Mar 28, 2024
Nuveen Strikes Deal With Invitation for Rental-Home Management
, Bloomberg News
(Bloomberg) -- Nuveen is shifting management of about 3,000 rental houses to Invitation Homes Inc., marking the end of its attempt to launch a new single-family landlord.
Nuveen’s real estate arm pledged as much as $400 million in a 2020 transaction with a company called Sparrow, striking the deal at a moment when investor appetites for rental homes were nearly insatiable. But higher interest rates cooled demand and stalled Sparrow’s growth.
Nuveen, which is retaining its ownership of the real estate, pursued the sale to Invitation to recoup its investment in the company, according to people familiar with the matter. It leaves Sparrow with some remaining assets, but the company’s path forward is uncertain, said the people, who asked not to be named discussing private details.
Nuveen previously sought to recapitalize some of the rental homes but no transaction materialized, one of the people said.
A representative for Nuveen declined to comment. Sparrow didn’t respond to a request for comment.
Invitation Homes confirmed that it had reached a deal to manage homes for Nuveen, but declined to comment further.
Invitation, led by Chief Executive Officer Dallas Tanner, has been seeking to expand by acquiring rivals’ properties outright or agreeing to manage their holdings. The company launched its third-party business last year, striking a deal to oversee rental houses for Starwood Capital Group.
Invitation has said that its new property-management initiative will add to earnings. It may also improve the company’s understanding of rental-market dynamics and function as a way for the company to better understand portfolios that it seeks to acquire in the future.
“There are a number of small to midsize operators out there that have great real estate, but they don’t have the same sort of margin profile that some of the bigger companies have,” Tanner said at an investor conference early this month. “This is going to be a normal course for our business to look at these opportunities as strategic.”
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