By Bill Conroy
Toronto-based Tricon Residential Inc., which oversees a portfolio of more than 33,000 single-family rental homes in the United States and Canada, is once again teaming up with the Arizona State Retirement System (ASRS) to invest $500 million to build 2,500 single-family rentals in the U.S. Sun Belt.
This latest deal represents the second joint venture between Tricon and ASRS. In 2019, they teamed up to make a $450 million equity commitment to develop 2,000 new “build-for-rent” homes.
Tricon notes in announcing the latest joint venture with ASRC that it “has already invested $1 billion in developing new, high-quality rental housing and has a pipeline of over 7,000 new homes currently under development.”
“The United States has a housing crisis that cannot be ignored,” said Gary Berman, CEO and president of Tricon. “Americans are facing a shortage of nearly four million homes, and families are struggling to find and afford quality housing.
“We have decades of experience in residential real estate development across the country and are excited to partner with ASRS yet again to build a new supply of high-quality, professionally-managed rental housing in the communities where people want to live.”
Tricon is contributing to a nationwide surge in single-family build-for-rent (SFBFR) construction. Another large institutional operator of single-family rentals (SFRs), Scottsdale, Arizona-based Progress Residential, which operates some 85,000 SFR properties nationwide, announced in a recent press statement that it has some 2,600 build-for-rent homes under development.
An analysis by the National Association of Home Builders (NAHB) found that there were some 21,000 SFBFR construction starts across the country during the second quarter of 2022, up 91% from the same period in 2021.
“Over the last four quarters, 69,000 such homes began construction, which is a 60% increase compared to the 43,000 estimated SFBFR starts in the prior four quarters,” the NAHB report states. “…The SFBFR market is a means to add inventory amid challenges over housing affordability and down-payment requirements in the for-sale market, particularly during a period when a growing number of people want more space and a single-family structure.”
The institutional-backed SFR sector has continued to expand its reach in 2022 in the face of a sharp downturn in the home-purchase market sparked by rapidly rising interest rates.
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