American Homes 4 Rent, the largest publicly traded U.S. single-family housing landlord, bought Beazer Pre-Owned Rental Homes Inc. for about $263 million in debt and equity, a sign of industry consolidation.
American Homes 4 Rent issued 8.2 million shares, worth about $145.6 million as of yesterday’s close, and paid as much as $5 million in cash held in escrow, the Agoura Hills, California-based real estate investment trust said in a statement today. It also assumed debt including about $112.8 million outstanding under the Beazer business’s credit line.
Beazer Pre-Owned has acquired more than 1,300 rental houses since 2012 with $100 million in initial backing from investors led by buyout firm KKR & Co. Beazer Homes USA Inc. owns about a 15 percent stake in the company, and will receive American Homes 4 Rent shares as part of the transaction, according to a statement from the Atlanta-based builder.
“This group of single-family rental focused companies are looking to expand their portfolios of properties and trying to find ways to do that in an environment where home prices are rising,” said Jeffrey Langbaum, an analyst for Bloomberg Industries in Skillman, New Jersey. “It’s all about finding alternative ways to continue to grow.”
REITs, private-equity firms and hedge funds have spent at least $20 billion to buy as many as 200,000 U.S. rental homes in the past two years. The largest buyers, such as Blackstone Group LP, have slowed acquisitions as home prices climbed and their focus shifted to efficiently managing thousands of properties scattered across several cities.
The Beazer homes are located in Arizona, California, Florida and Nevada, according to the American Homes 4 Rent statement. The deal gives the REIT a new presence in California, a market it had previously left, Jade Rahmani, an analyst at Keefe Bruyette & Woods Inc., wrote in a note today.
“We are pleased to add these well-located, high-quality homes to our portfolio,” David P. Singelyn, chief executive officer of American Homes 4 Rent, said in the statement. “We expect to move quickly to seamlessly integrate these operations and realize the resulting synergies as we continue to grow our business.”
American Homes 4 Rent owned 25,505 homes in 22 states as of March 31. Its shares gained 0.8 percent to $17.91 at 10:44 a.m. in New York. The stock has climbed about 12 percent since its initial public offering last July.