Mar 2, 2017 - Real Estate

Charlotte neighborhoods are being bought and sold on Wall Street

After a five-year buying spree, three giant companies have now invested at least $1 billion into Charlotte houses, according to the most recently available public documents.

These firms have paid cash for nearly 7,000 single-family homes across Charlotte — to turn them into rentals. At an average rent of $1,400 and sky-high occupancy, these houses are generating about $114 million in cash each year.

All three companies are public, and Wall Street has been bullish on them. American Homes 4 Rent and Colony Starwood Homes stocks are up 59 percent and 48 percent, respectively, over the past year.

The third, Invitation Homes, just raised $1.5 billion in its initial public offering.

The Charlotte real estate industry has long noted the impact these players have had on the local market. They’re particularly active in the suburban neighborhoods built during the early 2000s — areas like Steele Creek, Mountain Island Lake and Huntersville.

They’ve contributed to lightning fast-sales and driven up the home values by paying at or above list price.

And all indications are that they’re committed to sticking around.

Meet the three players

1) American Homes 4 Rent.

This company has made the largest investment in the Charlotte market — $500.2 million in 2,861 houses, as of the end of 2016.

Charlotte represents the fifth largest market in the company’s portfolio, after Dallas, Atlanta, Houston and Indianapolis.

The average home price for American Homes 4 Rent in Charlotte is about $174,000 and just over 2,000 square feet. The average rent is $1,457 per month, and their homes are 94 percent leased.

2) Invitation Homes. 

This company spun off from the hedge fund giant Blackstone earlier this year and owns the most Charlotte houses of the three — 3,123 homes worth $417.8 million, as of the end of September 2016.

The average rent is $1,348, and their Charlotte portfolio is also 94 percent leased. One warning sign: They’re operating at a nearly 40 percent annualized turnover rate locally.

3) Colony Starwood Homes.

This company owns 892 homes between Charlotte and Raleigh. They combine their North Carolina markets in public documents, so it’s impossible to single out their local homes.

But they’re generally buying bigger and more expensive homes. Their average home price is $188,183, are an average 2,334 square feet and they’re charging an average of $1,620 per month in rent. Their N.C. homes are only 88 percent leased.

What happens next?

The companies are continuing to buy homes in Charlotte, though at a much slower rate. Mecklenburg County Register of Deeds documents only record a few new sales in 2017. Most of the activity has been transferring homes back and forth between funds.

Interestingly, it seems like the companies are holding on to these homes as a long-term play. None of the companies has begun unloading properties en mass.

And the companies are not treating the homes as pure real estate appreciation plays. American Homes 4 Rent has written down a total of $35.6 million in depreciation on their Charlotte homes.

Still, it’s likely that the companies will begin selling properties at some point, and with the massive positions they have in Charlotte, that’s bound to have a significant impact on the market.


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