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| John Oharenko |
. Chicago, IL - The Real Estate Capital Institute (RECI) notes in its monthly report that Inflation fears resurface as the main ingredients of realty development – land, labor, and materials – continue on an upward spiral.
The Fed expects to raise rates in two
years, but many experts predict hikes sooner.
In the meantime, benchmark interest rates and mortgage spreads hover near historic lows. As a result, real estate capital markets focus on extremely tight yields due to limited investment opportunities.
Single-family rental ("SFR")
housing represents the best examples of institutional investment opportunities
within a supply-constrained environment.
SFH is a relatively new asset class
for many institutional investors.
SFR class now ranks as a
favorable property type for the following reasons:
Competitive Yields:
Spreads of 200 basis points or more exist for builders selling to institutional investors, as retail pricing hovers in the high-3%-to-4.5% range. Such yields reflect wider spreads than buying comparable-quality multifamily assets.
Lately, however, pricing continues to
tighten as more players move into this sector. New construction
pre-sale takeouts offer higher yields but with greater investor risk.
Portfolio Diversification:
Institutional investors traditionally seek net lease, industrial and
multifamily assets as preferred property types. SFR ventures
now offer more diversified risk in a property sector seen as critical to
consumers and investors alike.
The housing shortage is a critical problem in the nation. SFR offers longer-term hold strategies for upside values as housing demands far outweigh supply.
According to John Oharenko,
Director at The Real Estate Capital Institute, "Single-family rental
investments, are the hottest assets on the market
today. Institutional investors jump in to catch the action, driving
down yields to record-low levels for this sector."
The Real Estate Capital Institute® is a volunteer-based research organization that tracks realty rates data for debt and equity yields. The Institute posts daily and historical benchmark rates, including treasuries, bank prime, and LIBOR.
CONTACT:
John Oharenko
director@reci.com / www.reci.com
The Real Estate Capital Institute®
Chicago, Illinois USA 60622
John Oharenko, Executive Director
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