Big institutional investors are
getting away from buying single-family rental homes in bulk and are
narrowing their focus to only a few markets for future purchases, CoStar
Group reports.
The Blackstone Group, the largest institutional investor in the
single-family rental market, announced that its acquisition pace has
decreased 70 percent from its peak last year. Blackstone also said that
it would be narrowing its future purchases to markets such as Seattle,
Atlanta, Miami, Orlando, and Tampa, Fla. Blackstone’s portfolio includes
43,000 homes in 14 cities.
National home-price rises the past year are the main reason for the
slowdown in buying, many institutional investors say. Investors are
being more choosy about where they continue to buy.
"The housing recovery has been uneven across the nation, and we are
no longer able to buy in some of our Western markets, although we remain
excited about many others, where we can still acquire homes at a
discount to replacement cost and attractive rental yields," says David
Miller, president and CEO of Silver Bay Realty Trust, the first company
to convert to single-family REIT. "Florida, for example, leads the
nation with the highest foreclosure inventory, which should provide a
continuing supply of distressed inventory in 2014."
Silver Bay, which owns 5,642 single-family properties, says it is
narrowing its future purchases to markets in Texas and Atlanta, too.
American Residential Properties Inc., which has 6,073 single-family
homes in its portfolio, says it would like to add at least 1,000 homes
to its portfolio from four markets: Houston, Dallas, Atlanta, and
Phoenix.
Source: “New Year Brings New Strategies for Single-Family Rental Giants,” CoStar Group (March 19, 2014)