Starwood, Invitation Near Deal for 2,000 Rentals

It took two years for Barry Sternlicht’s Starwood Capital Group to decide to offload a portfolio of single-family rental homes it had purchased. It took roughly two weeks to find a potential buyer.

Invitation Homes is nearing an agreement to purchase approximately 2,000 properties from Starwood, Bloomberg reported. Specifics of the potential agreement weren’t reported, but the homes would possibly go for about $400,000 each.

The homes are from a portfolio of homes purchased from Pretium Partners in late 2021 for more than $1 billion. Pretium is set to reacquire approximately 100 homes from Starwood.

The portfolio sale would benefit the Starwood Real Estate Income Trust as it battles more redemptions than it can handle, forcing it to restrict redemptions. The REIT has a net asset value of $12.6 billion, including mostly housing and industrial properties.

As of the end of the first quarter, SREIT owned slightly more than 3,200 single-family rentals, a portfolio valued at $1.26 billion.

SREIT recently recognized an $80 million impairment charge on its single-family rentals. That impairment charge was related to an “increased probability of a near-term disposition.”

In the first quarter, SREIT reported $52 million in earnings, down 84 percent year-over-year. The REIT reported $490 million in revenue, a 67 percent increase over the same timeframe.

Invitation Homes is one of the biggest players in the single-family rental space, owning tens of thousands of homes, and has been preparing to dive even deeper into the market. In October, the Dallas Tanner-led firm started working with Eastdil Secured to find a partner on a $1 billion joint venture.

— Holden Walter-Warner