Home rentals

Single-family home rentals are coming back – but with a twist

KKR also invests in the home rental strategy in its credit and real estate businesses, said Daniel Pietrzak, partner and co-head of private credit at KKR.

“Our real estate and private lending strategies have worked together on opportunities in single-family rental housing, with a strong focus on both strategies to continue to find new opportunities and deploy capital on a large scale,” said Pietrzak .

In December, KKR’s opportunistic private credit strategy increased its funding for Toorak Capital Partners with a $ 250 million investment primarily from KKR Private Credit Opportunities II. Toorak makes small multi-family, mixed-use and residential loans in the US and UK; some customers buy homes to repair and resell them.

KKR also made a first minority investment with Black rock Inc. in single family home for rent company Home Partners of America. KKR made the investment based on its thesis dubbed the “light consumer,” aimed primarily at Gen Xers and millennials who prefer to lease major assets like homes and cars, choosing to spend their income on experiences rather than ‘in things, according to a KKR white paper co-authored by M. Pietrzak. Over the years, KKR has continued to invest in Home Partners with capital from its business development company and private credit opportunities funds. The company has purchased and manages more than $ 4 billion in homes, according to the white paper.

KKR’s US real estate equity strategy, through its KKR Real Estate Partners Americas series of funds, is also exploring opportunities to acquire portfolios and buildable homes, said Chris Lee, Partner and Head of Real Estate Americas. at KKR, speaking at the Urban Land Institute’s fall conference in October. Investors are increasing their property allocations to earn a return in today’s low interest rate environment, he said. This interest translates into increased competition for more secure and income-generating properties. Property managers like KKR are turning to narrower real estate sectors such as single-family home rentals and student housing, he said.

While not all investors are convinced that renting single-family homes will be a sustainable real estate industry rather than a current tactical investment, many are still interested in making small upfront investments to test the strategy, consultants said. The largest institutional investors are the most interested in the new home strategy.


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