JPMorgan forms joint venture for $1 billion in rental houses

JPMorgan Chase's asset-management arm entered into a deal to acquire more than $1 billion of single-family rentals, a sign that choppy markets haven't scared investors away from suburban housing.

Elijah Nouvelage/Bloomberg

Institutional investors advised by the bank formed a joint venture with Haven Realty Capital to buy and develop entire communities of new homes, according to a statement Tuesday. The partners are seeding the venture with three communities in the Atlanta area, and will eventually deploy $415 million in equity, enough to acquire more than 2,500 houses.

In 2020, JPMorgan teamed up with American Homes 4 Rent to acquire build-to-rent communities on behalf of investors. Haven's portfolio already includes 3,500 homes in various stages of completion through joint ventures with other partners.

Single-family rentals gained favor early in the pandemic as property funds looked for ways to capitalize on heated demand for suburban living. Buying or developing whole communities — a strategy known as build-to-rent — was especially appealing, in part because the projects were seen as easier to manage than a portfolio of houses scattered across a metropolitan area.  

But appetite cooled this year when rising borrowing costs and softening rents made investors more cautious. Purchases slowed, even as landlords predicted that the housing slowdown would eventually provide good chances to buy at discounts.

"I don't think anything has changed fundamentally in terms of long-term demand for this product," said Sudha Reddy, Haven's founder. "We want to be delivering new housing stock and we want to own these assets."

Reddy predicts buying opportunities will soon materialize as builders get comfortable cutting prices to offload inventory. It's too early to say where prices will settle, he said, but discounts could fall between 8% and 20%.