American Homes 4 Rent said it plans to raise more than $750 million in an initial public offering on Wednesday that would value the real estate investment trust at $4 billion and make it the largest publicly traded company in the fledgling single-family rental housing business.
If investors purchase roughly 44.1 million shares being offered in the expected range of $16-$18 per share, the IPO could signal that investor confidence in the U.S. housing market is holding steady. Based on the high end of the range, the company could raise as much as $794 million. Underwriters have an option to purchase an additional 6.6 million shares. The company is expected to trade on the New York Stock Exchange under the "AMH" ticker symbol.
The Agoura Hills, Calif., company, founded in 2011 by self-storage billionaire B. Wayne Hughes, owns or controls more than 19,000 homes and has grown to become the nation's second-largest single-family rental landlord behind Blackstone Group LP (NYSE:BX). Hughes, 79, founded Public Storage (NYSE:PSA), the third-largest REIT in the U.S.
Blackstone has spent more than $5.5 billion to acquire 32,000 rental homes since 2011. Other recent IPOs of single-family home-rental REITs include Silver Bay Realty Trust Corp. (NYSE:SBY), which raised $282 million in December, and American Residential Properties Inc. (NYSE:ARPI), which raised $288 million in May. Silver Bay owns about 5,000 homes and American Residential owns 4,000.
The business of buying foreclosed homes, renovating them and renting them out gained momentum after the housing-market crash caused prices to tank and put hundreds of thousands of bargain-priced foreclosure homes on the market.
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Most rental companies have about a 50 percent vacancy rate because they acquire properties faster than they can fill them. American Homes 4 Rent said that 11,000 of its 19,000 homes, or about 58 percent, are currently leased. Meanwhile, properties it has owned for 90 days or longer are 97 percent leased, a factor Hughes hopes will make his company's IPO attractive to investors.