New York-based investment firm GTIS Partners has sold a 1,081 single family rental portfolio to an undisclosed buyer for approximately $300 million.
The homes are located across Atlanta, Georgia and Nashville, Tennessee.
With the sale, GTIS has now completed the disposition of substantially all the homes it acquired in the wake of the Housing Crisis. Over the last three and a half years GTIS has sold 2,630 additional homes to institutional buyers for approximately $400 million and another 376 homes have been sold or are in the process of being sold through retail channels.
GTIS first entered the SFR space in 2012. Home values were depressed, presenting the opportunity to acquire homes at attractive prices either in foreclosure or through REO acquisitions to be rented until the housing market’s eventual recovery. Since 2012, GTIS has owned and/or managed over 4,700 SFR homes scattered across nine markets. As the recovery progressed and market conditions evolved, GTIS gradually exited its investments in scattered SFR homes and is instead continuing to execute its SFR strategy by developing communities of purpose-built SFR homes or build-to-rent (“BTR”) communities.
Tom Shapiro, President and CIO at GTIS, said, “Our SFR investments have been strong performers to-date and have generated attractive risk-adjusted returns for our investors. Institutional investor interest in the asset class has gained momentum and we continue to see strong consumer demand for SFR product. This sale represents an important milestone for our firm as we exit the first phase of our SFR platform and shift our focus to providing new purpose-built rental product to a market that is in desperate need of new, high quality supply.”
The sale comes as US home purchases by investors rose 2.7 percent year over year in the first quarter, marking the first period of growth since the coronavirus pandemic began, according to a report from Redfin.
The flurry of business follows three consecutive quarters of declines, during which investor purchases slumped by as much as 45.5 percent.
Investors bought about one of every seven U.S. homes (14.9 percent) in the first quarter of 2021—a rebound from the prior three quarters, during which they bought closer to 1 in 10 homes. Investor market share is now just shy of the 16.1 percent level it hit in the first quarter of 2020, when the pandemic had barely begun.
Redfin Senior Economist Sheharyar Bokhari said investors jumped back into the sector as a shortage of homes for sale intensifies. “With so few houses on the market, many families are resorting to rentals. Flush with cash, investors are able to snap up the homes that are available, and then turn around and rent them out to folks who can’t find a home or are priced out of homeownership,” said Bokharo.
“This is likely making the housing shortage even worse, and also means that individual homeowners sometimes end up competing with investors in bidding wars.”
Investors initially pumped the brakes at the beginning of the pandemic because the housing market had ground to a halt. The market then came roaring back, but investors were slower to rejoin the party, likely due to lingering economic uncertainty. Many investors purchase homes with the intention of renting them out, so when rents plunged, unemployment skyrocketed and evictions were halted due to the pandemic, some opted for a cautious approach.
While investors have been buying more single-family homes during the pandemic, they still have the biggest market share in the multifamily sector. They bought a quarter (25.8 percent) of multifamily properties that sold in the U.S. during the first quarter. By comparison, they purchased 14.8 percent of both single-family homes and condos, and 12.5 percent of townhomes.