DALLAS and SCOTTSDALE, AZ—Two of the single-family rental sector's 800-lb. gorillas, Invitation Homes and Starwood Waypoint Homes, said Thursday they planned to combine in an all-stock merger of equals. The combined entity will operate under the Invitation Homes name, with a market capitalization of approximately $11 billion and a total enterprise value of around $20 billion.

“This merger creates the leading single-family rental company in the United States, which will be uniquely positioned to deliver exceptional service to residents, while also improving operating efficiency,” says Fred Tuomi, CEO of Starwood Waypoint, who will serve in the same capacity for the new entity. “That is a win-win for both residents and stockholders.

“We will have an irreplaceable portfolio of homes focused in select high-growth markets, offering unrivaled service and high-quality housing options for families choosing to rent,” he continues. “We have great admiration for Invitation Homes and its talented team, and look forward to embarking on an exciting new chapter together.”

The combined company would own and manage approximately 82,000 single-family homes. Although it would be the largest SFR landlord in the US post-merger, it will achieve this distinction in what continues to be a highly fragmented sector. The combined company's portfolio will represent less than 0.1% of the more than 90 million single-family homes in the US, and just 0.5% of the country's SFR inventory.

The two companies cite strong similarities in their portfolios, which focus on overlapping, strategically selected, high-growth markets, with nearly identical average monthly rents and nearly 70 percent of combined company revenues coming from the Western US and Florida. The combined portfolio would also have an average of 4,800 homes per market, a footprint that Invitation Homes and Starwood Waypoint say will allow the combined company to leverage economies of scale and improve operating efficiency, while also enhancing customer service.

Blackstone, the majority shareholder in Invitation Homes, has signed off on the merger. Pending approval by Starwood Waypoint investors, the merger is expected to close by the end of this year. Starwood Waypoint formerly was known as Colony Starwood Homes following a 2016 merger between Colony American Homes and Starwood Waypoint Residential Trust; it rebranded last month.

Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC are acting as financial advisors and Simpson Thacher & Bartlett LLP is acting as legal advisor to Invitation Homes. For Starwood Waypoint, Morgan Stanley and Evercore are serving as financial advisors and Sidley Austin LLP is serving as legal advisor.

DALLAS and SCOTTSDALE, AZ—Two of the single-family rental sector's 800-lb. gorillas, Invitation Homes and Starwood Waypoint Homes, said Thursday they planned to combine in an all-stock merger of equals. The combined entity will operate under the Invitation Homes name, with a market capitalization of approximately $11 billion and a total enterprise value of around $20 billion.

“This merger creates the leading single-family rental company in the United States, which will be uniquely positioned to deliver exceptional service to residents, while also improving operating efficiency,” says Fred Tuomi, CEO of Starwood Waypoint, who will serve in the same capacity for the new entity. “That is a win-win for both residents and stockholders.

“We will have an irreplaceable portfolio of homes focused in select high-growth markets, offering unrivaled service and high-quality housing options for families choosing to rent,” he continues. “We have great admiration for Invitation Homes and its talented team, and look forward to embarking on an exciting new chapter together.”

The combined company would own and manage approximately 82,000 single-family homes. Although it would be the largest SFR landlord in the US post-merger, it will achieve this distinction in what continues to be a highly fragmented sector. The combined company's portfolio will represent less than 0.1% of the more than 90 million single-family homes in the US, and just 0.5% of the country's SFR inventory.

The two companies cite strong similarities in their portfolios, which focus on overlapping, strategically selected, high-growth markets, with nearly identical average monthly rents and nearly 70 percent of combined company revenues coming from the Western US and Florida. The combined portfolio would also have an average of 4,800 homes per market, a footprint that Invitation Homes and Starwood Waypoint say will allow the combined company to leverage economies of scale and improve operating efficiency, while also enhancing customer service.

Blackstone, the majority shareholder in Invitation Homes, has signed off on the merger. Pending approval by Starwood Waypoint investors, the merger is expected to close by the end of this year. Starwood Waypoint formerly was known as Colony Starwood Homes following a 2016 merger between Colony American Homes and Starwood Waypoint Residential Trust; it rebranded last month.

Deutsche Bank Securities Inc. and J.P. Morgan Securities LLC are acting as financial advisors and Simpson Thacher & Bartlett LLP is acting as legal advisor to Invitation Homes. For Starwood Waypoint, Morgan Stanley and Evercore are serving as financial advisors and Sidley Austin LLP is serving as legal advisor.