CPP Investments commits $840m to single-family rental JV with Greystar

The commitment to the strategy comes amid a boom in demand for US homes, both from renters and investors, during the pandemic.

The Canada Pension Plan is the latest institution to dive into the single-family rental market after committing $840 million to a joint venture with Greystar.

Together, the two firms plan to develop and acquire communities of standalone homes and townhouses throughout the US Sunbelt, Mountain West and West Coast regions, PERE understands. Greystar will then manage the properties as it does with its multifamily holdings.

CPP Investments joins the ever-growing list of institutional investors to have written large checks into the SFR space, including fellow Canadian pension investor PSP Investments and American groups such as the California State Teachers’ Retirement System and the Teachers’ Retirement System of Texas.

Institutional investment in single-family homes strategies had been on the rise since the global financial crisis, when droves of foreclosed homes were rolled up into SFR platforms by groups such as Blackstone and Starwood Capital. The sector has been on fire since the pandemic. In total, at least $30 billion of institutional capital has been committed to the strategy since March 2020, according to John Burns Real Estate Consulting, which tracks the space.

Peter Ballon, managing director and global head of real estate at CPP Investments, said his firm felt comfortable entering the space because of its longstanding relationship with Greystar – the two already have joint ventures for developing US multifamily and life sciences lab space. The dynamics of the SFR space also won the investor over.

“Purpose-built single-family rental properties are becoming more desirable for a large and growing segment of renters in the US,” Ballon said in a statement, “particularly families or other renters looking for more space without sacrificing access to urban centers.”

Despite its standing as the top owner of rental housing in the world with 750,000 apartments and student housing beds, Greystar had little exposure to SFR. As of this past February, it had fewer than 2,000 rental homes to its name. The partnership with CPP is the first major commitment to the SFR space for the South Carolina-based firm.

Bob Faith, founder, chairman and chief executive of Greystar, said he sees an opportunity to bring the type of highly-amenitized, active management approach to the single-family space that it has long leaned on for its multifamily platforms.

“This new wave of purpose-built, accessible rental communities is giving new options to renters who are seeking more space in a safe and professionally managed, quality home,” Faith said in a statement. “We are expanding the rental experience by providing families with the option of single-family homes while maintaining the same exceptional experience and sense of community of multifamily rental homes.”

The venture, which will be 95 percent owned by CPP Investments, will look for opportunities to buy or build communities in areas close to growing employment markets, mass transportation and retail centers. Like other Greystar properties, the complexes will have on-site leasing and management offices. All assets in the strategy will have private backyards and garages, PERE understands.

CPP Investments manages C$541 billion (US$428 billion; €379 billion) on behalf of Canada’s more than 20 million pensioners, with roughly 8.5 percent of that AUM in real estate. Greystar manages $230 billion of real estate in 215 markets around the world.