Tricon Residential opened two new Texas build-to-rent projects, marking its third completion following a $3.5 billion deal this year with Blackstone that promised to complete 1,000 new houses in the United States in 2024.
The developments, opened in suburbs of Austin and Houston, were developed in collaboration with HHS Residential, a division of Highland Homes. Together they include 303 single-family houses with either three or four bedrooms, attached two-car garages and fully fenced backyards.
At a time when home costs have been soaring, increased investment activity into single-family rentals has brought with it an additional level of scrutiny from lawmakers. Bills are pending in the U.S. House of Representatives and Senate to discourage institutional buyers by taxing their future purchases or sales of single-family rental homes.
But Tricon says its new projects “will enhance the supply and diversity of high-quality homes, at prices well below the cost of owning, for families in communities with quality schools, easy access to employment centers and local amenities,” according to a statement from Andy Carmody, senior managing director and head of sustainability at the company.
Tricon Bryson will open 155 homes with six separate floor plans located at 440 Raglands Road in Leander just north of Austin. Tricon Willow Creek, located in Tomball outside Houston, consists of 148 homes. The project includes four separate floor plans including several homes participating in the U.S. Department of Energy Zero Energy Ready Homes pilot that are designed for renewable energy sources intended to offset much of the house’s annual energy consumption.
Rents at the properties range from roughly $2,300 to $2,600, according to CoStar data. Both are roughly half leased.
Portfolio growth
The pair of openings follows another in May that was the first reported project completed after Blackstone agreed to purchase Tricon for $3.5 billion in January. That project, located in Lincoln, California, consisted of 161 single-family homes and duplexes.
Together with the newly announced Texas projects, Tricon has opened a total of 461 houses in 2024, adding to the company’s portfolio of roughly 38,000 rental homes in the United States. Blackstone has said it is aiming to open a total of 1,000 homes this year along with the same amount in 2025 as it invests an additional $1 billion in Tricon’s development pipeline
With more than 16 million single-family rental homes in the United States, institutional investors remain a small portion of owners and account for 2% of overall inventory, according to the National Rental Home Council. But their numbers have been rising as tightened inventories, increased prices and high mortgage rates have put more homes out of reach for first-time buyers.
At the height of the COVID-19 pandemic, investors accounted for roughly a quarter of all homes sold, up from roughly 15% annually since 2012, according to an analysis by the news website Stateline.
Regulation debate
That boost in investment activity, which some economists have said is helping drive up the cost of housing, has led to a debate over how to regulate the industry.
Most recently, Invitation Homes reached a $48 million settlement with the Federal Trade Commission over what the agency described as “deceptive tactics” by the company that included undisclosed junk fees, unnecessarily withholding security deposits, unfair eviction practices, along with dangerous and unsanitary conditions at some of its properties.
The company has said it plans to invest $1 billion in new home purchases this year after spending roughly the same amount on 3,200 houses in 2023. Invitation Homes’ current portfolio recently surpassed 110,000 homes, making it the largest owner of single-family rental houses in the United States.
Blackstone’s purchase of Tricon represented a return to single-family rentals for the firm that practically invented the category for institutional investors when it founded Invitation Homes in 2012. Blackstone exited the sector completely when it sold the company in 2019.
The following year, the firm’s real estate investment trust, Blackstone REIT, began making smaller investments in other single-family rental operators, including Home Partners of America and initial investments in then Toronto-based Tricon.