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Invitation Homes, Rockpoint to Target More Expensive SFRs

Updated: Jun 11, 2022

By Paul Bergeron

March 08, 2022 at 06:34 AM

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The new venture to acquire higher price-point single-family rental homes in premium locations.

Invitation Homes and Rockpoint Group are forming a new joint venture partnership that will acquire homes at higher price points than what the companies usually target.

Dallas Tanner, President & CEO of Invitation Homes, said in prepared remarks that this new JV will enable it to serve the growing number of renters by choice who place a high premium on location.

Kori Covrigaru, co-founder and CEO of PlanOmatic, tells GlobeSt that offering a single-family rental product that is likely 30% to 60% higher in monthly rental prices “seems to be a good idea for the demand coming from aging millennials as well as boomers who are seeking the rental lifestyle with flexibility and convenience. Both ends of the generational spectrum are creating this demand and this joint venture partnership is poised to successfully deliver.”

Covrigaru said this joint venture partnership is likely a hedge against the inflation we are currently seeing.

“Diversifying your portfolio is always smart,” he said. “The reality is that when there is an eventual downturn in the housing market, it is usually always felt and seen in the higher-priced markets first. By providing SFR units at a higher price point, Invitation Homes and Rockpoint Group are likely to experience firsthand any slowdown and be able to adjust their larger portfolios, accordingly.”

Targets Include West, Southeast, Florida, Texas

The JV will be capitalized with a total equity commitment of $300 million, of which $50 million (16.7%) will be committed by Invitation Homes and $250 million (83.3%) will be committed by Rockpoint.

A total of approximately $750 million (including debt) is expected to be deployed by the JV to acquire and renovate single-family homes in neighborhoods where rents average 30% to 60% higher than those targeted by Invitation Homes’ traditional investment strategy.

The companies plan to focus on submarkets within the Western US, Southeastern US, Florida, and Texas. Invitation Homes will provide investment, asset management, and property management services to the JV, for which it will earn asset management and property management fees and have the opportunity to earn a promoted interest subject to certain performance thresholds.

Reputable Brands Winning Favor

A renter able to pay a premium is likely to be more attracted to an experienced landlord backed by a reputable brand and powered by a technology platform versus a traditional mom-and-pop landlord, Covrigaru said. “Invitation Homes and Rockpoint Group will be successful at this price point due to the brand experience they already deliver across their portfolios,” he added.

Latham & Watkins LLP acted as legal advisor to Invitation Homes, and Gibson, Dunn, & Crutcher LLP acted as legal advisor to Rockpoint.

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