PROVO, Utah — With a vision to bring build-for-rent [BFR] housing communities to the Mountain West, PEG Companies [PEG], a vertically integrated commercial real estate investment firm known for its unique approach to creating value, this month launched PEG Capital Partners Fund IV, L.P., specifically to capitalize this strategy.
As one of the first groups in the Mountain West to launch a BFR strategy in a large-scale, systematic fashion, PEG is uniquely positioned to execute on the entire investment strategy. With a disciplined investment approach, experienced development team, a proven in-house property management group, and a strong multifamily housing track record, PEG is confident in its ability to maximize returns for its investors.
The new fund, currently targeting $200M in equity, will focus on the development and management of luxury BFR communities in the primary markets of Utah, Idaho, Arizona, and Colorado. Over the last 10 years, population growth in the Mountain West has significantly outpaced the rest of the country, with a 12.8% average growth annually (versus 6%, nationally). The Mountain West remains a leading region in the United States for population migration, and home prices in the market have seen double-digit growth between 2020 and 2021. The decline in homeownership affordability is one of the most pressing challenges facing the region, driving additional demand toward low-density rental housing.
“As we look at the various economic factors currently at play here in the Mountain West, we can clearly see that they’ve created the perfect storm for BFR demand,” said Soren Halladay, Chief Investment Officer at PEG. “Right now, we are in a severely supply-constrained single-family housing market. With rising construction costs and over a decade-long shortage of new housing deliveries, the average home price has increased by more than $70K in the last five years. This has created an environment where many ‘would-be’ home buyers are unable to afford homes,” he explained.
“The BFR strategy appeals to every generation of renters for different reasons,” added Rachel Oh, Managing Director of PEG Capital Partners, the firm’s fund manager. “We know that millennials entering the household formation stage remain a significant pool of renters, but strong interest from non-millennial renters have also emerged. Gen X and baby boomers are more likely to rent than ever before for a variety of reasons including the conveniences associated with renting, wanting a more mobile lifestyle, and prioritizing other investments over home ownership,” Oh said.
PEG has invited industry experts to weigh in on the decline in housing affordability and the rise of BFR in an upcoming webinar scheduled for October 13, at 11:00 AM MST. Click here to register for the webinar, Build for Rent: Pioneering New Opportunities to Capitalize on the Modern-day Rush to the West.