One of America’s biggest homebuilders is getting into the rental market at a time when it is growing rapidly.

Lennar Corp., which has traditionally always built its homes with the intent of selling them, said last week it has created a new business called Upward America Venture, that will acquire hundreds of single-family homes and rent them out in “high-growth” rental markets across the U.S.

The single-family rental sector has been accelerating in recent months due to the economic consequences of the COVID-19 pandemic, which has prompted many people to look for additional space. For many people though, their financial circumstances mean that owning a home is not an attainable goal, and that has led to much greater demand for rental properties instead.

Lennar said that it’s hoping to acquire more than $4 billion worth of single-family homes and townhomes through Upward America Venture, both from its own portfolio and also those of other homebuilders.

Rick Beckwitt, co-CEO and co-president of Lennar, said the new entity is a continuation of Lennar’s vision of becoming an environmental, social and governance-driven house building company that creates homes not only for sale, but also for rent. In addition, he said a portion of its rental homes will be made available via a rent-to-own option, helping more people to get into homeownership via non-traditional means.

“The vehicle’s social focus provides a unique opportunity for families and individuals across the country to live in brand-new homes at an attainable price point, all without putting up a down payment,” Beckwitt said.

Beckwitt said that Upward America Venture has an opportunity to scale at a pace that he does not believe will be possible for competitors in the single-family rental market, thanks to its access to “Lennar’s pipeline of more than 300,000 owned and controlled home sites.”

Lennar's initiative comes at a time when other home builders firms are ramping up construction of rental homes, funded by investors who believe that demand will remain high in suburban locations as home prices keep on growing.

Lennar said that Upward America Venture is being funded with an initial total equity commitment of $1.25 billion, led by institutional investors such as Centerbridge, Allianz Real Estate and others.

William Rahm, senior managing director and global head of real estate at Centerbridge, said he believes the single-family rental sector is going to continue to perform strongly in the coming years.

"As the housing needs and demographics in the United States continue to evolve, we believe that the single family rental sector will continue to outperform,” Rahm said. “We are thrilled to partner with Lennar given their scale and capabilities to aggregate a geographically diverse portfolio of homes concentrated in some of the fastest growing markets in the country.”