Blackstone Group LP (BX) hired Gary DeLapp, the former head of the Extended Stay hotel chain, as president of its home-rental business.
DeLapp, 52, said he will bring hotel-style service to tenants of Blackstone’s Invitation Homes LP, the largest U.S. single-family home landlord. The Dallas-based company has spent about $7.8 billion to buy 41,000 houses since April 2012.
“It’s our house because we acquired it,” DeLapp said in a telephone interview. “But it’s their home.”
Wall Street-backed private-equity firms, hedge funds and real estate investment trusts are part of a burgeoning industry of institutional landlords seeking to take advantage of home prices that fell by a third in the housing crash and rising demand for rentals. The six largest investors have spent more than $15 billion buying at least 90,000 properties in the last two years, according to Deutsche Bank AG.
The U.S. has about 14 million single-family rental houses, most of which have historically been owned and operated by mom and pop landlords.
DeLapp said Invitation Homes is able to provide better renter experiences than small landlords, offering benefits such as round-the-clock service for tenants with backed up toilets, failed air conditioners or other emergencies. It’s able to lower costs by procuring products in bulk through vendor partners, such as buying construction materials from Home Depot Inc. and appliances from General Electric Co., he said.
DeLapp joined Invitation Homes in October, Jonathan Gray, Blackstone’s head of real estate, said in an interview. Nick Gould will remain chairman and chief executive officer.
DeLapp was president and chief executive officer of HVM LLC, the operators of Extended Stay hotels, from 2001 to 2011.
Blackstone is a co-owner of Extended Stay. Its investments in the chain illustrate its ability to time real estate cycles, which the private-equity firm is trying to repeat with its rental-home company.
Blackstone bought Extended Stay for $3.1 billion in 2004 and sold it for $8 billion in June 2007 to Lightstone Group LLC. Blackstone, joined by Centerbridge Partners LP and Paulson & Co., bought the hotels again for $3.9 billion in 2010, the year after it was pushed into bankruptcy. The hotel chain went public as Extended Stay America Inc. in November, raising $565 million in a public offering, almost tripling the paper value of the three investors’ stakes.
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