(Bloomberg)—Retired baseball star Alex Rodriguez took to LinkedIn in late 2021 to ask for help: He’d invested alongside Starwood Capital Group in a single-family rental company that was buying 1,000 homes a month and needed to hire as many as 500 people to keep up.
“The right time to get on board is now,” he wrote in a post.
More than a year later, the company, Tiber Capital Group, is pulling back, the victim of a sudden housing slowdown that caught many sophisticated players by surprise. The Capitol Heights, Maryland-based firm has sharply curtailed real estate purchases and fired hundreds of workers, according to people familiar with the business, who asked not to be named because the matter is private.
The rapid growth of companies such as Tiber has been one of the defining features of the US housing landscape in recent years, adding to a homebuying frenzy that peaked with the largest single-family landlords buying more than 10,000 homes a month. Now, Tiber and its peers have become symbols of a dizzying retrenchment — cutting jobs and slamming the brakes on buying while they wait for the market to improve.
Tiber, which had begun acquiring homes for Starwood by 2019, positioned itself for rapid growth as the pandemic supercharged the market and eventually attracted Rodriguez, whose real estate bets have stretched from Manhattan to Florida. Representatives for Rodriguez and Tiber didn’t respond to requests for comment. Starwood declined to comment.
The slowdown in buying has persisted. The 20 largest single-family rental firms, which bought more than 10,000 homes in September 2021, acquired about 850 properties in December 2022, according to data firm SFR Analytics.
Many landlords are still bullish on rental homes. They generally aim to hold onto properties for a longer length of time than other buyers, which can help insulate them from the price corrections that started to slam the market last year. But firms that earn fees for deploying capital are getting squeezed, and a dearth of deals has pushed many to cut staff.
The job cuts have spread throughout the single-family rental space. Amherst, among the largest single-family landlords, laid off about 20% of its staff across two rounds of cuts, in November and January, people familiar with the matter said. A representative for Amherst said the layoffs didn’t affect the firm’s property-management capabilities, and that the company expects the industry to increase purchase activity this year.
It remains unclear when single-family rental companies will ramp up acquisitions. In the current environment, holding off from purchasing more homes makes sense, according to Jeff Langbaum, who covers publicly listed single-family landlords as an analyst at Bloomberg Intelligence.
Another company, Roofstock, laid off 20% of its staff late last year. Chief Executive Officer Gary Beasley said in an email that the layoffs were necessary to align costs with market activity. But the industry shakeout and recent price declines may create opportunities for investors who don’t rely on debt.
“Acquisition activity is indeed way down, driven principally by the run-up in borrowing costs,” said Beasley, Roofstock’s CEO. “There is a good opportunity emerging for unlevered buyers to come into the market and take advantage of a much less frothy environment.”
To contact the author of this story: Patrick Clark in New York at [email protected]
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