Tickers: AMH, INVH
Headline: Old Wall Journal Article on SFR
This morning HERE the Old Wall Journal had an article on the build-to-rent corner of the single family rental market. At a high level, the market for build-to-rent homes is becoming crowded as new entrants pour incremental capital into an asset class offering 6-8% unlevered cash-on-cash yields upon stabilization, versus properties in the acquisition market being acquired in some cases at ~2-3% or lower cap rates on in-place NOI. There are some estimates that ~100k new SFR units comprising ~$30 billion of capital have started construction this year with the bidding process for land becoming even more competitive. As we have mentioned before, we favor Best Idea Long AMH which has already inventoried perhaps ~$1.5 billion of land at today's values, just at substantially lower cost with a long runway to deliver at above-average stabilized yields. Just last week the company noted it had lowered its going-in yield requirement by ~25bp but maintained its holding-period return assumptions through the underwritings, meaning that underlying rents are likely accelerating vs. past experience in order to maintain those returns.
Tickers: PGRE, SLG, VNO
Headline: Kastle Systems Back-to-Work Barometer
Office Utilization: Kastle Systems released its weekly office utilization tracker for the 7-day period ending 11/3, which showed a +100bp increase in the 10-city average utilization rate to 37.8%, which has been tracked since the pandemic began (Figure 1 below). As a reminder this tracks "bodies through turnstiles," and is different than "occupancy" which represents tenant leased/occupied space as a percentage of total square feet. The New York Metro had one of its best recent showings at + +380bp to 33.9%, while Washington, D.C. brought up the rear at flat sequentially. We have SLG and VNO on our Long Bench in Quad 2. Texas submarkets continue to show the highest average utilization rates, while San Francisco remains consistently at the bottom of the list at 25.8%.
Figure 1: Kastle Back-to-Work Barometer for Week Ending 11/3
Source: Kastle Systems
Prior Notes:
11.7.21 - SUNDAY NIGHT REIT READ | 11.7.21 | (APARTMENT RENTAL RATE TRACKER, POSITION MONITOR UPDATE)
11.4.21 - REIT RECAP | 11.4.21 | AMH 3Q21 RESULTS
11.4.21 - REIT RECAP | 11.4.21 | CUBE 3Q21 RESULTS
11.4.21 - REITS DAILY BRIEF | 11.4.21 | (COLD, IRM, EARNINGS SURPRISE MONITOR)
11.3.21 - REITS DAILY BRIEF | 11.2.21 | (LSI, POSITION MONITOR UPDATE)
11.2.21 - REITS DAILY BRIEF | 11.2.21 | (PSA, U.S. OFFICE UTILIZATION)
11.1.21 - REIT RECAP | 11.1.21 | PSA 3Q21 RESULTS
10.31.21 - SUNDAY NIGHT REIT READ | 10.31.21 | (3Q21 EARNINGS SURPRISES, POSITION MONITOR)
10.28.21 - REIT RECAP | 10.28.21 | CPT 3Q21 RESULTS
10.28.21 - REITS DAILY BRIEF | 10.28.21 | (EXR)
10.28.21 - REIT RECAP | 10/28/21 | INVH 3Q21 RESULTS
10.28.21 - REIT RECAP | 10/27/21 | AVB 3Q21 RESULTS
10.27.21 - REITS DAILY BRIEF | 10.27.21 | (3Q21 Earnings, AVB, EXR, Office)
10.26.21 - REIT RECAP | 10/26/21 | EXR 3Q21 RESULTS
10.26.21 - REITS DAILY BRIEF | 10.26.21 | (EQR, REXR)
10.25.21 - SUNDAY NIGHT REIT READ | 10.24.21 | (POSITION MONITOR)
10.21.21. - REIT RECAP | 10/21/21 | REXR 3Q21 RESULTS
10.20.21 - REITS DAILY BRIEF | 10.20.21 | (EGP, PLYM, REXR, ILPT)
10.19.21 - VIDEO | American Homes 4 Rent (AMH) Thesis
10.19.21 - REITS DAILY BRIEF | 10.19.21 | (COLD, SLG, VNO, AMH, U.S. Office Utilization)
10.18.21 - REITS DAILY BRIEF | 10.18.21 | (PLD)
10.17.21 - SUNDAY NIGHT REIT READ | 10.17.21 | (PLD, POSITION MONITOR)
10.15.21 - REIT RECAP | 10/15/21 | PLD 3Q21 RESULTS
10.13.21 - REITS DAILY BRIEF | 10.13.21 | (PLD)
10.10.21 - SUNDAY NIGHT REIT READ | 10.10.21 | (POSITION MONITOR UPDATE)
10.8.21 - BLACK BOOK ROUND-UP | AMERCO (UHAL)
10.7.21 - BEST IDEA ROUND-UP | AMERICOLD REALTY TRUST (COLD)
Please e-mail with any questions.
Rob Simone, CFA
Managing Director
Twitter: @HedgeyeREITs
