Dive Brief:
- In another sign of the popularity of single-family rental homes, institutional investors advised by J.P. Morgan Global Alternatives have formed a joint venture with Los Angeles-based Haven Realty Capital to acquire and develop more than $1 billion in new build-to-rent communities around the United States.
- With a $415 million programmatic equity joint venture, Haven will have the dry powder to execute its business plan in the BTR space while leveraging existing relationships and creating new partnerships with homebuilders throughout the Sun Belt. In the next 90 days, Haven said the JV will invest in three communities with roughly 250 homes in the Atlanta metro area.
- The Haven-J.P. Morgan partnership will target developments with 50 to 200 homes ranging from 1,500 to 2,500 square feet. It will seek houses with three- and four-bedroom and two- and three-bathroom floorplans, as well as two-car garages.
Dive Insight:
The increasing popularity of SFRs has drawn more institutional money into the game. In 2021, these investors spent $2.5 billion in communities of 50 or more units, according to John Burns Real Estate Consulting. That was well above the previous annual high of $887 million, posted in 2018.
Institutions own 700,000 SFRs — about 5% of the national stock, according to a research paper from MetLife Investment Management cited in a report from Yardi Matrix. By 2030, MetLife estimates that they will possess 40% of all SFRs — roughly 7.6 million homes.
Though the rental market is cooling, many believe that rising interest rates will put single-family homeownership out of reach for many Americans, ensuring the BTR sector remains popular with institutional investors. Many observers, including Yardi, anticipate a movement of would-be homebuyers into single-family rentals in the near future.
“The for-sale housing market has been significantly hampered by recession fears, [with] inflation and rising interest rates placing a burden on homebuilders and their ability to add to the housing stock,” said Haven Founder and Managing Principal Sudha Reddy in a press release shared with Multifamily Dive.
Despite moderating performance in the SFR market this month, the national average rent for a single-family built-to-rent unit held at $2,088, according to Yardi.
In this environment, homebuilders are “becoming increasingly comfortable selling entire communities to operators like Haven to lease to residents,” according to Reddy. Haven currently controls 35 communities — constituting 3,500 homes and $1.2 billion in project value — across nine states.
“The joint venture will add to Haven’s existing portfolio that has been aggregated over the last two years,” Reddy said. “We expect to be an active buyer/developer as the market evolves and opportunities become available over the coming months.”
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