LAS VEGAS—J.P. Morgan Asset Management and single-family rental home REIT American Homes 4 Rent have closed on their first project under a $625 million joint venture aimed at this space.
They are developing 34 single-family homes in the Sovana and Spring Valley submarkets here. The first home deliveries are expected this June and completion is anticipated by October 2020.
J.P. Morgan Asset Management, on behalf of institutional investors, and American Homes 4 Rent are seeking to deploy $625 million of equity and develop approximately 2,500 purpose built single-family rental homes in multiple markets in the West and Southeast.
While REITs in the single-family rental home market started out purchasing homes, they have increasingly moved into development as well.
As of March 31, 2020, American Homes 4 Rent owned 52,776 single-family properties in 22 states. J.P. Morgan owns a similar number of multifamily units on behalf of institutional investors throughout the US.
The JV is coming online as the single family rental home industry is showing resilience in the face of the pandemic.
Stay-at-home orders tied to the COVI/D-19 pandemic have not tamped down the demand for single-family house rentals, executives from America Homes 4 Rent and Invitation Homes said in recent earnings calls. In addition, American Homes 4 Rent properties reported that 82% of rent payments had been made through May 5, falling within 6% of the company's historical rate, according to COO Bryan Smith.
At the same time, other trends are accelerating the business case behind the single-family rental home model. Increasingly city dwellers are seeking additional space in the suburbs, Mike Kelly, head of Real Estate Americas at J.P. Morgan Asset Management, says in prepared remarks.
"We see this shift as particularly prevalent among the millennial generation, the largest US age cohort, who are looking to transition away from apartment living. The move towards more spread-out living is also expected to accelerate in the wake of the COVID-19 pandemic, and we anticipate strong occupancy and rental growth rates across properties," Kelly says.
By year-end 2020, the venture has plans to deliver additional single-family rental projects in American Homes 4 Rent's existing markets in the West and Southeast.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
