Blackstone's Invitation Homes LP, the largest owner of U.S. rental homes, has reportedly filed confidentially for an initial public offering that would bring its portfolio of some 50,000 homes to the public market. The IPO would raise $1.5 billion, though it is not clear that Blackstone itself would sell any of its stake in the operation. As described, the IPO would value Invitation Homes at $7.5 billion.
Blackstone declined to comment on reports that Invitation Homes would file for an IPO.
The company would be structured as a real estate investment trust, and would be a bet - a big bet - that investors would treat a portfolio of rental homes spread throughout the country just as they would concentrated real estate assets such as apartment buildings, shopping centers and office towers.
Of course, the real estate market is one of the largest asset classes in the U.S.: at $35 trillion, the U.S. home market dwarfs the measly $20 trillion invested in U.S. stocks.
One of the dogging questions for Invitation Homes, though, will be: where are the avenues for growth? It was able to stitch together its portfolio of homes mostly during the housing crisis, when it was clear that buying assets from homeowners - many of them underwater on their mortgages - was cheaper than what it would cost to build them.
Now that the housing market has rebounded, along with the rest of the economy, the low-hanging fruit isn't hanging as low as it was.
However, with 50,000 units in its portfolio, Invitation Homes has the critical mass to support the infrastructure necessary to maintain and supervise the rental of all those properties. It also boasts the largest inventory of rental properties, though only narrowly. American Homes 4 Rent ( (AMH - Get Report) ) owns 48,000 houses that it offers on the rental market, while Colony Starwood ( (SFR) ) owns 30,000 units.