Waypoint Real Estate Group, which has acquired 2,000 single-family homes since early 2009, has received a $245 million revolving credit facility that will support the continued expansion of a growing portfolio of single family rental homes.
Waypoint is part of a broader trend of large investors attempting to buy up houses in bulk in hopes of institutionalizing the single-family rental market.
The new facility was lined up by members of SNR Denton’s capital markets practice along with Citi.
The facility is for Waypoint’s partnership with Menlo Park, Calif.-based GI Partners. The two entities signed a deal in December. GI Partners has committed $200 million in equity and has an option to invest an additional $200 million in the partnership.
The multi-year, revolving credit facility is designed to be flexible for the borrower, with funds made available at increasing advance rates based upon the stage of the home as it progresses from acquisition, through completed renovation, through lease-up and occupancy.
“The availability of debt financing is critical to the success of the emerging single-family rental business, yet no tested financial model existed for the industry,” SNR Denton Partner Bob McCarthy said in a statement. “We congratulate Citi and Waypoint on breaking new ground with this pioneering approach to structuring the credit facility. Incorporating elements from both residential and commercial facilities, we worked closely with our client to create a collaborative deal structure that balanced the needs of all parties and may serve as a model for future such deals.”
McCarthy led the SNR Denton deal team that also included Counsel Shannon McSwain and Managing Associate Michelle Alves.
In the past, it was too time consuming for large investors to amass portfolios of homes to manage. Properties were only available in one-off sales and auctions. Today, however, investors can buy homes in bulk, meaning portfolios that can generate meaningful income streams can be amassed more quickly.
Banks, as well as Fannie Mae and Freddie Mac, are selling larger portfolios of REO homes. As part of its new REO to Rental pilot program launched earlier this year, the Federal Housing Finance Agency put some 2,490 properties including 2,849 units on the block earlier this year. There are 1,743 single-family homes, 527 condos, seven manufactured homes, one co-op, 118 duplexes, 36 three-unit buildings and 58 four-unit buildings. The winning bidders have not yet been announced, but the first deals are expected to close in the third quarter.