Atlanta-based Beazer Homes, a top 10 house-building company, is coupling with investment firm Kohlberg Kravis Roberts to boost the rental business Beazer started as a way to fill foreclosed homes.
Beazer is contributing 200 homes worth $20 million from the business to a newly formed real estate investment trust called Beazer Pre-Owned Rental Homes, to which KKR will bring investors and an initial $65 million for expansion.
Beazer piloted the home-rental business a year ago in Phoenix and Las Vegas, two cities hit extraordinarily hard by the foreclosure crisis, as a way for the recession-battered company to generate income.
Beazer CEO Allan P. Merrill gave a hint of the infusion of cash during a company earnings report Wednesday. A reporter asked him about the rental business.
"I am happy to say that the houses are 98 percent leased," Merrill said, and added that many families had renewed their leases.
"We fully expect to scale this business with external capital," he said.
The real estate investment trust will buy, refurbish and lease recently built single-family homes. The new company will be based in Phoenix and hopes to eventually have $150 million to invest, according to a press release. It did not say where the company will buy homes, and a Beazer spokesman could not be reached.
“We believe our investment in [Beazer Pre-Owned Rental Homes] allows us to unlock the value in our rental homes business and grow it more rapidly than we otherwise could within Beazer,” Merrill said Friday.
KKR has made a push into real estate investing this year. It formed an investment group and bought a Chicago mall for $196 million in April.
