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Onyx+East, Pretium Launch $600M SFR Venture

Updated: Jun 7, 2022

By Ted Knutson

January 21, 2022, at 06:44 AM

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It’s the latest in a string of investments in single-family rental space.

Homebuilder Onyx+East and investment Manager Pretium announced plans for a joint $600 million venture to develop, build, and operate over 2,000 new single-family, build-to-rent communities across Midwestern markets and Florida’s West Coast.

This year, the operation aims to develop six communities across markets in Indiana, Ohio, and Florida, totaling more than 700 new homes.

Progress Residential, Pretium’s single-family rental platform, will operate and manage the new single-family, build-to-rent communities on behalf of the joint venture.

The venture is the latest in a string of investments that are pouring money into the single-family rental home asset class amid insatiable demand for these properties and a stellar business model.

The latest is MORE Residential, a Texas-based owner and operator of residential rental properties, and San Francisco-based investment firm Stockbridge Capital Group, which recently formed a programmatic joint venture to acquire single-family rental communities in high-growth US markets.

The joint venture will have more than $4 billion of initial gross purchasing power, with the potential to further scale over time. It will seek to acquire build-to-rent communities consisting of 50 or more homes in locations characterized by strong population and job growth.

In another SFR venture development announced late last year, Greystar Real Estate Partners and Canada Pension Plan Investment Board (CPP Investments) revealed they are getting started in the purpose-built single-family rental market with a new joint venture to develop and acquire communities in this booming segment in the US.

CPP Investments and Greystar have allocated approximately $840 million in equity to the joint venture. CPP Investments will own a 95% stake and Greystar will own the remaining 5%.

This is CPP’s first investment in the single-family rental sector alongside its existing partner, Greystar.

The latter part of 2021 also saw RESICAP expand its strategy in a deal with real estate private equity firm Rockpoint Group.

In October 2020, RESICAP, a provider of single-family rental services, formed a joint venture with Rockpoint targeting the acquisition of $1 billion of single-family homes. Last November, the two companies committed to a series of follow-on joint ventures, collectively targeting an additional $2.5 billion of SFR acquisitions.

Kori Covrigaru, co-founder and CEO of PlanOmatic, told in an earlier interview that capital is flooding into the single-family rental space because inflation is on the rise, and investors see rent as a hedge. Additionally, he said the record low-interest rates that may never be available again have investors capitalizing on the opportunity.

“Companies involved in real estate management are naturally flocking toward single-family rental properties because they understand cap rates, and now that we are seeing proven cap rates in residential real estate and decade-long proof that this is an asset class that can yield generous profits and great cash flow.”

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