The Real Deal Chicago

After New York PE firm becomes Memphis’ biggest homeowner, evictions soar

A review of Cerberus Capital Management’s portfolio of rental homes in Memphis found it seeks to evict residents at twice the rate of its peers: report
December 29, 2018 12:00PM

Steve Feinberg, 5191 Kingswood Cove (Credit :FirstKey Homes, Cerberus)

Since New York-based Cerebrus Capital Management became the largest owner of single-family homes in Memphis, the number of residents it’s sought to evict has soared.

A Washington Post investigation found FirstKey Homes, the property management company owned by private-equity firm Cerebrus, sought to evict more than 400 Memphis-area tenants this year, a 50-percent spike over 2017. It also filed for eviction at an annual rate of 21 times per 100 homes it owns in Shelby County, Tennessee, compared to an average of 11 times per 100 homes for other landlords.

Created in 2015, Firstkey Homes is now the largest owner of single-family homes in Memphis, acquiring nearly 1,800 houses in the city as part of a 20,700-home national portfolio. Cerebrus fueled the buying spree with $1.6 billion in capital investments, including a $500 million fund it launched earlier this year.

Homes owned by Cerebrus also racked up 190 property code violations in Memphis between Jan. 1 and Oct. 31 this year, a higher rate of infractions than any other landlord in most parts of the city, the Post found.

Single-family homes have been rapidly scooped up by out-of-town landlords since the foreclosure crisis of 2008, often through “iBuyers” like Opendoor and Offerpad. Single-family rental investors have bought some 300,000 houses since 2010, according to investment firm Amherst Holdings.

Census data shows the nationwide share of landlord-owned single-family homes jumped from 13 percent in 2007 to 17 percent in 2016. [Washington Post] — Alex Nitkin