Invitation Homes nears a deal for 2,000 Starwood rentals

STARWOOD Capital Group is nearing an agreement to sell a portfolio of rental houses to Invitation Homes, according to people familiar with the matter.

The deal would generate funds for Starwood Real Estate Income Trust (SReit), which is facing redemptions, said the people, who asked not to be named because the discussions are private. The transaction could include roughly 2,000 homes and value the properties at about US$400,000 each, one of the people said, adding that it hasn’t been finalised and may not go through.

Representatives for Invitation and Starwood declined to comment.

Starwood has been seeking to sell homes it acquired when prices for single-family rentals were near their peak. The firm is selling a small number of houses to Pretium Partners, from which it bought 2,300 properties for more than US$1 billion in late 2021, Bloomberg reported earlier.

The Reit said in a March filing that it recognised a nearly US$80 million impairment charge on various single-family rental properties “due to an increased probability of a near-term disposition”.

SReit, with a net asset value of US$12.6 billion, has faced higher redemptions in recent months, leading it to restrict how much money it returns at one time. Similar funds sold to affluent retail investors, such as Blackstone Real Estate Income Trust, have also limited redemptions. Some of the trusts have sought to sell properties that are holding up better in the real estate downturn.

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For Invitation, the deal would represent the kind of transaction that chief executive officer Dallas Tanner envisioned a year ago, when a housing slowdown had investors lining up capital for large purchases. The company had more than US$1.3 billion in unrestricted cash and undrawn credit facilities at the end of March, which could be enough to complete a deal without seeking new debt or equity. BLOOMBERG