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Atlas Real Estate and DivcoWest Form $1 Billion JV to Acquire and Renovate Single-Family Rental (SFR) Home

By Jules Lavallee

Los Angeles, California (The Hollywood Times) 6/04/2021 –  Atlas Real Estate, a full-service real estate company specializing in investment brokerage, property management, and institutional acquisition, and DivcoWest just formed a $1-billion joint venture to acquire and renovate SFR across the Western U.S., which is a testament to the strength of the SFR sector. Since its inception in 2013, Atlas Real Estate has been recognized as a leader in the real estate industry. The Denver Business Journal named Atlas as a Fast 50 Honoree, Bank of America selected Atlas as one of its Colorado Companies to Watch, and ColoradoBiz Magazine has honored the firm with the Best of Colorado: Property Management award for the past four consecutive years. The Hollywood Times spoke with Vince Deorio – VP at Atlas Real Estate.

How is Atlas Real Estate Uplifting Humanity Through Real Estate?

As a full-service residential real estate company heavily focused on property management, Atlas Real Estate believes that uplifting humanity starts with our residents. We treat our residents with dignity and respect and are committed to providing them, as well as our property owners, with the highest level of service. We interact with our residents in a way that is intended to uplift and guide them on a trajectory toward homeownership. Once our residents become homebuyers, we then coach them on how to become real estate investors. We call this the “Atlas Virtuous Cycle.”

Within our company, we often discuss the idea of “renter to retired.” It has become increasingly difficult to save for retirement and to think long term, without having to worry about a 9-to-5 job. At Atlas, our goal is to use real estate as a means to save for retirement, think long-term, and ultimately empower people to pursue their dreams and passions.

Every employee at Atlas believes that there’s a path toward financial freedom through homeownership. To that end, we proactively promote the benefits of homeownership and investing. For instance, we encourage our residents to form relationships with their on-site property managers who have a responsibility to educate and teach them how to acquire homes. We also host a program called the Real Estate Investment Hour, a free event open to the public. Among many other topics, we discuss the Atlas Virtuous Cycle and help anyone who’s interested get started on a path toward becoming a real estate investor.

Tell us about the history of Atlas Real Estate.

The history of Atlas Real Estate dates back to 2008 when DP Assets was founded by Ryan Boykin and Jason Shepherd, two young entrepreneurs, and real estate investors. DP Assets is the holding company that owns Atlas Real Estate. DP Assets flipped more than 500 homes in less than two years during the foreclosure crisis. Propelled by this success, the founders launched their own portfolio to invest in $120 million worth of single-family, multifamily, industrial, office, and retail real estate properties. As the portfolio continued to grow, there was a dire need for property management. In 2012, the co-founders filled that niche for property management by forming Atlas Real Estate. The management team began closing transactions on behalf of institutional funds, acquiring and managing over 1,500 homes and averaging 40-50 transactions per month for three years at a time.

In 2013, Atlas launched a full-service residential brokerage. Today, Atlas is a full-service real estate company offering institutional acquisition, property management, and brokerage services that have closed more than $1.2 billion in investment sales. Currently, Atlas has 120 employees in seven locations and over 4,500 properties under management.

You just formed a $1-billion joint venture with DivcoWest. What led to this partnership?

We were in the market to acquire and renovate a large volume of SFR properties due to the increasing value of SFR homes as investments, as well as the surging demand among renters for these assets, especially in our markets of the western U.S. Forming a joint venture with the right partner was our ultimate goal, and we found the right partner in DivcoWest. Not only is DivcoWest one of the leading institutional investment firms in the country, but they also share our mission as a company: to uplift humanity through real estate. Together, we are partnering to increase the inventory of SFR homes in Atlas-managed markets. This JV presents us with a tangible opportunity to serve renters, create a positive resident experience, and help to meet the supply demands by providing high-quality housing.

Why is this so timely?

It is timely because of the changing attitudes toward renting and the severe shortage of quality rental housing options across the United States, particularly in the West and Southwest.

Homeownership has become more challenging with supply constraints nationwide. Potential homeowners are unable to move into the neighborhoods they want, or they can’t afford a downpayment on their dream home. Renters rates rose during the Great Recession, and remained at 35.6% at the end of 2020, according to the Harvard Joint Center for Housing Studies. In addition, renters rates have increased among some groups that have traditionally been more likely to own, including higher-income households and middle-aged adults.

Rents have been on a “remarkable uptrend.” Between 2012 and 2017, the number of units renting for $1,000 or more in real terms shot up by 5 million, while the number of low-cost units renting for under $600 fell by 3.1 million. Meanwhile, the supply of units with rents in the $600 to $999 range also declined, but by only 450,000. This marks a sharp departure from the preceding five-year period when the number of units in all three segments grew by 1.2 million to 1.8 million. The decline in low-cost units brought their share of the national rental stock down from 33% in 2012 to just 25% in 2017, with decreases in all 50 states and Washington, DC.

Historically, DivcoWest has only invested in commercial real estate projects. What does your partnership bring?

DivcoWest’s decision to partner with us is a testament to our decade-plus history as an acquisition partner and the long-standing relationships we have cultivated with institutional investors since our inception. The decision by a company that up until now has only invested in commercial real estate assets verifies the strength of single-family rentals as an asset class. No longer is the SFR market an alternative asset class: It’s a $3-trillion-plus industry bolstered by institutions such as DivcoWest who are willing to place significant equity into SFR endeavors.

As more institutions enter the SFR investment market, they bring greater efficiency and scale to the sector. Increasingly, SFR managers and operators are beginning to operate their properties with the same efficiency as multifamily properties.

Tell us about the mission of this partnership. What will happen over the next 6-months?

Looking out even further to the next two years, Atlas and DivcoWest plan to acquire 2,500 single-family rental homes in Colorado, Idaho, Utah, Arizona, and Nevada. In addition to buying existing homes, our partnership will also seek to acquire newly constructed homes ‒ or build-to-rent properties ‒ from developers.

What is the current state of single-family rental homes in the Western US and how will your joint venture change lives?

Demand for single-family rental homes has grown over the past decade as families and couples have shown a preference to reside in properties with more indoor and outdoor space than apartments. As we emerge from the COVID-19 pandemic, SFR demand remains high in many major metro areas from coast to coast, vacancy is low and rents have resumed their upward climb after dropping throughout much of 2020 due to eviction moratoriums and suburban flight brought on by the uncertainty of the pandemic. Atlas is changing lives by offering more housing. In some cases, individuals or families may have sold their homes to live in rental housing due to the COVID-19 pandemic even if only for the short-term. With the acquisition power created by this partnership, we can proudly offer hundreds of high-quality rental housing options across the West at prices that are affordable to both individuals and families.

To learn more about Atlas, visit www.realatlas.com and Divcowest www.divcowest.com