JLL Income Property Trust Invests in $1.2B SFR Portfolio
- Aug 12, 2021
JLL Income Property Trust became the latest entry into the growing single-family rental homes market with the $560 million acquisition of a 47 percent stake in a SFR portfolio with more than 4,000 homes owned and managed by affiliates of Amherst Residential.
JLL IPT’s investment is based on an overall portfolio valuation of $1.2 billion. Amherst will continue to manage the properties.
The investment was funded with approximately $205 million of equity and an assumption of its proportionate share of 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 current valuation, the portfolio loan-to-value ratio is approximately 63 percent.
The portfolio is spread across 14 major markets in 10 states with homes in multiple locations within the markets. Nearly 80 percent of the stabilized portfolio is located in the Atlanta; Dallas; Phoenix; Charlotte, N.C.; and Tampa, Fla., markets. Assembled by affiliates of Amherst Residential, an institutional investor and manager of SFR homes, the portfolio is 96 percent leased and occupied with no displacement expected as part of the transaction.
“LaSalle Investment Management and JLL Income Property Trust have been underwriting SFR deals for several years. This was an excellent opportunity to enter the market at scale through a pre-assembled, diversified and renovated portfolio with an experience partner,” Allan Swaringen, president & CEO of JLL Income Property Trust, told Multi-Housing News.
“This portfolio was attractive because the properties are located in markets that LaSalle Research and Strategy has identified as having key demand drivers, such as employment growth, limited housing supply and positive population growth,” he added. “We strongly believe the Sun Belt and areas of states with these demand drivers like Ohio provide excellent opportunity for investments in the single family rental space.”
Swaringen said JLL IPT would continue to watch the SFR sector closely and has the capital to make additional investments as similar attractive opportunities are identified.
In prepared comments, Swaringen said they believe single-family rentals are an excellent complement to the REIT’s existing apartment portfolio. With the newest transaction, Swaringen said JLL IPT’s residential allocation was now more than 40 percent of the portfolio. He said that had been a strategic overweight objective for the past several years.
In May, JLL IPT acquired Princeton North Andover, a 192-unit luxury apartment community in the Boston suburb of North Andover, Mass., for $72.5 million, or $375,000 per unit. At the time, Swaringen said the property fit in well with the REIT’s growing apartment portfolio and its strategy to invest in amenity-rich, newer communities with high barriers to entry for new competition.
A subsidiary of Amherst Holdings, Amherst Residential is a privately-owned, vertically integrated owner and operator of more than 37,000 SFR homes in 30 markets and 20 states with more than $9.8 billion in assets under management. Amherst Residential had the fourth largest single-family rental platform in the United States.
In February 2020, Amherst Residential entered into a merger agreement to acquire Front Yard Residential in a deal valued at $2.3 billion. The deal would have added 15,000 SFR homes to Amherst’s portfolio. The agreement fell apart in May 2020 and Front Yard was acquired earlier this year by Pretium and Ares Management Corp. in a $2.5 billion deal and taken private, marking the SFR industry’s first public-to-private transaction.