InvestmentsReal Estate

Altisource Residential growing single-family rental business again

Signs agreement to acquire up to 3,500 rental properties

Last year, Altisource Residential doubled its portfolio of single-family rental homes in one deal, buying a portfolio of 4,262 single-family rental properties for an aggregate purchase price of $652.3 million from “investment funds sponsored by Amherst Holdings.”

The purchase was part of the company’s plan to massively increase its single-family rental holdings.

And Friday, the company announced that it is growing its single-family rental portfolio again, in another deal with Amherst Holdings affiliates.

According to Altisource’s announcement, the new deal will allow the company to to acquire up to 3,500 single-family rental properties from “entities sponsored by Amherst Holdings.”

Altisource said that as part of the deal, it already completed the first closing under the purchase agreement, acquiring 757 “stabilized rental properties” for an aggregate purchase price of $106.5 million.

Under the terms of the agreement, Altisource will purchase up to approximately 2,750 additional stabilized rental properties from the sellers in additional closings in 2017.

According to Altisource, the homes purchased in this deal” will significantly increase the size of the company's stabilized single family rental portfolio in strategic target markets and will be consistent with Altisource’s existing portfolio of quality, affordable rental homes.”

According to George Ellison, Altisource’s CEO, the deal is the next step in the company’s stated plan to expand its SFR business.

“RESI continues to execute on its stated objectives. This second large acquisition from Amherst is further evidence of our ongoing commitment to strong growth and our ability to identify and acquire the right rental properties to capitalize on attractive single-family rental economics,” Ellison said.

“These properties are an excellent fit for the RESI brand, and we will focus on our cost-effective property management and financing structures to operate the portfolio efficiently and generate long-term value for our stockholders,” Ellison added.

According to Altisource, the seller financing for the initial closing represented 75% of the purchase price and was provided pursuant to a loan agreement with a term of up to five years and a floating interest rate of one-month LIBOR plus a fixed spread of 2.75%.

“The current macroeconomic backdrop coupled with shifting behavioral trends of U.S. consumers have resulted in continued positive momentum in the performance of single family rental assets. This performance has driven significant institutional investor interest in the asset class,” said Drew Flahive, President of Amherst Single Family Residential.

“Amherst’s vertically integrated business model provides a turnkey investment opportunity, which we believe will facilitate the growth of institutional investment in single family rental assets,” Flahive added. “We are investing meaningful amounts of capital in this asset class as we remain very constructive about its forward prospects.”

The company added that each subsequent acquisition will be subject to the same seller financing terms as the initial loan agreement.  Additionally, the company noted that it is retaining the current property manager, Main Street Renewal, for the acquired properties.

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