Acquisition Strengthens NexPoint’s Position in Single-Family Rental Market
NexPoint, a multibillion-dollar alternative investment platform, announced today the recent acquisition of a single-family rental home portfolio by a NexPoint-advised private placement real estate investment trust. The trust is managed by VineBrook Homes, LLC (together “VineBrook”), a real estate company that specializes in acquiring, renovating, and leasing single-family homes.
The acquisition, which included 951 homes across nine states, expands VineBrook’s geographical footprint, marking its entry into a number of new markets, while further establishing its presence in key existing markets. With the acquisition, VineBrook’s portfolio now totals approximately 6,500 single-family rental homes.
Initially focused on multifamily assets, NexPoint has expanded its real estate capabilities in recent years, moving into the single-family rental market through its partnership with VineBrook, which began in 2018. Single-family rental assets across the NexPoint platform now total $1.7 billion.1
In addition to single-family rentals, NexPoint’s real estate expertise has grown to include hospitality, industrial, and office/retail, among other sub-sectors, with gross real estate acquisitions now totaling over $8.9 billion.2
“We are continuously looking for ways to channel NexPoint’s real estate capabilities into investment solutions that provide access to areas where we see strong growth potential,” said Dustin Norris, NexPoint’s head of distribution and chief product strategist. “The single-family rental space is a prime example of this approach. It is a market that is still relatively early in its development and bolstered by strong fundamentals. NexPoint’s ability to provide investors with exposure to this type of asset is one of the platform’s biggest strengths.”
According to NexPoint, the opportunity in the single-family rental market is driven by a confluence of trends. Macroeconomic conditions and shifting demographics across the U.S. are among the factors contributing to the growing demand for single-family rental homes—an affordable alternative to homeownership. This demand is particularly strong in secondary and tertiary markets in the U.S., like a number of cities in the Midwest and other locations with favorable employment conditions where the cost of living remains reasonable compared to major metropolitan areas.
There are also trends at the industry level that NexPoint believes support the investment opportunity. In NexPoint’s view, one of the most appealing industry dynamics is the potential for consolidation across the single-family rental space. Despite the strong demand for single-family rental homes, it is still an emergent asset class, evident in the fragmented landscape of owners and operators. The nascent development of the market presents opportunities for institutionalization that NexPoint believes could create value via scale and sophistication.
The recent VineBrook acquisition, which closed at the end of the third quarter, captures these trends. Some of the rental homes included in the acquisition are in markets where VineBrook has existing properties and professional management in place, creating operational efficiencies and cost savings.
Other portions of the newly acquired portfolio are in new markets for VineBrook. Those assets provide a strategic entry into key markets like Little Rock, Arkansas and Jackson, Mississippi, which appear to have strong growth potential.
For NexPoint, the acquisition further establishes its single-family rental capabilities and, in NexPoint’s view, helps position the platform to capitalize on the positive trends driving growth in the asset class.
(1) As of September 30, 2019. Inclusive of affiliates. (2) As of September 30, 2019. Inclusive of real estate acquisitions by NexPoint and affiliates since 2012.
NexPoint is a leading alternative investment platform. The NexPoint platform is comprised investment advisers NexPoint Advisors, L.P. and NexPoint Real Estate Advisors, L.P., and a suite of related investment vehicles. The platform provides differentiated access to alternatives through a range of investment offerings, including publicly traded real estate investment trusts (“REITs”), Regulation D private placements, Delaware Statutory Trusts (“DSTs”) and 1031 Exchanges, closed-end funds, interval funds, and a business development company (“BDC”).
Risks and Disclosures
The information in this presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often include words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes,” and words and terms of similar substance in connection with discussions of future operating or financial performance.
These forward-looking statements are based on NexPoint’s current expectations and assumptions regarding its portfolios and investment performance, the economy, other future conditions, and forecasts of future events, circumstances, and results. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied in its forward-looking statements.