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.
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.”
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.