One of the country’s largest homebuilders is making a giant bet on the single-family rental market.
Lennar is launching a $4 billion platform that will buy single-family homes and townhomes to turn into rentals. Called Upward America Venture, it will target “high-growth markets,” the company announced.
Miami-based Lennar said the venture will initially be capitalized with a $1.25 billion equity commitment led by Centerbridge Partners and Allianz Real Estate.
CEO Rick Beckwitt said a portion of the properties will have a rent-to-own option, which gives tenants the opportunity to buy without having to fork over a substantial down payment.
The pandemic has led to surge in interest in single-family home rentals. Some city dwellers, unable to buy but searching for more space than an apartment can offer, have moved into rental homes in the suburbs.
Large investors and developers have also seized on the moment.
Over the last year, more than 50,000 rental homes were built, roughly two-thirds more than the average over the past four decades.
California State Teachers’ Retirement System and Pacific Coast Capital Partners recently formed a $1 billion joint venture to invest in the build-to-rent sector. And earlier this month, Quinn Residences said it would build thousands of rental homes in the Southeast after securing a $500 million commitment from an unnamed sovereign wealth fund.