Invitation Homes, PulteGroup Partner to Provide SFR Supply
The companies have already reached an agreement on the construction and sale of more than 1,000 homes across seven communities over the next several years.
In yet another sign that single-family rental owners are seeking out new arrangements to source product, Invitation Homes and PulteGroup have formed a partnership in which PulteGroup will supply the REIT with new houses.
Specifically, Invitation Homes expects to purchase approximately 7,500 new homes over the next five years from PulteGroup, the nation’s third-largest homebuilder. The company will design and build expressly for this purpose.
Invitation Homes and PulteGroup have already reached an agreement on the construction and sale of more than 1,000 homes across seven communities over the next several years. The first sales are expected to close in 2022. Initial projects are scheduled for delivery in Florida, Georgia, Southern California, North Carolina and Texas.
The deal also gives PulteGroup entrance into the burgeoning SFR market.
“We have been evaluating potential structures for participating in the single-family rental market that would seek to capitalize on our strengths in community development and new-home construction while delivering high returns,” said Ryan Marshall, PulteGroup President and CEO, in a prepared statement. He added that the new partnership will increase its scale in its existing markets, make investing in larger land parcels more practical, and generate attractive risk-adjusted returns.
As the SFR market becomes more competitive, its build for rent component is attracting more and more players.
Earlier this month, SVN | SFR Capital Management, for example, launched a commercial real estate investment firm focused on the build-for-rent rental home asset class.
The firm will target 35,000 newly-constructed BFR homes in the Southeast, Sunbelt, Central and Midwest states. Atlanta, Charlotte, Phoenix, Denver, Nashville, Jacksonville and Tampa are a few of the metros it will focus on.
Another SFR firm, Haven Realty Capital, has also been successful in forming partnerships with builders to quickly scale its portfolio of homes.
“SFR operators like Haven can be a great sales channel for builders who are open to selling an entire rental community to one buyer instead of to numerous individual buyers,” Sudha Reddy, managing principal of Haven Realty Capital, told GlobeSt.com in an earlier interview. “This type of transaction can decrease the total hold period for a builder as operators can typically acquire phases of homes more quickly than individual buyers can buy phases of home.”