Coldwell Banker Premier Realty

Institutional Buying of SFR


Update on SFR rental
Posted: December 26, 2012 by John McClelland

We first described the single family rental business as an opportunity back in late 2009, when homes could be acquired at trustee sales with enough velocity to make sense. In our 2011 annual report, we also described how the business could make sense. Since that time, many more buyers have become active in the Las Vegas market, many of which are backed by private equity. Further, these firms are likely to achieve some economies of scale and are taking a mixed approach to the underwriting with a view towards cash flow that sustains the business and longer term appreciation, implied by values that despite recent gains, are still below trend growth (in Las Vegas the aggregate indices still point to 1990's era pricing).

A couple of weeks ago, Silver Bay Realty Trust Corp raised $245 million in an IPO, the first ever for a REIT that runs single family rental homes. While trading subsequent the IPO lead to a lower than open price, its not really surprising given a short track record of firms in this space. Nevertheless, we do expect more IPO's in the single family rental realm.

http://www.bloomberg.com/news/2012-12-14/silver-bay-little-changed-after-raising-245-million-in-offering.html?cmpid=yhoo

 In addition, several other firms are active in this segement. American Residential is an active buyer, having recently acquired a portfolio in Chicago.

http://online.wsj.com/article/SB10001424127887324731304578193482573590100.html?mod=dist_smartbrief

 

 

 

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