In times of economic crisis, some had significantly benefited from the opportunities that arise that had enough liquidity to acquire when the rest of the world was selling. One of the best cases of this is Blackstone’s Invitation Homes, a REIT that took advantage of the previous recession by going on an enormous acquisition campaign of single-family residential (SFR) properties in 2008, renovating them and leasing to a population that was no longer purchasing due to the credit crisis. Invitation Homes at this time enjoys $1.4 billion in annual revenue, employs over 1,200 SFR professionals, has a $17 billion enterprise with more than 80,000 homes in 16 markets.
Corresponding to the Korea Economic Times, POBA has pledged $120 million along with many other US institutional investors to make a joint investment in single-family rental homes across the US. The expansion into the US single-family housing market is viewed as a safe place during this economic downturn. POBA is not apprehensive about economic uncertainty and does not want to miss out on the opportunity to acquire assets at a significant discount.
Our co-investment with TCS Anika Homes at present has a concentration on investing in affordable/workforce housing SFR and multifamily and believe that a recession could even enhance conditions in the demographic that we serve. When times get tough, people consider lowering their payments, although still must live somewhere. We are developing quality affordable housing and believe that in challenging times individuals will move out of their ‘A’ class apartments and downsize to the market that we serve. Additionally, a recession would likely allow us to buy and build for less while sustaining our +/- $1,200/ month rents resulting in improved cap rates. We are underwriting at a minimum of 5-10-year hold; as a result, we are not so concerned about exit cap rates that would be shaken by a downturn.
We like to think that we are more than physically rebuilding these communities – we are laying down the foundation for our tenants’ dreams. We feel this is a socially responsible investment where we will deliver a high-quality product to help improve the living conditions the demographics we serve.
