Amherst Holdings to buy single-family landlord for $2.3B

Deal for 15,000 homes includes $1.6B worth of debt

TRD NATIONAL /
Feb.February 19, 2020 04:30 PM
CEO of Amherst Holdings LLC Sean Dobson

CEO of Amherst Holdings LLC Sean Dobson

In an effort to expand its already large portfolio, Amherst Holdings is acquiring heavily indebted single-family landlord Front Yard Residential Corp. in a $2.3 billion deal.

The acquisition will bring the total number of homes in the New York-based investment firm’s portfolio to over 36,000 rental homes. Amherst plans to integrate Main Street Renewal Brand, which will help integrate property management operations.

“Scale in this industry is very important,” president of Amherst Residential, Drew Flahive, told Bloomberg. “It has a lot of knock-on benefits in terms of our cost to deliver services, which ultimately means we can deliver better products inside the home and better customer service to the tenant.”

Front Yard’s portfolio includes over 15,000 rental homes across the country, which is largely in the Rust Belt, the Sun Belt and the South. Front Yard, which recently settled a lawsuit with an activist shareholder, has about $1.6 billion in debt, meaning the market value of its portfolio is roughly $609 million.

The deal indicates investors still see big potential in the suburban rental market, which has been seen as a risky investment for much of the decade.

Still, large financial firms like Blackstone Group have shown that it’s possible to effectively manage massive portfolios of rental properties. The company invested heavily after the foreclosure crisis and is one of the largest private landlords in the world.

The Real Deal reported in July 2019 that the suburbs were making a comeback. Fourteen of the 15 fastest growing cities in the U.S. were suburbs of major cities due to the cost of living skyrocketing in some cities.

Since news of the deal broke, Front Yard’s shares jumped 11 percent to $12.52 as of 9:46 a.m. in New York, according to Bloomberg. [Bloomberg]Jacqueline Flynn

 

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