Ellington Plans IPO for Its Single-Family Rental BusinessJohn Gittelsohn
Ellington Management Group LLC, the $5.3 billion investment firm founded by Michael Vranos that specializes in mortgage-backed bonds, is planning an initial public offering for its rental-home business.
Ellington Housing Inc. intends to use proceeds from the stock sale to buy single-family homes, mortgages and multifamily loans and properties, Old Greenwich, Connecticut-based Ellington Management said today in a statement. It didn’t say how much money Ellington Housing plans to raise in the IPO.
Operators of single-family rental homes have been filing to go public, creating a new real estate asset class in a field once dominated by small investors. Private-equity firms and hedge funds are seeking to take advantage of home prices that are 28 percent below their 2006 peak and rising demand for rentals as the U.S. homeownership rate declines. About 14 million U.S. single-family homes valued at an estimated $2.8 trillion are occupied by renters, according to a report last month by Goldman Sachs Group Inc.
Colony American Homes Inc., a single-family rental unit of Thomas Barrack Jr.’s Colony Capital LLC, filed plans this week to raise $260 million through an IPO as a real estate investment trust. Silver Bay Realty Trust Corp., a single-family rental company based in Minnetonka, Minnesota, was the first to go public as a REIT in December, followed by Scottsdale, Arizona-based American Residential Properties Inc.
Silver Bay fell 0.4 percent to $18.17 at the close of New York trading, and is below its Dec. 13 IPO price of $18.50. American Residential Properties, which started trading at $21 on May 9, was up 2.9 percent today to $20.06.
American Homes 4 Rent, a rental housing company headed by Public Storage founder B. Wayne Hughes, and Waypoint Homes Realty Trust Inc., an Oakland, California-based operator with more than 3,000 homes, also have announced IPO plans.
“We are excited about the housing-recovery investment opportunity,” Leo Huang, chief executive officer of Ellington Housing, said in an April 1 statement announcing that the company had raised $140 million to buy rental properties through a private REIT.
Huang, who joined Ellington from Starwood Property Trust Inc. in January 2011, was co-head of commercial real estate lending at Goldman Sachs Group Inc. from 2004 to 2008.