Tricon Residential to spend $ 5 billion on single-family rentals
A new joint venture led by Tricon Residential plans to invest $ 5 billion in thousands of single-family rental homes in the United States, signaling insatiable demand from institutional investors in this asset class.
The Toronto-based investment firm has partnered with the Teacher Retirement System of Texas and the Pacific Life Insurance Company in the joint venture – one of the largest deals in single-family home industry history – which will target the houses of the Sunbelt.
The joint venture will have an initial equity commitment of $ 1.4 billion and include the option for investors to increase the investment to $ 1.55 billion. Tricon provided a co-investment of $ 450 million.
Tricon expects the joint venture to acquire more than 18,000 single-family rental units over the next three years. The company will serve as the asset manager and property manager for the business.
Instead of building new homes, the company plans to acquire existing homes and original communities. The partnership will be the successor to an existing single-family rental joint venture previously launched by Tricon, which has acquired more than 9,000 homes and is now fully invested.
Tricon’s latest deal highlights massive interest in renting single-family homes, once a generally overlooked area. Large institutional investors and private equity firms are raising funds to invest in the asset class, which has exploded in growth during the pandemic and amid a record stock of homes available for purchase.
In June, Blackstone agreed to acquire Home Partners of America, which owns more than 17,000 homes in the United States, for $ 6 billion.
Rising home prices have also turned buyers into renters. In April, home prices climbed 14.6% from a year earlier, according to the U.S. S&P CoreLogic Case-Shiller National Home Price Index, the largest increase since the start of the year. index over 30 years ago.
Single-family rental skeptics wonder if these companies will be able to draw the numbers in pencil if the Federal Reserve raises interest rates, which in turn would increase the cost of financing.
Gary Berman of Tricon recently said The real deal that the company has a three-pronged approach to the sector. He buys homes on the Multiple Listing Service, works directly with home builders, and builds new rental homes. Berman said the company is buying 800 homes per quarter outside of MLS, but plans to increase that number to 1,500 homes per quarter later this year.
The Company owns and operates a portfolio of more than 31,000 single-family rental units and multi-family rental apartments in the United States and Canada. Last August, Blackstone led a group of investors that injected $ 300 million into Tricon Residential.