KKR Stakes a Bigger Claim in the SFR Space With New Company

KKR & Co. is launching a single-family management company, My Community Homes, to purchase and manage rental homes across the US, according to Bloomberg.

While KKR wouldn’t provide comment to Bloomberg, the media outlet learned that the company is using its real estate and private credit funds to invest in the platform. KKR has been flirting with the SFR space, having previously backed Home Partners of America, which Blackstone just acquired for around $6 billion. Home Partners buys and rents out single-family homes, giving tenants a chance to buy the property. It has a portfolio of more than 17,000 houses throughout the US. 

These investments are the latest illustration of the strength of the SFR asset class, which is now on par with the multifamily sector in terms of investor interest and fundamentals. Walker & Dunlop estimates the SFR market to be valued at around $3.4 trillion—a staggering number when compared to the more established multifamily market, which is estimated at $3.5 trillion.

The single rental sector has drawn several new entrants this year. In February, as one example, the single-family rental platform Transcendent Investment Management and multifamily owner and operator Electra America established a fund, Transcendent Electra, to acquire newly built, single-family rental homes in suburban neighborhoods in Florida, Georgia, Texas, North Carolina, South Carolina and Tennessee. By April, it had already acquired nearly 2,000 homes. 

Crowdfunding platforms are also part of the space. In June, Arrived Homes announced it had raised $10 million in equity and $27 million in debt financing for a total of $37 million. 

Capital is also flocking to the emerging build for rent submarket in this space. BFRs are purpose-built housing to be operated as single-family rental investments, similar to traditional multifamily housing, and all of the homes within a BFR are contiguous, Walker & Dunlop notes. As a result, an estimated 5% to 10% of all new builds are BFRs.

“BFR is a relatively new concept among SFR investors, national homebuilders, and developers,” the report states. “It has become increasingly popular to investors in recent years, including traditional multifamily developers. While the BFR market only makes up about 5 percent of new homes built, it is rapidly growing and will continue to do so as new entrants begin BFR operations.”