American Homes 4 Rent, the real estate investment trust founded by self-storage billionaire B. Wayne Hughes, raised $705.9 million in its initial public offering, pricing the shares at the low end of the range.
American Homes 4 Rent, based in Agoura Hills, California, sold 44.1 million shares for $16 each, according to data compiled by Bloomberg, after offering them for $16 to $18. The shares will start trading Thursday, listed on the New York Stock Exchange under the symbol AMH.
The company, with almost 18,000 properties, is the second-largest in the U.S. homes-for-rent market, after Blackstone Group LP, and is going public at a time when investors are cooling on the fledgling industry. American Homes 4 Rent raised almost 44 percent less than the $1.25 billion amount estimated in an initial propectus by the company in June.
While American Homes 4 Rent has the benefit of strong leadership under Hughes and a diverse portfolio, it’s uncertain whether single-family owners can make money over the long term on par with other types of landlords, Dave Bragg, an analyst at Green Street Advisors Inc., said this week before the IPO. The two other REITs that have gone public — Silver Bay Realty Trust Corp. and American Residential Properties Inc. — are trading below their offering price.
American Homes 4 Rent and competitors such as New York-based Blackstone, which has invested more than $5 billion in about 30,000 houses, are betting they can build an institutional real estate class from U.S. single-family rental homes, which are mostly owned by mom and pop businesses.
Shares of other public single-family rental REITs have fallen as the companies have failed to show a profit, in part because they are acquiring houses faster than they can fill them with tenants. Silver Bay, based in Minnetonka, Minnesota, began trading in December at $18.50 a share and closed today at $16.09. American Residential Properties of Scottsdale, Arizona, went public in May at $21 and has fallen to $17.54.
Goldman Sachs Group Inc., Bank of America Corp., FBR & Co., JPMorgan Chase & Co. and Wells Fargo & Co. led the offering.
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