August 21, 2023Washington Business Journal
A major developer and its investment partners have acquired the 200-unit build-to-rent subdivision of a new townhome development known as CityHouse Ashburn Station for $120 million.
McLean-based American Real Estate Partners, or AREP, together with GreenBarn Investment Group and Rithm Capital Corp. (NYSE: RITM), bought the property from Dream Finders Homes in a deal that closed July 27.
Construction of the subdivision, about three-quarters of a mile northeast of the Ashburn Metro Station, the Silver Line's terminus, had already begun prior to the change of ownership. The first phase of homes will be available to rent this month, according to an Aug. 21 press release. AREP will deliver the rest of the homes, which will average about 2,000 square feet, over the next 15 months.
AREP and GreenBarn are co-general partners in the venture, while Genesis Capital, a Rithm subsidiary, provided about $86.4 million in acquisition and construction lending, per the press release.
Build-to-rent means the homes are being developed from the outset as rentals. That's usually been the province of high-rise developments, whereas single-family and townhouse projects are more typically built for sale. But building single-family homes for rent has been a growing trend, accelerating nationwide since 2020, according to RentCafe, an apartment market data and research firm.
AREP invested in the project because it's "seeing an over saturation in the more traditional apartment market," Brian Katz, AREP's co-founder and president, told the Washington Business Journal in an email. He added that rising interest rates and other costs make build-to-rent single-family homes "the logical progression" for growing families that otherwise would've looked to move from renting to ownership. He suggested renting rather than owning could appeal to other demographics, as well, like retirees, empty nesters and folks relocating temporarily for a job.
CityHouse "was a very targeted investment that will position AREP on the leading edge of this quickly emerging and highly desirable sector and we are looking to expand this model up and down the East Coast," Katz said.