“Capital Flooding Built-For-Rent (BFR)”

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By Brett P Holmes, Managing Partner

Anyone who has been paying attention to the commercial real estate investment world recently has likely taken notice of the tremendous popularity of the built-for-rent (BFR) sector.  As an early investor in the space, we receive many calls and messages from individuals who are trying to better understand what’s going on...

The past 6 months alone has seen a dizzying sequence of announcements from major home builders, investment managers, and publicly traded companies announcing ambitious plans to invest heavily into the single-family rental (SFR) industry.  

A shortened timeline of the recent frenzy:

  • Dec 2019: Global Life commits to building 10,000+ BFR homes with a $2.5 billion partnership with Leste’s global investment arm

  • May 2020: Koch announces a $200 million investment into Amherst Holdings, already a massive SFR owner-operator; Meanwhile, JPMorgan teams up with American-Homes-4-Rent (AMH) with a $625 million+ investment to grow their BFR development pipeline

  • July 2020: The world largest real estate company, Brookfield, declares a $300 million investment into property manager, Conrex

  • Aug 2020: Invitation Homes (INVH) decides that it needs to DOUBLE its 80,000+ unit portfolio of SFR with a $300 million investment while Blackstone, the founder of INVH, shocks nobody with a $300 million return to built-for-rent through a partnership with Canadian leader, Tricon Residential

  • Sept 2020: Nuveen announced a $400 million investment into expanding its BFR holdings alongside Sparrow, a property developer/manager

  • Oct 2020: Rockpoint announced a $250 million partnership with Resicap just weeks after declaring that they would be placing another $1 BILLION into SFR’s through a $375 million partnership with INVH, the largest player in the industry.

  • Finally, a $2.3 billion acquisition of Front Yard Residential (RESI) by Amherst fell through in February only to be revived last month with a $2.4 billion acquisition by Pretium instead!

The whole point of this somewhat numbing recollection of massive capital inflows is to emphasize a very real hype surrounding the BFR/SFR sector.  The investment world strongly believes in its long-term potential and sophisticated capital is pouring in to back it up.  Demographic and economic futurists do not see any signs that the demand for rental housing will let up and quite frankly, the product offerings keep getting better.

At SCM, we’re anxious to see how this all plays out.  In the meantime, we’ll be focusing on our current BFR projects and we’re optimistic that we’ll find more opportunities in 2021!


Brett P Holmes, Steel City Management LLC