Leading the Charge: The Evolving SFR/BFR Market

June 7, 2022

Leading the Charge: The Evolving SFR/BFR Market

June 7, 2022

Though heightened demand for Single-Family Rental (SFR) and Build-For-Rent (BFR) communities has recently thrust the asset class to the forefront of investors’ minds, the market itself is not new. In fact, Berkadia was an early mover in the space and has helped investors navigate the market for over a decade.

Historically, the SFR/BFR market has been dominated by mom-and-pop investors but in the last few years, we’ve seen tremendous interest from institutional investors, resulting in $50 billion of investment capital entering the market since 2020. As more institutional investors flock to the SFR/BFR sector for the first time, they are focused on understanding this segment of the commercial real estate industry, they are curious about how SFR and BFR are performing, and they seek local data on the most attractive regions for investing. Having access to this market research and experience is especially important as the landscape rapidly evolves, offering new product types and financing options as well as opportunities in primary, secondary and tertiary markets.

Over the past 12 years, Berkadia’s production volume for SFR and BFR has exceeded $2.7 billion and in the second half of 2021 alone, Berkadia closed $400 million in volume. Our growing presence in the space is made possible by our experienced investment advisors, mortgage bankers and JV equity/structured capital experts who are based in more than 65 U.S. markets and have sold and financed transactions in the 20 largest SFR and BFR markets across the country, such as Atlanta and Phoenix.

Our Track Record

Berkadia always has a finger on the pulse of the market and as it evolves and expands, we grow with it. So far in 2022, Berkadia has sold and financed more than $650 million of single-family rental and build-for-rent communities. Some highlights include:

  • In April, Berkadia facilitated the acquisition and refinancing of over 1,000 single-family rental homes worth over $200 million throughout the Midwestern, Southern and Southeastern regions of the United States. The closing of a deal of this magnitude demonstrates Berkadia’s proficiency in the SFR space, specifically within the scatter-site product type.
  • Berkadia Institutional Solutions also facilitated the sale of an SFR community consisting of 275 homes located in the Southeast. The closing of this deal, especially in a tertiary market where growth in home value is particularly strong, is a testament to Berkadia’s knowledge and deep expertise in this specialty asset class.

Unrivaled Service for Institutional Investors

The recent combination of Berkadia’s Client Services Platform and Berkadia Institutional Solutions has allowed us to deliver an even greater level of service to our institutional clients. We identify pain points specific to institutional investors, such as alternative financing methods for SFR sites, while also recognizing opportunities that enable them to better understand and break into the growing market.

Our proprietary research, which examined the SFR/BFR market in the context of rent growth, inflation sensitivity, rental yields, volatility and interest rates, equips our teams with the latest market insights and trends, and aids them in guiding investors to achievement of value-add solutions.

As the SFR/BFR landscape continues to evolve, successful investors will be those that truly understand the market, are open to pursuing innovative product types and financing solutions and seek to collaborate with companies that have an enduring transaction record and an abundance of industry experience.

-Jeff Coles, Vice President of Institutional Client Services

Jeff Coles of Berkadia on Single-Family Rental/Build-for-Rent Markets | Mortgage Bankers Association