Single-family rental REIT Altisource Residential Corporation (Residential, or RESI) has acquired a portfolio containing 4,262 single-family rental properties, according to an announcement from Residential.
Residential purchased the portfolio at an aggregate purchase price of $652.3 million in a seller-financed transaction, and the assets were purchased from investment funds sponsored by Amherst Holdings, LLC, according to Residential.
The acquisition more than doubles Residential’s single-family rental portfolio. The newly-acquired portfolio is consistent in quality with Residential’s existing portfolio of affordable single-family homes and is on target with the company’s objectives for return on equity. The properties in the new portfolio will greatly enhance Residential’s presence in new and existing strategic target markets, which include Florida, Texas, Georgia, Tennessee, North Carolina, and South Carolina.
“Residential continues to successfully execute its strategy to transition the company into a 100 percent single-family rental REIT and to capitalize on attractive single-family rental economics,” said George Ellison, CEO of Residential. “These high-yielding properties are an excellent fit for the Residential brand and expand our geographic reach in strategic markets. The acquisition of these properties is a crucial milestone for Residential and keeps the Company on track to achieve its stated goal of 10,000 rental homes by the end of 2016.”
David Reiner, Chairman of the Residential Board of Directors, stated, “This is a transformative transaction for Residential. By continuing to execute on our strategy, Residential is well positioned to reward investors with long-term growth and attractive returns.”
As a condition of obtaining seller financing, Residential was required to return the current property manager of the portfolio. In support of the Residential acquisition, Altisource Portfolio Solutions agreed to provide a limited waiver of its exclusive right to provide property management and other services to Residential with regard to the newly-acquired portfolio, according to Altisource.
Residential agrees (along with other considerations) to pay $60 million if the company sells, liquidates, or disposes in any form 50 percent or more of its single-family rental portfolio managed by Altisource, in exchange for the limited waiver. Click here to view Residential’s 8-K filing with the Securities and Exchange Commission that contains the agreement.
“We are very supportive of RESI’s portfolio acquisition as it accelerates RESI’s transition to a 100 percent single family rental company,” an Altisource Portfolio Solutions spokesperson said in a statement. “We believe this acquisition strengthens RESI’s position in the industry and positions them well for growth, which are positive for Altisource. We believe the terms we agreed to with RESI further underscore RESI’s long-term commitment to the rental home business and our strong ongoing relationship with RESI.”
Editor’s note: The Five Star Institute will present its second annual Single-Family Rental Summit in Frisco, Texas, on November 1 through 3. Click here for more information or to register.
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