Dear friends,
While browsing Real Estate news recently, this headline caught our eye: “JP Morgan Plans To Acquire $1 Billion In Single-Family Rentals”. For those who are not familiar with the firm, JP Morgan Chase is a multinational investment bank and financial services firm. It’s one of the oldest financial institutions in the USA and one of the biggest, managing north of $3 trillion. What on earth is an investment bank doing buying houses to manage them and rent them out? Why don’t they just give mortgages to people to buy houses?
Following a few quick Google searches we discovered that JP Morgan is not the only bank performing such acquisitions. Aren’t these financial companies supposed to just trade stocks and bonds? Invitation Homes is a publicly traded company worth $20 billion which was spun off from Blackstone, the world’s largest private equity company in 2017. Invesco backed a plan by Mynd Management in 2021 to invest $5 billion purchasing single-family rental homes. Allianz and private equity group Centerbridge invested $1.25 billion to acquire new single-family homes for rent in the USA. Goldman Sachs Asset Management bought 700 build-to-rent homes last year in the UK. Wall Street-backed firms account for an estimated 300,000 of the more than 128 million single-family homes in the US, and that number is growing quickly.
And what about Spain? Banco Popular and Banc Sabadell have acquired assets valued at over 300 million euros. Casavo, the family office of the Agnelli family, is buying flats and refurbishing them for resale. Caixa Catalunya is acquiring assets from property investment companies. Goldman Sachs has bought residential and industrial Eeal Estate. JP Morgan and Credit Suisse are also present in the country.
So what’s going on? Have the banks decided to change their business model? Probably not. What are they seeing is exactly what we at Artemis Assets are seeing. Residential Real Estate is presenting a unique opportunity to have your cake and eat it. To achieve the investor’s ultimate dream. To acquire an asset which is appreciating at the rate of inflation or faster, which is paying recurrent and appreciating cash flows, and which is not volatile.
It gets even better. An increasing percentage of millennials are planning to rent for the foreseeable future, so the demand for rent is guaranteed. Also, data suggests that Residential RE will be an increasingly powerful tool for (retail and professional) investors in coming years. And finally, interest rates are poised to stay high in the short/medium-term which leads investors to switch from stocks/bonds/crypto into real assets that produce real cash-flows. It’s a flight to assets.
So will you join Wall Street to play buyer and receive passive income? Reach out to Artemis Assets to tell you how – just press the Contact Us button below.
Until the next one!
