S969

1) What happened: On March 11, 2025, Sen. Warnock (D-GA) introduced S.969, the 'Stop Predatory Investing Act,' which amends the Internal Revenue Code to deny interest and depreciation deductions to any taxpayer who owns 50 or more single-family residential rental properties. The bill currently sits with the Senate Finance Committee after its first reading. A companion bill, H.R. 4352 (HOMES Act), has been introduced in the House. The 12 Democratic cosponsors include committee chairmen (Wyden on Finance) and high-profile progressives (Warren, Sanders), giving it moderate procedural momentum but a long path to enactment in a Republican-controlled House (119th Congress has a Republican House majority). 2) The money trail: This bill does not authorize or appropriate any government spending. It is a revenue raiser — it closes tax expenditures. The Joint Committee on Taxation would estimate revenue gains from eliminating interest and depreciation deductions for large SFR owners; preliminary estimates for similar past proposals ranged from $3–$5 billion over 10 years. The mechanism is a tax change, not a spending program. 3) Structural winners and losers: The direct losers are $AMH and $INVH, the two pure-play public SFR REITs. Both rely on interest and depreciation deductions to minimize taxable income in their REIT structures. Eliminating those deductions would require them to either (a) pay corporate-level tax on all rental income, (b) increase leverage to maintain cash flow, or (c) sell properties below the 50-unit threshold. Blackstone ($BX) and KKR ($KKR) have large institutional real estate funds with SFR exposure, but their diversified structures (private equity, credit, insurance) mean the impact is smaller relative to their total earnings. Independent landlords with fewer than 50 properties are unaffected. 4) Real market data analysis: As of April 30, 2026, $AMH trades at $31.31, up 2.29% over 7 days and 12.1% over 30 days. $INVH at $28.07 is up 2.82% (7-day) and 13.32% (30-day). Both stocks have rallied strongly in the past month. This rally is NOT connected to the bill's progress — the bill has been dormant in committee for 13 months. The 30-day moves reflect broader market dynamics, likely declining interest rate expectations, which benefit the REIT sector structurally. The bill's bearish overhang remains latent; market pricing does not currently discount passage risk. $BX at $119.83 (-2.04% 7-day) and $KKR at $99.32 (-2.28% 7-day) show mild weakness this week, but their SFR exposure is a minor fraction of AUM. 5) Timeline and legislative path: The bill was introduced 13 months ago and has had zero committee action since. With a Republican-controlled House (Speaker Johnson's majority) and a 53-47 Republican Senate, tax increases face extremely high hurdles. The bill would need to pass the Senate Finance Committee (Chairman Wyden is a cosponsor but Republicans hold the majority), pass the full Senate (requires 60 votes to overcome filibuster), and then pass the House, where House Ways and Means Chairman Smith (R-MO) has not advanced similar legislation. Enactment probability for this Congress is below 10%. If Democrats win unified control in 2028, this bill or a similar provision could become law starting 2029-2030.