New York and Phoenix-based SVN | SFR Capital Management announced the launch of its commercial real estate investment firm dedicated to the growing build-for-rent rental home asset class, adding that U.S. consumer demand and investment interest in rental housing is increasing dramatically. Indeed, studies have shown the build-to-rent market is evolving based on the needs and desires of homebuyers and renters.
The company reports that its industry depth, investable inventory, and relationships with developers, homebuilders, and institutional investors, SVN | SFR targets opportunistic investment portfolios to aggregate 35,000 newly-constructed homes located in dedicated build-for-rent communities.
Jeff Cline, CEO of SVN | SFR Capital Management, reports that purpose-built rental home communities have the ability to deliver very strong risk-adjusted returns to investors for a meaningful period of time, given secular changes in housing across the country. Housing markets targeted for investment by the firm include the Southeast, Sunbelt, Central and Midwest states, including Atlanta, Charlotte, Phoenix, Denver, Nashville, Jacksonville, and Tampa, to name a few.
"We’ve targeted top-performing markets for investment in affordable rental housing and will complete our plan to provide consumers with access to better housing solutions,” said Cline, who has more than 45 years of commercial real estate experience and leadership, including construction, development, finance and asset management for large-scale residential and commercial projects. He added, "SVN | SFR’s differentiation as a national leader in the build-for-rent sector is comprehensive—from our relationships with homebuilders to our investment in people, technology, and operating/asset management processes.”
Build for rent continues to expand as commercial real estate's strongest investment growth sector, due to higher occupancy rates, less turnover, and greater return on investment, compared to multifamily, SVN | SFR reports. Many large U.S. developers and homebuilders have diversified their strategic growth initiatives and ventured into building standalone rental communities. John Burns Real Estate Consulting highlights several reasons for BFR’s strong performance and estimates that over 16 million single-family rental homes are in existence today across the country. The firm found, among other things, the following:
- COVID-19 fueled the sector’s acceleration, with approximately the same number of rental homes as apartment communities in the U.S.
- Stable SFR rents
- Potential tenants in this sector (aged 25-54) prefer renting over homeownership
- BFR homes typically lease up quickly, maintain strong occupancy rates and achieve significant rent premiums
- Single-family rents are forecasted to grow 17% through 2024 and 6% of new single-family rental growth is from BFR, with expectations of continued strong traction as an acquisition strategy this year.
The shift in desirability for BFR communities isn’t expected to slow anytime soon, experts report. Hunter Housing Economics reported that build-for-rent homes account for over 6% of new homes built in the U.S. annually, and this number is anticipated to double by 2024. Billions of dollars of equity capital have been invested into the sector in just the last year with a projected $40 billion more expected in the next 18 months, according to SVN | SFR by way of the aforementioned report.
SVN | SFR says it has engaged best-in-class third-party professional service providers to ensure focused execution and operating profitability, critical factors to quickly scale. Firm affiliates—namely, SVN | SFRhub Advisors and SFRhub.com, as well as through its partnership with SVN International Corporation—have contributed to the firm’s prominent position in the BFR sector, the firm reports.
Investors in build-to-rent communities and homes, as well as all single-family rental investors, are encouraged to attend this fall's Single-Family Rental and Investment Roundtable, part of 2021 Five Star Conference and Expo, September 19-21 at the Hyatt Regency Hotel in Dallas, Texas.