Billionaire B. Wayne Hughes, owner of the largest self-storage company in the world, is going on a major real-estate shopping spree, buying thousands of houses to rent to people priced out of home ownership.
The 79-year-old founder of Public Storage has acquired about 10,000 single-family homes through his company American Homes 4 Rent. This makes the Malibu, California-based firm the second-largest owner of single-family rentals, right behind the Blackstone Group LP.
Most of the buys are through foreclosure auctions; Hughes is drawing $600 million for the purchases from the Alaska Permanent Fund Corp and fundraising to cover the rest, Bloomberg reported. The rentals are located in Arizona, California, Colorado, Florida, Georgia, Illinois, Indiana, Nevada, North Carolina, Ohio and Texas. Homes 4 Rent has the most properties in Texas.
American Homes 4 Rent mostly picks three-bedroom, two-bathroom houses constructed within the last 20 years, often in homeowner associations that keep the buildings in good condition. The joint venture with the Alaska Permanent Fund generally steers clear of places that make it difficult to evict tenants or raise rents. “We aren’t in the fixer-upper business,” Michael Burns, chief executive officer of the Alaska Permanent Fund Corp., told Bloomberg. “If a place is toxic for landlords, we don’t go there.”
The home ownership rate shrank to 65.4 percent at the end of 2012, the lowest since 1997 and down from a high of 69.2 percent.