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3/17/21
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PCCP LLC, together with the California State Teachers' Retirement System (CalSTRS) and a global institutional investor, has formed a joint venture to invest in purpose-built, single-family rental communities located in primary and secondary markets across the United States. The venture will initially have more than $1 bil in purchasing power.
“PCCP has identified a scalable opportunity in the build-for-rent (BFR) space as this sector provides attractive supply/demand characteristics,” said PCCP Partner Jim Galovan. “With a nationwide shortage of single-family housing supply, we see the strongest demand for this BFR sector coming from Millennials and Baby Boomers, however, it is also attractive to a wide range of renter demographics.”
Galovan observed that the housing shortage is most acute in rental units ranging from 1.2k sf to 2k sf as developers find this size range to be less economical to build. This size range is also usually larger than units offered in apartment communities. “The convenience of a professionally managed and amenitized community, combined with mid-size housing options that are scarce in traditional residential, is attractive and expected to command stronger rental rates in comparison to traditional apartments or scattered single-family rental options.”
While the investment thesis is more structural than COVID-driven, the housing market is experiencing an added post-COVID demand surge for this product type, given a consumer desire for physical distance from neighbors and low density living with space to work from home and non-communal outdoor space.
The venture’s targeted portfolio will be executed via both acquisition and development opportunities, with a long-term strategy to build, lease, stabilize and aggregate BFR communities. The BFR communities will be newly constructed, well-amenitized and institutionally managed. PCCP’s investment team will target markets that possess certain common criteria including strong job, population and rent growth and low to moderate cost of living.
Within this new platform, PCCP has already closed five single-family investments to date that total over $240 mil. Completed transactions are located in Jacksonville, Nashville, Atlanta, and Raleigh.
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