Earlier today, I published a piece discussing the ridiculousness of the latest centrally planned housing bubble, and I also described some of the things I have gotten wrong with regard to real estate in the past several years. Well here’s one thing I got right. In early May I wrote an article titled: Las Vegas Housing: 8% of Single Family Homes Vacant, Yet New Construction Permits Up 50%. In it I wrote:
Taking bets as to how soon after its IPO American Homes 4 Rent will go BK.
Fast forward to today, and we see that a month after its IPO, American Homes 4 Rent is already firing 15% of its staff. Yep…
Aug. 23 (Bloomberg) — American Homes 4 Rent yesterday fired a group of workers, with a focus on acquisition and construction staff, after the housing landlord reported a fiscal second-quarter loss, according to a person with knowledge of the terminations.
The company, owner of almost 20,000 single-family homes, has cut about 15 percent of its workforce this year, including an earlier round of terminations before its initial public offering last month, said the person, who asked not to be identified because the information is private. The Malibu, California-based company, which raised $705.9 million in the IPO, had a net loss of $14 million, or 15 cents a share, on revenue of $18.1 million in the quarter ended June 30, according to a statement this week.
Losing money at the top of a new housing bubble? No es bueno.
Single-family landlords have struggled to turn a profit while acquiring homes faster than they can fill them with tenants. Hedge funds, private-equity firms and real estate investment trusts have raised more than $18 billion to purchase more than 100,000 rental houses in the past two years. American Homes 4 Rent, founded by B. Wayne Hughes, is the largest single- family landlord after Blackstone Group LP’s Invitation Homes, which has spent more than $5 billion on 32,000 homes.
American Homes 4 Rent executives Peter Nelson, Jack Corrigan, Sara Vogt-Lowell and Janice Stack didn’t respond to e- mails and telephone messages seeking comment on the firings.
Craig Smith, 55, a property-compliance inspector from Columbus, Ohio, said he received a termination notice after nine months with American Homes 4 Rent. Smith, who earned about $50,000 a year, said he saved the company money by finding more than $7,000 in invoice errors last month alone.
“It’s a complete shock,” he said in a phone interview. “I was out working and they called me to the office and told me I was cut.”
“As far as being able to put money to work, I mean we could easily ramp back up to $300 million-a-month pace if we have clarity that we would have that capital available,” he said. “But we don’t want to get too far out over our skis.”
Might be a little late for that pal.
American Homes 4 Rent owned 19,825 properties for an investment of $3.4 billion as of July 31, according to its earnings statement. About 56 percent of the company’s homes were leased as of June 30.
Thank you Benjamin Bernanke.
Full article here.
In Liberty, Mike