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Single-Family Rental REITs: The 'Burbs Are Hot


  • The 'Burbs are back - and hotter than ever. Single-Family Rental REITs have been one of the top-performing property sectors over the past year amid a COVID-driven "suburban revival."
  • Single-Family Rental fundamentals are among the strongest in the REIT sector. SFR REITs reported near-perfect rent collection, record-high occupancy rates, and rent growth eclipsing 5% in their recent reports.
  • Quieting the critics that questioned their ability to operate efficiently, SFR REITs have been leaders in using Property Technology (PropTech) to reduce costs, increase renter satisfaction, and fuel accretive growth.
  • Surging home values can be a headwind, however, as investment yields compress when rent growth can't keep pace with price appreciation. Rising interest and mortgage rates could benefit these SFR REITs.
  • Even before COVID ignited the suburban revival, the 2020s were already poised to be a strong decade for the U.S. housing industry, fueled by record-low housing supply and robust demographic-driven demand.
  • This idea was discussed in more depth with members of my private investing community, Hoya Capital Income Builder. Learn More »

REIT Rankings: Single-Family Rentals

single family rental REITs

(Hoya Capital Real Estate, Co-Produced with Colorado Wealth Management)

Single-Family Rental Sector Overview

The 'Burbs are back - and hotter than ever. Single-Family Rental REITs have been one of the top-performing property sectors over the past year amid a COVID-driven "suburban revival" that has resulted in some of the strongest fundamentals across the REIT sector. In the Hoya Capital Single-Family Rental Index, we track the two single-family rental REITs (SFRs) Invitation Homes (INVH), American Homes 4 Rent (AMH), as well as Canadian-listed Tricon Residential (TCNGF). Together, these three companies collectively own more than 150,000 single-family rentals, primarily in the Sunbelt region.

single family rental REITs

Fueled by the combination of COVID-related factors and the long-term secular tailwinds of limited supply and demographic-driven demand, the U.S. housing industry continues to be the unexpected leader of the early economic recovery, a stark contrast from its role as a "provocateur" during the Financial Crisis. The intensifying housing shortage has been particularly acute in the faster-growing Sunbelt regions and in suburban markets, which have seen an extra boost in demand from the ongoing out-migration out of the high-density "shutdown cities." The bifurcation in fundamentals between urban and suburban-focused REITs was on full display over the last quarter.

rent collection single family rental REITs 2020

Single-Family Rental REITs concentrate on these Sunbelt markets that have experienced the strongest economic growth during the post-GFC recovery and in the early post-pandemic recovery. As discussed in Apartment REITs: Tale of Two Americas, lockdown policies have plunged several high-density coastal rental markets - NYC, L.A., San Francisco - into distress, backtracking a two-decade-long trend of urban revival. Outside of these troubled markets, however, national rental markets - particularly in the SFR category - have been remarkably resilient and have built strength over the last nine months.

geographical breakdown SFR REITs

Aided by WWII levels of fiscal stimulus - and

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This article was written by

Hoya Capital profile picture

Alex Pettee is President and Director of Research and ETFs at Hoya Capital. Hoya manages institutional and individual portfolios of publicly traded real estate securities.

Alex leads the investing group Learn more.

Analyst’s Disclosure: I am/we are long HOMZ, AMT, ARE, AVB, BXMT, DRE, DLR, EFG, EQIX, FB, FR, MAR, MGP, NLY, NHI, NNN, PLD, REG, ROIC, SBRA, SPG, SRC, STOR, STWD, PSA, EXR, AMH, CUBE, ELS, MAA, UDR, SUI, CPT, NVR, EQR, INVH, ESS, PEAK, LEN, DHI, HST, AIV, MDC, ACC, PHM, TPH, MTH, WELL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Hoya Capital Real Estate ("Hoya Capital") is an SEC-registered investment advisory firm that provides investment management services to ETFs, individuals, and institutions, focusing on portfolio and index management of publicly traded securities in the residential and commercial real estate industries. A complete discussion of important disclosures is available on our website (www.HoyaCapital.com) and on Hoya Capital's Seeking Alpha Profile Page. It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Nothing on this site nor any published commentary by Hoya Capital is intended to be investment, tax, or legal advice or an offer to buy or sell securities. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and should not be considered a complete discussion of all factors and risks. Data quoted represents past performance, which is no guarantee of future results. Investing involves risk. Loss of principal is possible. Investments in companies involved in the real estate and housing industries involve unique risks, as do investments in ETFs, mutual funds, and other securities. Please consult with your investment, tax, or legal adviser regarding your individual circumstances before investing. Hoya Capital, its affiliate, and/or its clients and/or its employees may hold positions in securities or funds discussed on this website and our published commentary. A complete list of holdings is available and updated at www.HoyaCapital.com.

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Comments (4)

How do eviction moratoriums affect SFH-REITS ?
Hoya Capital profile picture
@john doe4944 There was some good discussion of this topic on the earnings calls.

Bottom line: Not a major effect, but it is resulting in marginally higher rates of uncollected rents. (ie ~97% vs. ~98% pre-pandemic) As it "unwinds" the expectation is that occupancy rates may decrease marginally, offset by marginally higher collection rates.

AMH: "The overall eviction discussion is evictions for our entire time that we've been a company have been a means of last resort. And we talked about in prepared remarks and Bryan's talked about here in some of the comments about having good relationships with your tenants and being able to work out the issues. And hopefully, we can do that with anybody who has got a valid COVID impacted tenancy. And so I think there will be a time where the COVID period starts to unwind in many ways in this economy, and we'll get back to normal. And how the evictions play into it, we'll see at that point. But I don't really foresee any major changes in the short term and maybe not even in the long term. We'll use eviction very, very sparingly in collection process."


INVH: "So I just think that we're kind of in an environment where we've kind of hit the point where every month we seem to collect somewhere between about 96% to 97%. You know some months it's just under 96%. We’ve got a couple of months it's been a little bit over 97%, but around in both cases 96% and 97% and that's been pretty steady for us really since July. It just kind of how it plays out you know month-by-month.

So we're not seeing any trouble spots, we don’t see anything that's really concerning and Charles and team are just doing a wonderful job working with residents, having contact with them and the only place where we're seeing a material variation from the mean, from the average is Southern California.

private market guy profile picture
Interesting piece. Agree SFH looks interesting here. What kind of annualized return do you see going forward for INVH? After the giant run in apartment REITs, expected returns here www.privateeyecapital.com/... have narrowed a bit as they trade closer to NAV ESS and CPT should still do quite well and have great balance sheets and mgmt
Hunt4cheapREITs profile picture
@private market guy agree - my EQR NAV is in line w/ your weblink- i just swapped some of my EQR and AVB into INVH and ELS
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