Nuveen Enters Single-Family Rental Market
The global asset management firm will invest up to $400 million in the new Sparrow platform, which will acquire homes across the Sun Belt.
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Nuveen Real Estate will invest up to $400 million in a new single-family rental startup called Sparrow, marking the $131 billion investment manager’s first foray into the niche asset class. Based in Scottsdale, Ariz., Sparrow will receive capital to expand its platform while growing its portfolio of single-family rental homes, starting with targeted cities in Arizona, Florida and Texas.
The business expects to begin buying homes in the next week or so, a Nuveen representative told Multi-Housing News. Sparrow was founded by REIT veterans Patrick Whelan and Jami Schulman, who co-founded single-family rental investment and management firm Imajn Services in 2017. The executives have acquired, leased and managed more than 75,000 rental homes and apartments nationwide, according to Sparrow’s website.
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Sparrow and Nuveen will target high-growth markets with attractive economic and demographic drivers across the Sun Belt states. Michael Hunter, global head of alternatives and strategic transactions at Nuveen Real Estate, indicated in a statement that the company foresees continued growth in demand for the asset class driven by a “fundamental shift in demographics and lifestyles.”
Emerging niche
Institutional investors have staged a gradual entry into the single-family rental market. Last December, Global City Development partnered with alternative investment firm Leste to launch Cassa Life, a $2.5 billion housing platform that aims to develop 10,000 single-family rental homes across the U.S.
In the same month, Canada’s Tricon Investment Group acquired a portfolio of 708 single-family rental homes in Nashville, Tenn., from Invitation Homes, the nation’s largest owner in the space. Tricon made the $210 million investment through a single-family rental joint venture that was said to include sovereign wealth and pension fund investors.
A Freddie Mac report released at the end of 2018 showed that only 1 percent of all single-family rental homes, or about 188,000 properties, were owned by institutional investors. Roughly 88 percent were owned by very small investors with portfolios of 10 houses or less.
