A Canadian pension giant has become the latest institutional investor to bet on the single-family rental (SFR) market, forging a $700 million joint venture with Pretium, the second-largest owner and operator of the niche asset class in the U.S.
The venture between Pretium and the Public Sector Pension Investment Board (PSP Investments) will initially invest in SFR across major markets in the Southeast and Southwest. Specific markets and projects were not disclosed.
The announcement comes after Pretium and Ares Management Corp. closed on their $2.5 billion acquisition of Front Yard Residential Corp., a watershed public-to-private deal that added 14,500 rental homes to Pretium’s platform. Pretium, which has $20 billion of assets under management, now owns and operates more than 55,000 SFR homes throughout the U.S., second only to Invitation Homes.
Ottawa-based PSP Investments, which manages pension funds for Canadian institutions including the federal Public Service and the military, had a portfolio of about C$169.8 billion of net assets as of March 2020. That portfolio included C$23.8 billion in real estate, primarily in the U.S. and Canada. Residential and retirement assets made up a plurality of the portfolio at 38.4 percent.
Niche asset rises
The SFR sector has attracted growing interest from players such as Blackstone Group and Canada’s Tricon Residential, backers of Invitation Homes, and Nuveen Real Estate, which last September announced it would invest up to $400 million in a new, Arizona-based SFR platform called Sparrow.
Other investors in the market include Rockpoint Group, which formed a $250 million joint venture with Atlanta-based SFR operator Resicap last October. In 2019, Global City Development partnered with alternative investment firm Leste to launch Cassa Life, a $2.5 billion SFR platform.