Colony Files to Raise $100 Million in Home Rental IPO
Thomas Barrack Jr.’s Colony American Homes Inc., which has bought more than 8,000 U.S. single-family rental houses since starting last year, filed to raise as much as $100 million in a U.S. initial public offering.
The company, based in Scottsdale, Arizona, didn’t disclose the number of shares or an offering price in its regulatory filing yesterday. The offering size is a placeholder amount used to calculate registration fees and may change.
Private-equity firms including Barrack’s Colony Capital LLC and Blackstone Group LP have raised more than $10 billion after the U.S. housing crash to buy single-family homes and rent them out. There are 14 million rental homes in the country with an average price of $200,000, giving what was once a mom and pop business a value of $2.8 trillion, according to a report from Goldman Sachs Group Inc. last month.
The investors are taking advantage of prices that remain 29 percent below their 2006 peak and rising demand for rentals among people who can’t qualify for a mortgage. The U.S. homeownership rate fell to 65 percent at the end of March, the lowest since 1995, the Commerce Department said this week.
Colony American Homes, which plans to organize as a real estate investment trust and apply for listing on the New York Stock Exchange, spent more than $1 billion to acquire and renovate homes since it was founded last March, buying in 25 metropolitan areas, according to the filing. Colony Capital, which has bought about $50 billion of real estate since it was founded in 1991, has raised $2.2 billion from private investors to purchase single-family rental homes, the filing shows.
While the company currently has no debt, management plans to “use leverage in the future and are currently in the process of negotiating to obtain a credit facility to provide us with additional capital,” according to the filing.
Silver Bay Realty Trust Corp. (SBY) in December became the first pure single-family rental company to become a public REIT. The Minnetonka, Minnesota-based company’s shares are up 4.8 percent from the initial price of $18.50 on Dec. 13.
American Residential Properties Inc., a Scottsdale-based investor in rental homes, said this week it plans an IPO of 13.7 million shares at $21 to $23 each. American Homes 4 Rent, a Malibu, California-based single-family rental operator led by B. Wayne Hughes with more than 10,000 homes, said in February that it also expects to register for a public offering.
Credit Suisse Group AG, Morgan Stanley and Bank of America Corp. are leading the Colony offering.
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