Amherst Expands SFR Properties Portfolio to 16,000 as Institutional Investment Market Shifts
Amherst Holdings acquired a portfolio of 1,523 single family rental (SFR) properties from an undisclosed institutional owner and operator of the rental properties for $153.4 million or about $100,722 per home.
The acquired portfolio consists of rental properties in nine markets where Amherst currently owns and manages properties, including Atlanta, Charlotte, Dallas, Jacksonville, Orlando, Phoenix, San Antonio, Southeast Florida and Tampa. Austin-based Amherst will also enter two new markets as a result of the deal — Columbus, Ohio and Tucson.
“Single family rental assets continue to demonstrate strong performance in our target markets, and we intend to continue investing substantial capital into this asset class,” said Drew Flahive, president of Amherst Single Family Residential. “Because of our platform’s size and attractive cost of capital, we are well positioned to execute on portfolio acquisitions of all sizes in the future.”
SFR Investor Market Shifting
Earlier this month, Amherst Holdings’ affiliate Amherst Capital Management LLC, a BNY Mellon investment boutique, released a new paper, “U.S. Single Family Rental-Institutional Activity in 2016/2017,” which reported that institutional ownership of SFR homes surpassed 200,000 homes in 2016. According to Amherst Capital data, total institutional investment in SFR homes reached $33 billion at the end of 2016.
“Institutional activity in the SFR market continues to increase, driven by relatively attractive valuations, modestly strong home price appreciation and stable financing,” said Sandeep Bordia, head of research and analytics at Amherst Capital. “Our data shows that newer entrants and mid-sized institutions accounted for the majority of institutional SFR home purchases over the last year, compared to a slowdown in buying activity among larger institutional holders. We believe that evolving demographics, financial factors and shifting consumer preferences, will keep demand for SFR homes elevated over the coming years.”
The paper also notes of several shifts occurring in the SFR space. Newer entrants and mid-sized institutions have increased their market share of SFR homes, while bigger players have slowed down their investment in the sector. Also, the Amherst report said that institutional SFR buying has shifted to the Southeast and Midwest U.S., away from Western markets prioritized by early SFR entrants.