Blackstone to spend $1B in affordable single-family rental expansion

Blackstone is planning a $1 billion move to expand its backing of single-family rental offerings, picking up homes that will be rented at below-market rates.

Home Partners of America, a rent-to-own portfolio company the investment firm acquired last year, will offer the Choice Lease program, Bloomberg reported. Eligible households include those earning 80 percent or less of their area’s median income. Accepted tenants would be able to receive a 10 percent reduction on monthly rent payments.

The program, which comes amid a nationwide housing shortage and rapidly rising home prices, follows Home Partners’ rent-to-own model capping the annual increase for a home’s purchase price at 3.5 percent, below the typical rate of appreciation for homes in most markets.

The company is expected to spend $1 billion on the program for 4,000 homes in the next two years, according to Bloomberg. While profit margins for Blackstone will decrease, the offer could help scale Home Partners’ offerings to those who couldn’t afford rent on the single-family homes before.

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The program has already been tested in four markets, Bloomberg reported, including Atlanta and Phoenix, and is slated to debut in an additional 13 markets.

The investment giant jumped into single-family rentals with a $6 billion bet on Home Partners in June 2021. In buying the portfolio of 17,000 homes, Blackstone may have been banking on how an increasing lack of housing affordability could lead to a boom in rent-to-own homes.

Blackstone previously saw success with Invitation Homes, which the firm’s president Jonathan Gray built into America’s largest operator of single-family rentals before cutting bait in 2019.

[Bloomberg] — Holden Walter-Warner