Bain Capital And Cherry Tree Capital Partners Forming JV To Build For-Rent Townhomes

Bain Capital Real Estate and Cherry Tree Capital Partners formed a joint venture to build new rental townhomes throughout Southern California. 

BCT Development, as the JV is called, launched “with the objective of deploying several hundred million dollars of gross capital over the next several years.” 

BCT will at first focus on acquiring, entitling and developing land in the region’s highest-growth suburban markets, especially targeting areas with good schools, growing neighborhoods and desirable entertainment options. 

Cherry Tree Capital's Chris Marsh and Tim Stanley worked together as executives at the Irvine Co., where they oversaw a 22,000-plus-unit multifamily development pipeline. The two launched Cherry Tree Capital Partners in 2021 and will lead the new BCT Development venture.

“Aging millennials are the fastest-growing demographic in Southern California,” Stanley said in a statement. “As individuals and families continue to migrate to the suburbs, they’re faced with a lack of attainable for-sale housing, and quality alternatives. That’s where BCT comes in — meeting this deep need of elevated rental living through our premier townhome communities, all while prioritizing affordability by design.” 

“In a supply constrained market with growing consumer demand, we believe there is a significant opportunity to develop premier townhome communities for the high concentration of households in Southern California that have been priced out of homeownership,” Bain Capital Real Estate Managing Director Martha Kelley said in the statement. 

Only 11% of households in Los Angeles and Orange counties could afford a median-priced house during the third quarter of 2023, the Los Angeles Times reported, citing National Association of Realtors data. In Riverside County, which is perceived as more affordable, that figure was 19%. In San Bernardino County, also associated with more affordable living costs, that proportion was 25%. 

But the demand for new SoCal homes, like their price tags, is still high. Three SoCal housing developments, one in the Inland Empire and two in Orange County, were among the nation’s fastest-selling last year, The Orange County Register reported. 

Nationwide, many single-family rental operations that scooped up existing homes to rent them are pivoting to build-to-rent to meet the need of would-be residents who can’t buy a home, whether because of the high cost of borrowing, a lack of supply or both.