Beazer Homes, an Atlanta-based home builder, is building a $150 million bundle by buying rental homes. An announcement last week by Beazer noted that the company is has created a real estate investment trust (REIT) to buy, renovate and rent single-family homes. Beazer developed the REIT with Kohlberg Kravis Roberts & Co., (KKR), a well-known buyout firm. The name of the new entity is Beazer Pre-Owned Rental Homes Inc. To date, Beazer has acquired 192 single-family homes in Phoenix and Las Vegas. Generally, these acquisitions have come through foreclosure auctions, short sales and other distressed property avenues.
Interesting to note that Beazer originally built about 10% of the homes it has purchased to date, as reported by The Journal. Furthermore, Beazer claims the number of rental homes it controls could eventually number in the thousands. “It’s not a short-term, opportunistic thing,” Allan Merrill, Beazer’s chief executive, told the Journal. “It’s building a durable rental stream.”
To the uninformed, this is a ‘hot’ new trend with many investors and private-equity firms moving into the distressed home market in hopes of capitalizing on the housing market crisis. U.S. Census Bureau data indicates that there are approximately 25.5 million single-family rental properties compared with 18 million apartment rental units.
Of the Beazer Pre-Owned Rental Homes Inc. portfolio, the 192 homes have a market value of about $20 million. KKR and other investors have contributed $65 million.
Michael Hobbs, PahRoo Appraisal & Consultancy
Twitter @PahRoo
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