American Residential Plans to Raise $300 Million in IPOLee Spears and John Gittelsohn
American Residential Properties Inc., an owner of single-family rental homes, plans to raise $300 million in a U.S. initial public offering, according to a regulatory filing today.
The company, based in Scottsdale, Arizona, didn’t say how many shares it will offer or at what price. The offering size is a placeholder amount used to calculate registration fees and may change. Founded in 2008 and led by Chief Executive Officer Stephen Schmitz and President Laurie Hawkes, the firm has raised $372 million since July in three private offerings.
American Residential plans to organize as a real estate investment trust and apply for listing on the New York Stock Exchange, according to the filing. As of March 20, it owned or had rights to acquire 2,831 homes in Arizona, California, Florida, Georgia, Illinois, Indiana, Nevada, North Carolina, South Carolina and Texas. The company has added more than 1,000 of those properties since Dec. 31.
“The growth of our portfolio has been significant in recent months, as we have increased the rate at which we acquire properties,” according to the filing. “We believe that home prices continue to be significantly below replacement costs in many of these markets. Additionally, we believe there will continue to be a supply of homes at distressed values.”
Institutional investors have stepped up purchases of single-family homes to lease in the past two years, seeking to take advantage of prices that have fallen by a third from their July 2006 peak. Demand has increased from renters who have lost properties to foreclosure, can’t qualify for mortgages or don’t want to own. Blackstone Group LP, the world’s largest private-equity firm, has spent $3.5 billion to buy 20,000 homes at a $100 million-a-week pace.
Proceeds from the American Realty Properties IPO will be used to acquire, restore, lease and manage single-family homes as rental properties and for general purposes, according to today’s filing.
Silver Bay Realty Trust Corp. became the first pure single-family rental company to become a public REIT in December. Shares of the Minnetonka, Minnesota-based firm fell 0.2 percent to $19.02 at the close in New York. They are up 2.8 percent from the initial price of $18.50 on Dec. 13.
Colony Capital LLC, founded by Thomas Barrack, owned 7,000 single-family rental homes as of March 6 after having raised $2.2 billion to buy properties for lease. American Homes 4 Rent, a Malibu, California-based single-family rental operator headed by B. Wayne Hughes with more than 10,000 homes, said on Feb. 27 that it expects to register for a public offering within 60 days.
Single-family rental homes make up almost 10 percent of the $17.7 trillion U.S. housing market of 133.2 million residences, according to the American Residential Properties filing.