WASHINGTON, DC—As one of its founding members markets a $513.6-million bond issue backed by mortgages on single-family homes, a trade group has launched to advocate for the interests of owner-operators of professionally managed single-family rental homes. The National Rental Home Council, headquartered in Washington, DC, says it seeks to educate the public, the media and policymakers about “the economic value of the industry and the benefits of large-scale, well-managed single-family rental housing platforms.”
At present, such institutional platforms control about 200,000 of the 14 million single-family rentals across the US, according to the NRHC. Bloomberg reported that REITs, private equity firms and hedge funds have spent more than $20 billion to acquire the homes since the 2008 downturn.
“Rental demand in communities across the country is strong,” says Gary DeLapp, president of Dallas-based Invitation Homes, a unit of the Blackstone Group that is among the group’s founders. “Our members are professionalizing the market, offering high-quality, professionally managed single-family rental homes to residents and families looking for an alternative to buying a house or renting an apartment.” Along with Invitation Homes, the group’s other founders include Starwood Waypoint Residential Trust, Colony American Homes and American Homes 4 Rent.
Colony American’s CEO, Justin Chang, says large-scale owner-operators’ investment in local communities “helps to create new jobs through renovation and property management, and drives economic growth by providing income for local businesses and tax revenues for state and local governments. Furthermore, our investment in local communities contributes to a vibrant and stable single-family rental market nationwide.”
The trade group’s formation, though, occurs at a time when such investment may have passed its peak. Citing data from RealtyTrac, GlobeSt.com reported earlier this week that institutional investors bought 44,087 single-family rental properties in the fourth quarter of 2013, a drop of more than 25% from Q3′s figure of 60,648. Furthermore, rents backing Invitation Homes’ revenue stream dipped by 7.6% between October and January.
Even so, GlobeSt.com reported on Monday, the capital markets will be busy with institutional owner-operators’ offerings for quite some time. As a case in point, Colony American’s $513.6-million bond issue is only the second one in the space, after Invitation Homes’ sale of $479 million in debt last year.
Morningstar Credit Ratings, which last week assigned a triple-A rating to the largest slice of the bonds, describes the collateral backing Colony American Homes 2014-1 as 3,399 single-family properties with a total value of $733,675,853. Colony American has acquired all of the properties, which are rented as of the collateral cut-off date of Feb. 1, 2014, with an average monthly rental payment of approximately $1,389. Properties in California and Florida constitute the majority of the pool, representing approximately 37.7% and 20.3%, respectively, of the assets.
The NRHC has established a website, www.rentalhomecouncil.org. It hosts what the group describes as “a variety of information and materials outlining how the industry functions, the importance of a strong housing rental market in the US and case studies detailing the economic benefits of industry investment in local communities.”