JPMorgan Chase is taking another look at single-family rentals, partnering with Haven Realty Capital on a joint venture.
The partners plan to acquire and develop $1 billion worth of build-to-rent communities across the country. They are set to deploy $415 million in equity for the venture. JPMorgan is advising institutional investors on it.
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Targeting homebuilders in the Sun Belt, the partners will look at communities of 50 to 200 homes spanning 1,500 to 2,500 square feet. Seed investments include three communities in Atlanta representing about 250 homes; the partners expect to close on them in the next three months.
The partners see an opportunity to exploit a lull in homebuilding, according to Haven founder Sudha Reddy.
“The for-sale housing market has been significantly hampered by recession fears, inflation and rising interest rates placing a burden on homebuilders and their ability to add to the housing stock,” Reddy said in a press release.
Another Haven executive noted in the release that “the fundamentals of the single-family rental industry remain solid,” despite turmoil in other sectors of the housing market.
Investors are trying to meet demand for single-family homes from people not ready to buy because of recession fears or mortgage rates and home prices having risen. Invitation Homes is reportedly looking for a partner on a $1 billion joint venture in the single-family rental sector.
Single-family rentals boomed during the first two years of the pandemic, supported by sustained demand and a short supply of for-sale homes. Build-to-rent homes became the fastest-growing housing sector in the country, handing investors big returns as rents rose.
The success of the JPMorgan and Haven deal, like all joint ventures, will depend on more than market conditions. Last week, Arizona-based homebuilder Taylor Morrison and developer Christopher Todd Communities ended their partnership in the build-to-rent space.
JPMorgan has played in this space before. Two years ago, the bank’s asset management arm increased its investment in American Homes 4 Rent from $250 million to $625 million only months after the partnership was formed.
Haven operates 35 communities across nine states, totaling 3,500 homes.