AG Mortgage Trust Enters Single-Family Rental Market With $140M Deal
The REIT has acquired a 1,225-asset portfolio for $140 million.
NEW YORK CITY–AG Mortgage Investment Trust has entered into a purchase agreement to acquire a portfolio of 1,225 single-family rental homes located mostly in the Southeast US from funds affiliated with Connorex-Lucinda, LLC, or Conrex. It is paying $140 million for the portfolio.
The transaction is expected to close during the third quarter of 2018, after which Conrex will continue to provide property management services to the properties.
AG Mortgage will finance the deal with $37 million of cash on hand and $103 million of 5-year, fixed rate debt.
The company, which has been examining the single-family rental asset class since last year, says it is complementary to its existing strategies and leverages the expertise of the Angelo Gordon platform.
“The acquisition of single-family rental homes further bolsters [our] strategy as a leader in investing in a wide range of housing and credit transactions,” says David Roberts, CEO of AG Mortgage. Adds CIO T.J. Durkin: “We look forward to the expansion into SFR as a meaningful way to deploy capital into our target assets.”
Still Targeting SFR
Both private-sector companies and public-sector REITs continue to scoop up single-family homes even as housing prices continue to rise and even though the favorable market dynamics that existed during the foreclosure crisis — favorable for these companies that is — are no longer in place.
These companies have identified an ongoing need, or at least desire, on the part of middle-income families to rent homes instead of apartments and instead of buying. “A growing demographic of financially stable young adults, coupled with high barriers for homeownership and limited supply of entry-level housing, has created significant demand for quality single-family rental homes,” Dana Hamilton, Head of Real Estate at Pretium Partners said in a prepared statement.
This summer Pretium closed its second fund focused on this asset class, with total equity capital committed exceeding $1 billion. This also included targeted commitments from separately managed accounts pursuing SFR strategies.