Builder Is Constructing REIT for Home Rentals

Investors can buy stakes in malls, apartment towers, timber forests and even cellphone towers through real-estate investment trusts. Now, add to the list: single-family homes transformed into rental properties. Beazer Homes USA Inc., BZH +0.37%one of the nation's top home builders, has formed a REIT that will buy and then rent single-family homes, one of the largest and most talked-about asset classes in the real-estate business. The Atlanta-based company last week announced that it was joining with buyout firm Kohlberg Kravis Roberts & Co. to form the REIT, which eventually plans to go public. Beazer already had accumulated 192 single-family homes in the Phoenix and Las Vegas areas—more than 10% of them houses the company built and sold in the first place. Most were purchased at steep discounts from their original prices through foreclosure auctions, short-sales or other distressed home-buying strategies.

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