Key facts
- The 21st Century ROAD to Housing Act has removed legislative uncertainty that previously froze capital flows into the build-to-rent (BTR) sector.
- AMH and Invitation Homes, two major single-family rental operators, report a cautious return of investor interest and deal activity.
- AMH focuses on in-house development and selling older assets, while Invitation Homes primarily acquires properties and has recently expanded into development.
- The new legislation is expected to support the growth strategies of AMH and Invitation Homes.
- Industry leaders anticipate increased consolidation, potentially benefiting larger operators like AMH and Invitation Homes at the expense of smaller firms.
The passage of the 21st Century ROAD to Housing Act has removed significant legislative uncertainty that had previously hampered capital flows into the build-to-rent (BTR) single-family housing sector. Executives from AMH and Invitation Homes, two of the largest public operators in the space, indicated on recent earnings calls that investor interest and deal activity are beginning to return, though at a measured pace.
AMH, founded in 2012, has shifted its growth strategy from purchasing homes on the Multiple Listing Service (MLS) to an in-house development program launched in 2017, supplemented by partnerships with homebuilders and acquisitions of new rental communities. The company has been actively selling older, scattered-site homes to recycle capital into newer, purpose-built communities, disposing of 1,318 such homes in the last two quarters, up from 786 in the prior-year period.
Invitation Homes, conversely, has historically focused on acquiring single-family rental inventory, typically through bulk purchases of purpose-built BTR communities or forward-purchase agreements with builders. Recently, the company has favored acquiring nearly complete builder inventory within 60-90 days for more attractive returns. However, Invitation Homes expanded into development with the $89 million acquisition of ResiBuilt in January, providing an in-house development and general contracting platform that management intends to grow. The company also operates a lending business, offering debt and construction financing to BTR developers, and provides third-party property management services.
Invitation Homes CIO Scott Eisen noted that deal flow was stagnant for the first six months of the year due to legislative uncertainty, but capital is now beginning to re-enter the market. Invitation Homes President and CEO Dallas Tanner described the previous situation as having "froze capital" but now sees "capital start to open up again." Invitation Homes CFO Jon Olsen mentioned that while projects in flight continued, some scheduled starts were delayed or canceled, leading to a near-term shortfall that the team is working to overcome by refilling the pipeline. Olsen also reported increased interest and inbound activity in Invitation Homes' lending business since legislative clarity was achieved.
AMH CEO Bryan Smith echoed the sentiment of a returning deal flow post-legislation, noting more activity and discussions with owners. Smith believes the new regulations will make it more difficult for smaller operators relying on MLS purchases, potentially leading to consolidation. He described these impacted firms as "in-betweener" companies owning over 350 homes but lacking the scale and capital access of major institutional operators. Invitation Homes also anticipates increased consolidation, particularly in the BTR space, as smaller, capital-constrained operators seek partners or buyers, creating opportunities for larger players to gain market share.