American Homes 4 Rent, a real estate investment trust led by Public Storage founder Wayne Hughes, filed to raise as much as $794.1 million in a U.S. initial public offering.
The housing landlord, based in Malibu, California, is offering 44.1 million shares at $16 to $18 each, according to a regulatory filing today. American Homes 4 Rent, which owns almost 18,000 houses, plans to list on the New York Stock Exchange under the symbol AMH.
Operators of single-family rental homes are going public, creating a new real estate asset class in a field once dominated by small investors. There are 14 million for-lease houses in the country, according to an April report by Goldman Sachs Group Inc. that valued the industry at $2.8 trillion. REITs, private-equity funds and international investors are capitalizing on home values that are about 26 percent below their 2006 peak and leasing demand among Americans who can’t qualify to buy or don’t want to own property.
“The recent drop in home prices, constraints on mortgage lending, job volatility requiring greater geographic mobility, economic uncertainty, evolving demographics and expanded rental options are changing the way many Americans live,” American Homes 4 Rent said in the filing. “Many people, who in the past might have become homeowners, are instead becoming long-term renters of single-family homes.”
The U.S. homeownership rate fell to 65 percent in the first quarter, down from a high of 69.2 percent in June 2004, Census Bureau data show.
American Homes 4 Rent’s IPO would be the largest for a company specializing in single-family rentals, according to data compiled by Bloomberg. The company plans to use proceeds from the offering to purchase and renovate more homes and to reduce debt, according to the filing.
Single-family rental companies are struggling in the stock market as they acquire properties faster than they can fill them with tenants. Silver Bay Realty Trust Corp., a Minnetonka, Minnesota-based REIT, has fallen about 11 percent from its December IPO. American Residential Properties Inc., a REIT based in Scottsdale, Arizona, is down about 15 percent from its debut in May.
Colony American Homes Inc., a single-family rental company headed by Tom Barrack, postponed an IPO in June after REIT stocks fell amid concerns that rising interest rates would threaten investor returns.
American Homes 4 Rent spent $3.1 billion on 17,949 houses in 21 states as of June 30, with 1,152 other properties worth about $191 million in escrow, according to the filing.
Hughes, 79, founded the company in 2011 with a group of executives from Public Storage, which he started in 1972. Public Storage is the third-largest U.S. REIT by market value, after Simon Property Group Inc. and American Tower Corp.
Blackstone Group LP has the largest U.S. single-family rental venture, having invested more than $5 billion on 30,000 rental houses through its Invitation Homes division.