Key takeaways: Last night Long Bias name Invitation Homes (INVH) announced a new and very important partnership with PulteGroup (PHM), the third largest homebuilder in the U.S. INVH agreed to acquire built-for-rent homes over a five year duration with the first tranche set to begin closing next year. Although the total number of homes to be delivered represents less than ~10% of INVH's current footprint, we view the announcement as important on several fronts: (1) it underscores the importance of sourcing homes outside of the traditional bulk or single-home acquisition channels, (2) further validates the investment case for built-for-rent homes given current demographic and inventory trends, (3) is likely only the first step in a broader and longer-term move for INVH, and finally (4) reinforces the strategic rationale behind Best Idea Long AMH and its multiyear head start through its development program. Building homes on-balance sheet and/or sourcing bulk inventory from established homebuilders will be critical for maintaining long-term external growth rates and taking advantage of the favorable cost of capital currently being afforded SFR by the market:
- INVH acquiring ~7,500 built-for-rent homes over five years beginning in 2022
- Initial projects scheduled for delivery in Sunbelt states of Florida, Georgia, Southern California, North Carolina and Texas
- Compares to INVH's existing portfolio of ~80k homes as of 1Q21
- We think it is very likely that similar agreements signed with PHM or other builders (if allowable under terms of this agreement) in the coming quarters
Please call or e-mail with any questions.
Rob Simone, CFA
Managing Director
Twitter: @HedgeyeREITs
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