Koch Piles Into Amherst’s Single-Family Rental Business

Koch Real Estate Investments is doubling down on its belief in the Amherst Group — and the single-family rental space.

The Koch subsidiary invested $165 million in Amherst, Bloomberg reported, making it the single-family rental company’s largest outside investor. The companies later announced an equity investment between the two sides, but did not disclose specifics regarding the financials.

“Our equity investment in Amherst expands on our existing partnership and underscores our confidence in and commitment to the platform and its leadership,” KREI president Jake Francis said in a statement.

The investment is expected to help Amherst grow its capacity to buy and develop single-family rentals.

The deal arrives five years after Koch made a $200 million preferred-equity investment in the business. That transaction closed shortly after Amherst terminated a deal to acquire heavily indebted rival Front Yard Residential.

Amherst counts more than 59,000 rental home acquisitions in its ledger, spending $2 billion in home repairs alone before renting them out. The company has $16.4 billion in assets under management, including commercial real estate and mortgage-backed securities.

The single-family rental sector exploded during the pandemic as renters sought more space while being priced out of the housing market after home prices and mortgage rates surged. Major companies such as Tricon Residential, Invitation Homes and American Homes 4 Rent carved out chunks of the market while Wall Street poured into the segment.

Softening rents and rising interest rates hit institutional players hard, though. Additionally, the perception that investors buying and renting out single-family homes drove up prices for homebuyers led to legislative efforts to derail companies, particularly in the build-to-rent category.

Amherst president Drew Flahive sees opportunity nonetheless, pointing to consistent demand from priced-out would-be homebuyers, lower borrowing costs and rising investment yields.

“There are some nice green shoots happening in the marketplace,” Flahive told Bloomberg.

— Holden Walter-Warner