$5B Tricon JV Targets Single-Family Rental Homes

Tricon Residential has entered into a joint venture arrangement with three institutional investors to acquire single-family rental homes targeting the middle-market demographic in the US Sun Belt.

The joint venture, referred to as SFR JV-2, will have an initial equity commitment of $1.40 billion. Investors will have the ability to increase the vehicle size to $1.55 billion, including Tricon’s co-investment of $450 million. That represents approximately $5 billion of purchasing power with leverage.

Over three years, SFR JV-2 is expected to acquire more than 18,000 single-family rental homes primarily from resale channels. The JV will complement Tricon’s other investment vehicles, which target new single-family rental homes. Tricon will be the asset manager and property manager of the joint venture, the largest JV in its history.

“With the closing of this joint venture, Tricon is well-positioned to accommodate the incredible demand we are seeing across the US Sun Belt for high-quality single-family rental homes at an accessible rental price point,” Gary Berman, president and CEO of Tricon Residential said in a prepared statement.

Berman says Tricon has now raised $2 billion of third-party equity commitments year-to-date and has the capital in place to grow its single-family rental portfolio to nearly 50,000 homes over the next three years. “We anticipate growing our portfolio by over 6,000 homes in the coming year and are already well on track with more than 1,500 homes acquired in Q2,” Berman said.

Tricon’s existing single-family rental joint venture preceded SFR JV-2 and has acquired over 9,000 homes and is now fully invested. Investors in this vehicle include the Teacher Retirement System of Texas, Pacific Life Insurance Company and one of Tricon’s existing global investors.

Tricon’s new joint venture comes at a time when SFR rents are surging. In June, rents rose 11.1% and occupancy increased 1.1% year-over-year in the single-family rental sector, according to Yardi Matrix.

“The demand for the SFR sector is holding strong as people continue to seek more space,” according to Yardi. “The competitive housing market, driven in part by a lack of supply, is also sending would-be buyers to the SFR space.”