SFR REITs Continue to Expand


The leading single-family rental (SFR) REITS continue to be focused on acquisitions and are even building new houses from the ground up to operate as rental properties. At the same time, the REITs have more access to financing than ever before and the percent of rental houses that were occupied in 2017 continued to rise.

“The past six months have been an exciting time for the single-family rental industry,” says Diane Tomb, executive director of the National Rental Home Council, an advocacy organization for the SFR industry. “In the next six months, we expect to see continued demand for the high-quality rental homes our members provide.”

Invitation Homes absorbs new units

Invitation Homes added 34,670 rental properties to its portfolio last year in a single deal when it merged with Starwood Waypoint Homes, a transaction that closed in November. A spokesperson for the company said the company is now focused on a successful integration.

In addition to the merger, Invitation bought and sold a few hundred houses in the fourth quarter, buying just a few dozen more than it sold. “​ We will always consider other opportunities that make sense, but we believe we have a terrific portfolio of homes in strategic markets that meet the needs of our residents,” the company spokesperson says.

At the end of the year, Invitation’s total portfolio added up to 82,570 homes. The REIT acquired 290 homes for $80.5 million, including estimated renovation costs. That works out to a relatively high price of $313,000 per unit. The REIT sold 257 homes for gross proceeds of $57.9 million.

American Homes 4 Rent builds new rentals

American Homes 4 Rent plans to spend $400 million to $600 million in 2018, primarily to build new rental homes. At the end of 2017, the REIT had a portfolio of 46,996 leased rental houses, up 970 for the third quarter of that year.

At the end of 2017, 95.7 percent of those homes were leased, up from 95.2 percent in the third quarter.

“American Homes 4 Rent completed a successful year, generating a 6 percent improvement in annual core NOI after capital expenditures from our comparable same-home pool,” says David Singelyn, company CEO.

More financing available

At the same time, the REITs continue to have access to financing. For example, in February, Invitation Homes closed a $917 million, seven-year mortgage loan with an interest rate that will float 124 basis points over LIBOR. The loan repaid a series of loans that had been set to mature in 2019. Including this loan and other refinancing loans that Invitation Homes received, the REIT will save $9.1 million a year in interest expenses.

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