JLL Income Property Trust has acquired an approximately 47 percent interest in a single-family rental portfolio.
The existing portfolio of over 4,000 homes was assembled and is managed in a venture with affiliates of Amherst Residential, an Austin, Texas-based investor and manager of single-family rental homes and an institutional investor.
Income Property Trust’s 47 percent investment was acquired for approximately $560 million based on an overall portfolio valuation of $1.2 billion.
“This is a unique and attractive opportunity for us to enter the single-family rental market at scale through a previously acquired, renovated and stabilized portfolio with broad nationwide diversification,” noted Allan Swaringen, President and CEO of JLL Income Property Trust. “LaSalle’s Research & Strategy team has identified single-family rentals as a ‘near-core’ property sector poised for accelerating institutional capital inflows along with an attractive risk adjusted return profile. Given the superior long-term tenant demand growth outlook, our research projects long-term expected rent and NOI growth above all other institutional property type averages.”
“Those strong fundamentals are also supported by favorable demographics as a diverse set of cross-generational tenants seek single-family home living, increased demand as people look for more living space amid and post-pandemic, along with a constrained supply of new homes and rising construction costs.” Swaringen added, “We are focused on investing in sectors that benefit from strong, secular tailwinds and we believe that single-family rentals are an excellent complement to our existing broadly diversified apartment portfolio. With this transaction we have grown our residential allocation to over 40 percent of our portfolio, a strategic overweight objective for us over the last few years.”
The portfolio is broadly diversified across fourteen major markets in 10 different states with homes spread across multiple locations within these markets. Nearly 80 percent of the portfolio is located in LaSalle’s research identified single-family market recommendations which include Atlanta, Dallas, Phoenix, Nashville, Charlotte, and Tampa.
”This broadly diversified portfolio offers a compelling risk-return profile relative to traditional large-scale apartment communities given limited asset-specific risks as compared to the traditional supply and geographic risks inherent with numerous units concentrated in one location,” said the company in a press release.
”The portfolio is currently over 96 percent leased and occupied with no displacement anticipated as a result of the transaction.”
JLL Income Property Trust’s investment was funded with approximately $205 million of equity and an assumption of its proportionate share of attractive in-place financing – a $761 million securitized loan, interest only at a fixed rate of 2.1 percent maturing at the end of 2025. At the current valuation the portfolio loan-to-value ratio is approximately 63 percent.
Amherst Residential is a privately-owned, vertically integrated owner and operator of more than 30,000 single-family rental homes in 30 markets and 20 states aggregating to more than $9.8 billion of assets under management.