For all the concerns about the rental housing business, American Homes 4 Rent and Invitation Homes are expanding.
Single-family home rental REIT American Homes announced in the course of its Q2 2023 earnings results a second joint venture with institutional investors advised by J.P. Morgan Asset Management.
It announced it entered into a $625 million joint venture focused on constructing and operating newly built rental homes. American Homes will own 20 percent of the build-for-rent business “which has an evergreen term.” American Homes will also earn fees for development and management services provided to the joint venture.
The first joint venture closed in May 2020. At the time it also was valued at $625 million and were planning to build about 2,500 SFR rental homes in the West and Southeast.
Meanwhile, Invitation Homes announced that it had acquired “a premier portfolio” of nearly 1,900 homes for approximately $650 million. The REIT funded the transaction primarily with cash on hand, with the remainder from its revolving credit facility.
“Essentially, this is a high-growth portfolio of exceptionally well-located homes that we bought at a pretty attractive price,” according to CEO Dallas Tanner. “We believe our purchase price represents a meaningful discount to end user market values, giving us immediate benefits of scale at value that would have been impossible to replicate through one-off buying in today’s environment.”
More than 90 percent of the homes they purchased “overlap with our existing Sun Belt footprint, including within our Florida and Texas markets, along with Las Vegas, Phoenix, Atlanta and the Carolinas.”
“Further, we expect our best-in-class platform to help us achieve enhanced returns, starting with the year 1 yield in the mid-5s that we anticipate will grow quickly thereafter,” Tanner added. “In addition, the quality and location of the homes we acquired are right in line with the type of product we’d like to own more of. In particular, these are great homes within desirable infill neighborhoods that we believe will provide strong rent growth and value appreciation.”
Source Erik Sherman, globest.com
