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One of the country's biggest homebuilders is jumping into the white-hot single-family rental market.
Lennar Corp. plans to spin off its noncore businesses from its homebuilding and financial services divisions, and as part of that process, it is launching a joint venture to acquire and manage single-family rentals across the U.S., Reuters reports. The JV, called Upward America Venture, will be backed by $1.25B of equity from a group of investors led by private equity firm Centerbridge Partners.
Allianz Real Estate is joining Centerbridge in backing Upward America Venture by contributing $300M in equity from funds its parent company manages, Allianz announced in a separate press release. The Allianz announcement said the JV is "positioned" to acquire $4B worth of single-family homes.
To facilitate those acquisitions, Upward America will have an inside track on the 300,000 home sites that Lennar Corp. owns, the company said on a post-earnings call reported by Reuters. No public target has been set for acquisition speed or geographical focus.
Lennar's core company, once it is stripped of side businesses, is expected to be worth between $3B and $5B, depending on the inclusion of its mortgage business. Either way, it will not carry any debt at the outset, Reuters reports. The side businesses Lennar has launched through the years include multifamily investment and development.
Single-family rentals spent decades among the most splintered portions of the real estate market, but since Blackstone launched Invitation Homes to serve that sector in the aftermath of the Great Financial Crisis, it has become considerably more institutionalized. Blackstone exited Invitation Homes in 2019, having doubled its initial $3.5B investment.
In January, commercial real estate services firm JLL launched a single-family rental advisory arm, followed months later by the announcement that it had taken a minority ownership stake in single-family rental platform and management services startup Roofstock.
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