Atlas Real Estate and DivcoWest Form $1 Billion JV To Enter SFR Market

Atlas Real Estate and DivcoWest have formed a $ 1 billion joint venture to acquire, renovate and manage single family homes across the American West. This signals the recent entry into the rapid SFR market and marks DivcoWest’s official entry into the sector.

As part of the transaction, San Francisco-based DivcoWest will invest $ 250 million in equity. The joint venture is expected to invest a total of $ 1 billion in home purchases and renovations in high-growth states such as Colorado, Arizona, Idaho, Nevada and Utah, where Atlas currently manages more than 4,200 units.

The SFR market– –traditionally in the area of ​​responsibility of smaller investors– –has has proven to be a stable, relatively safe investment vehicle in the COVID eraand the growth of the sector is expected to dwarf According to Walker & Dunlop, apartment buildings, offices, retail stores, warehouses, and hospitality businesses will grow through 2022. The company estimates the SFR market at around $ 3.4 trillion.

Institutional investors are flooding the room with it handyman Lennar launches a $ 4 billion SFR platform With lead investor Centerbridge in March and JP Morgan Asset Management, American Homes 4 Rent committed $ 625 million in equity to develop around 2,500 homes in high-growth markets in the West and Southeast over the past year.

SFR rental growth also continues to rise, although rising property prices have compressed interest rates somewhat. The average gross annual rental return among the 495 counties analyzed by ATTOM Data Solutions in a recent report is 7.7% for 2021, compared to an average of 8.4% in 2020. Within this sub-sector, return fell in 87% of counties year-on-year back -year.

Investors should take courage, however, Maksim Stavinsky, co-founder of Roc360, a FinTech platform that is superior to Roc Capital and Haus Lending. said in a previous interview.

“The falling yields are offset by improved financing conditions for such rental properties and portfolios,” said Stavinsky. “On our platform, the interest rates we offer borrowers have more than offset the declining cap rates year-on-year, with borrowers with the highest credit level seeing the terms in the low 4% range. This is happening despite a yield curve that has recently become steeper. “