Firms now control a significant portion of the rental market in the United States as well as in Canada, raising rents in the service of turning profits. They also continue to receive tax breaks and subsidies. When the US federal government forecloses on homes due to residents’ inability to pay their mortgage, for instance, the homes are then resold to investment firms at big discounts. The corporate landlords then either resell or rent those homes. “With help from the federal government, institutional investors became major players in the rental market. They promised to return profits to their investors and convenience to their tenants. Investors are happy. Tenants are not.”
So it’s perhaps not surprising that foreclosures are on the rise again. In January of this year, there was a seven-fold increase in foreclosure starts, new data shows. And mortgage delinquencies rose for the first time in 9 months this April. A serious delinquency can be devastating for a homeowner. It means a hit to the credit score and potentially a default and foreclosure.
As mortgage payments as have risen above 20% for the first time since late 2007, rent has jumped 17% since last year, hitting a new record.
Apart from increasing homelessness among the working poor, corporate home buyouts are causing additional problems for surrounding neighborhoods. As discussed in the WAPO article cited below, “the rise of investor purchases has spawned complaints that the companies … are pricing out first-time home buyers and renting to tenants who have not been properly screened. In Potters Glen, one house owned by Invitation Homes … drew several reports of illegal drugs and gunfire, according to police reports and neighbors.”
Invitation Homes is not a name most are likely to recognize, but its owners are. As official SEC filings show, the Invitation Homes is and has been majority owned by big players like The Vanguard Group, Norges Bank (Norway), Cohen & Steers Inc, Blackstone Holdings III LP and Blackrock Inc. Other entities and individuals involved through ongoing deals include the below.
Invitation Homes Operating Partnership LP (subsidiary of Invitation Homes Inc)
Invitation Homes OP GP LLC (wholly owned subsidiary of Invitation Homes Inc)
IH Merger Sub LLC (wholly owned subsidiary of Invitation Homes Inc)
Cohen & Steers Asia Ltd (75% or more owned by Cohen & Steers Inc)
Cohen & Steers Capital Management Inc (75% or more owned by Cohen & Steers Inc)
Cohen & Steers Inc (owns 75% or more of Cohen & Steers Asia Ltd and is the sole shareholder of Cohen & Steers Capital Management Inc)
Cohen & Steers UK Ltd (75% or more owned by Cohen & Steers Inc)
Mark A. Solls (Executive Vice President, Secretary and Chief Legal Officer of Invitation Homes Inc)
Joint Book-Running Managers
BofA Securities
KeyBanc Capital Markets
PNC Capital Markets LLC
BMO Capital Markets
Citigroup
J.P. Morgan
RBC Capital Markets
Wells Fargo Securities
Co-Managers
Credit Suisse
Deutsche Bank Securities
Goldman Sachs & Co. LLC
Mizuho Securities
Morgan Stanley
BNP PARIBAS
BNY Mellon Capital Markets, LLC
Capital One Securities
Raymond James
Regions Securities LLC
Scotiabank
Siebert Williams Shank
US Bancorp
Sources
TheAtlantic
Sonali Kolhatkar
Reuters
CNN
Marketwatch March 2022
Matketwatch April 2022
Black Knight Mortgage Monitor
WAPO / Yahoo
Invitation Homes SEC Filings