Blackstone Real Estate Income Trust

 Back in 2019, Blackstone pulled back from the single-family housing market, selling off its shares of Invitation Homes, which Blackstone had used in the years following 2012 to gobble up homes for dirt cheap prices following the housing crash.

At the time, the Wall Street Journal proclaimed that “Blackstone has closed the door on its giant rental-home gambit.”

Only the “door” wasn’t closed.

In June 2021, Blackstone Real Estate Income Trust was ready to jump back into the single-family space with its $6 billion purchase of Home Partners of America, which at the time owned 17,000 U.S. homes. And this January, Blackstone announced it is acquiring single-family rental giant Tricon Residential for $3.5 billion.

Where does the latest move to acquire Tricon Residential place Blackstone in the institutional landlord hierarchy? And, in which housing markets will Blackstone be the most concentrated?

According to Parcl Labs’ proprietary database, once Blackstone completes its Tricon Residential acquisition, it will have the third-largest U.S. single-family portfolio (61,964 U.S. single-family homes), behind Progress Residential (83,502 single-family homes) and Invitation Homes (81,716 single-family homes).

Most of that 61,964 U.S. single-family home portfolio comes from Tricon Residential (35,448 single-family homes), while the rest are held by Home Partners of America (26,516 single-family homes), according to Parcl Labs.

According to Parcl Labs: Once the Tricon deal is complete, Blackstone’s single-family rental portfolio will be most concentrated in the following 5 housing markets:

1. Atlanta: 11,144 homes (7,104 Tricon; 4,040 Home Partners of America)
2. Dallas: 5,172 homes (2,922 Tricon; 2,250 Home Partners of America)
3. Charlotte: 4,710 homes (3,986 Tricon; 724 Home Partners of America)
4. Tampa: 3,949 homes (2,365 Tricon; 1,584 Home Partners of America)
5. Phoenix: 3,801 homes (2,863 Tricon; 938 Home Partners of America)

Those housing markets have some of the highest levels of institutional homeownership in the country. The reason is that their favorable demographics and rental growth have attracted big single-family investors, according to Parcl Labs.

While a portfolio of 61,964 homes isn't small, in the grand scheme of the U.S. housing market, which has over 82 million single-family homes, it might not be as large as it initially sounds.

On a national level, institutional homebuyers—firms owning at least 1,000 homes—own around 1% of the total U.S. single-family stock, according to Parcl Labs.

In a bid to boost supply, the Canadian government said last year it would remove the federal 5% consumption tax on the construction of new rental apartment buildings.

Morgan Stanley and RBC Capital Markets are the financial advisers to Tricon.

Tricon primarily provides single-family rental housing and rental development in the United States and Canada.

After the acquisition, Tricon plans to complete its $1 billion development pipeline of new single-family rental homes in the U.S. and $2.5 billion of new apartments in Canada.

The transaction, expected to close in the second quarter of this year, comes at a time when Canada is facing an affordable housing crisis.

nvestment management company Blackstone (BX.N), opens new tab has agreed to take Canadian real estate firm Tricon Residential (TCN.TO), opens new tab private for $3.5 billion, the companies said on Friday.

U.S.-listed shares of Tricon jumped about 28% at market open, hitting nearly a one-and-a-half-year high.

Under the deal, Blackstone will acquire all outstanding shares of Tricon for $11.25 per share in cash, representing a 30.35% premium to the stock's last close.