US housing groups to launch IPOs A handful of companies that rent houses to single families are preparing to launch initial public offerings on the US stock market as their private equity and hedge fund owners take advantage of investor interest in the US housing recovery. Colony American Homes, backed by investment firm Colony Capital, is expected to be among the largest in what is becoming a new area of the US publicly listed property sector. Others looking at a listing include units of investment fund Ellington Management; Fundamental REO, whose fund received a large investment from Goldman Sachs; Waypoint Homes Realty Trust; American Homes 4 Rent; and Barry Sternlicht's Starwood Property Trust, according to industry insiders and analysts. The US IPO market has been buoyed by strong stock market returns, with equities testing record levels almost daily, giving buyout groups and investment firms opportunities to list portfolio companies. Meanwhile, shares in publicly traded companies related to the housing market have notched up large gains as home prices have risen and inventories fallen amid a recovery in the US housing sector. Colony, like investment funds led by Blackstone, has built a portfolio of more than 8,000 single family homes at depressed prices in recent years and turned them into rental properties. A person close to the Colony offering said it could seek to raise at least $250m from a US float. "We believe current market conditions present a unique opportunity to consolidate the ownership of single-family homes at distressed prices, rent them to tenants, manage and position the assets for revenue growth, stability and capital appreciation, and thereby achieve attractive rates of return," the company said in a securities filing this month. Investors have raised about $10bn to buy homes for these companies with the aim of institutionalising a sector that has been dominated by "mom and pop" businesses in the past, according to a Goldman Sachs report There are 14.4m single-family rental homes in the US with an average price of $100,000, according to Zelman & Associates, which means investment groups have snapped up only a small fraction of the existing supply. Blackstone has amassed the largest portfolio in the sector with 28,000 homes, having spent $1.8bn on its Invitation Homes unit. An offering of that business is not expected for some time, though, according to someone familiar with the company's plans, because it still has too many homes under repair and yet to be rented. Blackstone declined comment. The expected IPO activity comes as smaller entities have already successfully listed, such as Silver Bay Realty Trust, which was spun out of Two Harbors Investment Corp, and Altisource Residential. Last week American Residential Properties raised $287.4m in a listing. "From an investor's point of view, there's a lot of bullishness on the housing market but very few ways to play it," said Andy Richard, managing director in the real estate investment banking group at Credit Suisse. Analysts said potential pitfalls for the sector included any macroeconomic shocks that could hit the housing market. Also a rapid appreciation of home prices fuelled by a rush of capital into the sector could limit buying opportunities.