction will be 6 billion dollars and is expected to close later this year.

While the Blackstone deal is notable for its size, it is not unique in the active real estate segment, which has recently attracted the interest of savvy investors and ambitious entrepreneurs looking to cash in on the hot market. Home may be where the heart is, but it also looks more and more like a place where there is an opportunity to expand the field of players.

Why buy Blackstone

Blackstone is no stranger to the real estate market. In the aftermath of the mortgage financial crisis, the investment company became known for buying up dysfunctional single-family homes and renting them out through a firm called Invitation Homes. Since then, Blackstone has withdrawn from the market and no longer holds shares in Invitation Homes, which has become the largest US firm in the industry with 80,000 single-family homes for rent.

And as the market has caught on more and more over the past year, Blackstone is returning to the wild real estate world. First, by investing $ 240 million in 2020 to purchase a preferred stake in Tricon Residential Inc., Toronto, which specializes in single-family rentals in North America; now with its recently announced acquisition of Home Partners, which is transferring holdings to Blackstone Home Partners of over 17,000 homes across the US.

Blackstone has also inherited the startup’s unique approach to buying a home and converting it into a rental model – unlike other players who hold property as a landlord indefinitely – Home Partners offers its tenants the opportunity to buy their home to rent after a specified period of time. … predetermined price. Blackstone’s Kathleen McCarthy told The is a Wall Street JournaIt looks like I’ll become more popular over time. Today, about 20 percent of Home Partners tenants have exercised their home purchase options. However, given the sharp rise in home prices in several markets, Blackstone expects this percentage to increase as tenants seize the opportunity to purchase their homes for rent at a predetermined price below current market value.

An increasingly crowded market

Blackstone is not alone among the big players who are attracted by the opportunities in the burgeoning housing market. Canadian real estate giant Brookfield Asset Management Inc. recently acquired a stake in a landlord that owns over 10,000 US homes, while JP Morgan Asset Management and Rockpoint Group LLC have both invested heavily in single-family rental operators, according to the magazine.

And that leaves out the real FinTech army moving into space with a host of host-connected products aimed at a wide variety of goals – seeking to speed up and automate the mortgage underwriting process (Blend), making it easier for investors. buy shares in a rental property instead of renting them out and acting as a landlord (Cadre) or letting the client rent out while they are eligible to buy (Divvy).

“We are a fractional ownership platform that empowers customers to [working] with us to save less and then work on a specialized rental product that allows them to embark on the homeownership journey through mortgages, ”Divvy Bria Ma co-founder Karen Webster said in an interview. podcast conversation earlier this year… “Right now, our goal, and we’re making great progress, is to get people on the right path to buying homes.”

Something that gets harder and harder for buyers, especially young ones, as prices continue to rise; The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the country, rose 13.2% for the year ended March, up from 12% in the previous month.

But where there is a problem, it is clear that there is also an interesting opportunity here – and it is becoming increasingly attractive to a wider range of investors and innovators around the world.

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