At first glance, there is nothing out of the ordinary Cantabria Bradenton. Located 46 miles south of Tampa and 14 miles north of Sarasota, this recently constructed rental community consists of 172 townhouses and 12 detached single-family homes on 36 acres. Cantabria Bradenton has a clubhouse, gym and swimming pool. It looks like a modern rental community in Florida, with homes Rental ranges from $2,400 to $3,000.
However, beneath the surface, there is something about it that makes it new: The rental community is previously owned JPMorgan Asset Management.
Earlier this month, Wolfson Development Company sold the Cantabria Bradenton, which was constructed between summer 2020 and spring 2023, to JPMorgan Asset Management 59 million dollars.
When it comes to institutional home ownership, companies such as Black stone Or call homes come to mind. But this Cantabria-Bradenton purchase is a reminder that the US housing market has the attention of the biggest dog on Wall Street: JPMorgan Chase.
Even before analysts realized that a housing boom would take shape during the pandemic, JPMorgan Asset Management Announced in May 2020 that it will form a $625 million joint venture with American Homes 4 Rent to build 2,500 single-family rentals across the West and Southeast. With millennials moving out of apartments, JPMorgan Asset Management has argued that the US housing market will see an increase in demand for single-family rentals.
Then in November 2022, JPMorgan announced Its asset management arm will form another joint venture, this time alongside real estate investment firm Haven Realty Capital. They were setting aside $1 billion to buy single-family rentals around the country in what is called a “build-to-rent” form, meaning they would buy directly from developers. JPMorgan and Haven Realty Capital joint venture plans to begin purchasing 250 homes in the capital, Atlanta.
As JPMorgan continues to penetrate deeper into the US housing market, some institutional players are waiting things out.
See, the pandemic housing boom — a period that saw low interest rates, high house prices, and skyrocketing rents — saw an institutional home-buying stampede in 2020 and 2021. However, that boom was followed by a sharp institutional slowdown such as the rate hike by a bank The Federal Reserve, along with frothy home prices, limits potential returns.
In fact, an analysis by John Burns Research and Consulting found that institutional investors — those who own more than 1,000 homes — have bought 90% fewer homes in January and February than they did in the first two months of 2022. Invitation Homes, the largest owner of American single-family rental homes, sold more homes in the first quarter of 2023 (297) than it bought (194).
“No space is immune to capital markets, in general. Every food group in real estate, whether it’s multi-family or single-family, everyone is having a hard time finding an institutional buyer right now,” he said. Adam WolfsonCEO of Wolfson Development.
In Wolfson’s account, institutional homebuyers wait on the sidelines for either a drop in interest rates or house prices. At the end of the day, institutional investors are looking for financial returns (i.e. cap rates) that justify their investment.
While institutional home buying has slowed, it is not going away. This is perhaps the biggest benefit from JP Morgan Asset Management’s purchase of Cantabria Bradenton from Wolfson Development. This is also why Wolfson Development Building for rent arm (Wolfson BTR) currently has a pipeline of 2,000 housing units “with an estimated total exit value of approximately $1 billion”.
JPMorgan declined to comment. JPMorgan also declined to say how many leases it owns in the United States.
