American Homes 4 Rent scores $500M loan for acquisitions, builds

Calabasas-based REIT in deal with Minneapolis-based hedge fund

Los Angeles /
Jun.June 08, 2022 01:00 PM
American Homes 4 Rent ceo David Singelyn with renderings of evelopments by AH4R (American Homes 4 Rent)
American Homes 4 Rent ceo David Singelyn with renderings of evelopments by AH4R (American Homes 4 Rent)

A Calabasas-based real estate investment trust is borrowing $500 million to back plans to buy or build new homes as rental property investments.

American Homes 4 Rent has secured a $500 million banking facility agreement to acquire and develop the single-family rental homes, the San Fernando Valley Business Journal reported.

Varde Partners, a hedge fund based in Minneapolis, will provide the capital.

“The two firms have recently closed their first six land transactions into the facility, representing total acquisition and development costs of over $150 million, and due diligence is underway on additional sites,” the companies announced in a joint statement.

The publicly traded REIT bills itself as among the nation’s largest owners and managers of single-family rental properties, with a market capitalization of $15 billion.

Its rents and other single-family property revenues rose 13.9 percent year-over-year to $356.1 million for the first quarter, according to regulatory filings. It claimed nearly $11 billion in real estate assets.

American Homes 4 Rent has amassed 57,129 rental properties in 22 states, with key markets in the Southeast and Midwest, including such cities as Atlanta, Dallas and Charlotte, North Carolina, with Phoenix also being a strong market, according to a June investor presentation.

“Our facility with Värde Partners will enable us to continue the strategic expansion of our development pipeline while also maintaining our commitment to a best-in-class investment grade balance sheet and reducing long-term risk,” David Singelyn, chief executive of American Homes 4 Rent, said in a statement.

Last fall, the San Fernando Valley investment trust was in talks to buy homes from Zillow, which dissolved its home flipping business.

American Homes 4 Rent was founded in 2012 by Wayne Hughes, the founder of Public Storage. Hughes died in August at 88 on a horse breeding ranch he owned in Kentucky.

American Homes thrived in the wake of the mortgage crisis and within a year amassed a portfolio of around 10,000 homes. In 2020, JP JPMorgan Chase boosted its investment in the company to $625 million from $250 million. 

In recent years, investor home purchases have come under criticism from some who say they’ve helped fuel a housing affordability crisis, while driving away first-time home buyers. 

Real estate investors bought a record 18.4 percent of the homes that were sold in the United States in the fourth quarter of 2021, up from 12.6 percent a year earlier, according to Redfin. In relatively affordable Sun Belt cities, their share is far higher.

In Charlotte and Atlanta, investors such as American Homes bought more than 30 percent of the homes sold in the fourth quarter of 2021, according to Redfin. In Jacksonville, Fla., Las Vegas, and Phoenix, they bought just under 30 percent.

[San Fernando Valley Business Journal] – Dana Bartholomew





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