Starwood Capital Group is acquiring 2,300 single-family homes for rent from Pretium Partners, increasing its stake on US real estate in suburbs.
Starwood, led by Barry Sternlicht, has agreed to pay more than $ 1 billion on the portfolio, according to people who are aware of the transaction, which is pending completion.
Starwood and Pretium representatives declined to comment.
Single family home rentals became a popular business when the Covid-19 pandemic sparked migration to the suburbs of the Sun Belt and prompted property investors to look for new strategies. According to deal announcements compiled by John Burns Real Estate Consulting, more than $ 30 billion has been raised for rental homes since 2020.
The flood of new capital, combined with low borrowing costs and rising rents, is driving up asset prices. In the past, rental houses were considered riskier than apartment buildings, so single-family investors could earn a premium. But the gap is getting smaller.
Sternlicht, whose company is one of the largest owners of US apartments, acquired single-family homes for the first time after the US foreclosure crisis. After a hiatus, Starwood started buying homes again before the pandemic.
Pretium is now one of the most active participants in the boom in single-family home rentals. The company, led by Donald Mullen, has partnered with Ares Management Corp. Teamed Up to Create Landlord Front Yard Residential Corp. for $ 2.5 billion and has reached agreements to purchase homes from GTIS Partners and Zillow Group Inc.