GTIS Partners and 643 Capital Management have created a single-family rental home investment and management company, the private equity real estate firms said Wednesday.
New York-based GTIS and San Francisco-based 643 Capital have partnered on single-family rental investments since 2012, GTIS founder Tom Shapiro told PERE. Now, the firms have consolidated a portfolio of 3,500 homes under the recently-formed StreetLane Homes, which will be based in San Francisco. Both GTIS and 643 Capital are equity investors with undisclosed stakes in the new company. It was unclear at press time how many homes each firm contributed to the overall portfolio.
StreetLane Homes’ portfolio is spread across Atlanta, Dallas, Houston, Chicago, Las Vegas, South Florida and Nashville, Tennessee, making it one of the top 10 largest single-family home owners in the US, according to the Wednesday statement. In 2017, Shapiro said new single-family rental markets for the firm could include Tampa, Florida, and Charlotte, North Carolina.
In a total market of 16 million single-family rentals, Shapiro said about 200,000 homes are owned by major institutions. He estimated the market’s value ranges between $2.5 trillion and $3 trillion, creating opportunity for StreetLane Homes.
“A lot of investors have been circling around this, questioning whether it’s going to be a long-lasting business,” he said. “What we like about the business is that it works no matter which way the market is going.”
Shapiro identified millennials as the driver of future growth in the single-family rental business, noting that the older cohorts in the demographic are starting families, leading them out of multifamily units. Because many of these would-be homeowners lack the down payment and credit to buy a home, renting has become more appealing.
“Millennials rent everything these days – Airbnb for their houses, Uber for their cars,” Shapiro said. “More and more, this generation doesn’t have a strong conviction about the importance of homeownership, and they’re more transient.”
GTIS assembled its single-family rental portfolio through one-off deals, small portfolio transactions and ground-up development, made on behalf of its two US residential funds and separate accounts.
Shapiro said he does not seek to develop an entire rental home subdivision, but rather to create a mix of rental and for-sale homes within the same subdivision. To do so, the firm works with builders to develop the subdivisions and then purchases a percentage of the homes for below market rate. Those homes would then become rental properties, he said.
GTIS manages about $3.8 billion in assets, according to Wednesday’s statement. 643 Capital oversees about $1.6 billion.