NexPoint Advisors, the alternative investment platform founded by Jim Dondero, is extending its bet on single-family rentals as rising mortgage rates threaten to cool demand for homebuying, creating new opportunities for landlords to acquire properties.
Dallas-based NexPoint is seeding a newly formed vehicle with $250 million in equity and debt to buy houses, according to people familiar with the matter. NexPoint, which has raised $1 billion for single-family rental owner VineBrook Homes Trust, aims to exceed that amount for the new vehicle, the people said.
In a statement Thursday, NexPoint said it would advise a new real estate investment trust that aims to purchase, build and manage single-family rentals. The REIT, which is partnering with Charlotte-based HomeSource Operations, already owns more than 1,000 properties and plans to extend that reach to “several thousand homes” by the end of 2022.
NexPoint, which says on its website that it offers retail investors access to strategies typically restricted to institutions through independent broker-dealers and advisers, had $14 billion in real estate assets under management at the end of 2021.
The firm made its first foray into single-family rentals when an affiliate acquired a portfolio of homes from Magnetar Capital in 2018. NexPoint has added to that bet since, expanding the VineBrook portfolio to more than 22,000 homes. VineBrook, which has explored an initial public offering, focuses on older homes in Midwestern markets, with average rents around $1,100.
NexPoint’s new single-family rental vehicle is focused on a different part of the market. It plans to buy new homes directly from builders, and also acquire existing units built from 2000 onwards, focusing on high-growth secondary and tertiary markets throughout the US Sun Belt, according to the statement.
“We are pleased to announce a partnership with a quality operator like HomeSource that will allow us to broaden our exposure to this critical sector and expand our SFR platform into new segments,” Chief Investment Officer Matthew McGraner said in the statement.
HomeSource CEO Randy Hagedorn said that the company and NexPoint will leverage their collective experience and expertise to grow the REIT’s portfolio.
“We are grateful to have a partner in NexPoint that understands the need to be entrepreneurial and flexible as we acquire SFR and BTR Homes in the REIT,” Hagedorn said in a statement. “We look forward to our partnership.”
