On Wednesday, the second-largest homebuilder in the United States, Lennar Corp., announced that it is launching a new investment platform for single-family home rentals in high-growth U.S. markets. The platform, to be called the Upward America Venture, will be capitalized with an initial equity commitment of $1.25 billion, led by its venture partner Centerbridge Partners, the private equity and real estate investment firm that currently manages $28 billion in client assets.
Other investors in the platform include Allianz Real Estate, and other (unnamed) “high quality institutional investors.” The venture will seek to acquire more than $4 billion of new single family homes and townhomes from Lennar and (possibly) other homebuilders.
The venture will focus on making new homes affordable to households earning approximately the median income in each respective market, which Lennar says is “consistent with its focus” on making the single family lifestyle possible for a broader social and economic array of families.
“The Upward America Venture continues Lennar’s vision of becoming an ESG driven homebuilding company by making our high quality homes not only available for sale but also for rent, with a portion of the homes available with a rent to own option,” said Lennar co-CEO and co-president Rick Beckwitt, in a statement on the venture. “The vehicle’s social focus provides a unique opportunity for families and individuals across the country to live in brand-new homes at an attainable price point, all without putting up a down payment. We have a distinct opportunity to create upward mobility in the housing market through this initiative.”
Beckwitt said he believes the venture has the potential to scale at a pace likely not possible for its competitors in the single family rental space, given its direct access to Lennar’s pipeline of more than 300,000 owned and controlled homesites.
“As the housing needs and demographics in the United States continue to evolve, we believe that the single family rental sector will continue to outperform. We are thrilled to partner with Lennar given their scale and capabilities to aggregate a geographically diverse portfolio of homes concentrated in some of the fastest growing markets in the country,” said William Rahm, Senior Managing Director and Global Head of Real Estate at Centerbridge, which has identified single-family residential rentals as one of its highest conviction themes.
JLL-Roofstock deal
The Lennar-Centerbridge platform is the second major transaction in the SFR market–a sector valued at $4 trillion–in March to date. Earlier this month, JLL, the $16.6 billion real estate investment and services company, announced a strategic minority investment in SFR proptech and online transaction platform Roofstock, whose co-founder and CEO, Gary Beasley, was featured on a recent episode of the Investable Universe podcast.
According to a joint statement from the companies, the transaction is strategic for both parties. JLL will offer its investment clients access to the U.S. SFR market at scale through Roofstock’s application, while Roofstock will gain access to JLL’s global footprint to fuel its continued growth. Under the terms of the agreement, Roofstock agreed to buy Stessa, the asset management software-as-a-service (SaaS) platform that JLL technology division (JLLT) had owned since 2018.
