Dive Brief:
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Two real estate private equity firms, GTIS Partners and 643 Capital Management, have teamed up to launch StreetLane Homes, a single-family home rental investment and management company.
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Based in San Francisco, StreetLane Homes will be among the 10 largest single-family home owner/operators in the U.S., the company said, with a portfolio of more than 3,500 units worth $445 million.
- The properties span Atlanta, Dallas, Houston, Chicago, Las Vegas, Nashville, TN, and South Florida.
Dive Insight:
The decision by GTIS and 643 to launch the new company comes as they look to further tap into the single-family rental market, which they said in a statement accounts for nearly 16 million units, or 13% of the total U.S. housing stock and 35% of all rentals.
Demand in single-family rentals is largely being underpinned by young entrants to the housing market, many of whom face barriers to homeownership such as limited savings, a tight credit environment and recent increases in mortgage rates. Nearly one-third of homebuyers age 35 and under surveyed by Redfin in August cited affordability as their leading concern around purchasing a home, with 10.3% fearful they wouldn’t be able to afford a down payment.
Against this background, the rental market is strong and is expected to remain robust as home prices show no sign of easing and for-sale housing inventory languishes. Millennials are also marrying later than previous generations and are holding off on home purchases, recent research indicates.
These trends are helping to attract more interest from investors and developers in single-family rentals, leading to consolidation in that market. In October, former Goldman Sachs Group executive Donald Mullen Jr. was reportedly looking to raise $1 billion to purchase foreclosed single-family homes to convert to rentals.
In late 2015, American Homes 4 Rent merged with American Residential Properties in a $1.5 billion deal that would make it the second-largest holder of single-family rental inventory after Blackstone Group’s Invitation Homes. The latter put forth plans on Jan. 6 for a previously discussed initial public offering, The Wall Street Journal reported.
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