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More Investment Firms Spending Billions To Snap Up Sun Belt Single-Family Rentals

More than a third of single-family homes in the U.S. are now rentals, according to reporting from Bloomberg CityLab.

Two more private equity giants are capitalizing on the demand for homes in the U.S., buying up thousands of build-to-rent single-family homes in the Sun Belt.

Swiss-based private equity firm Partners Group Holding AG spent $1B to acquire more than 2,500 recently constructed single-family rentals in 17 states across the Sun Belt and another 1,000 under-construction homes in the pipeline, according to a press release.

It acquired the properties from affiliates of Fortress Investment Group and Kairos Living, and Kairos has agreed to finish construction of the homes and stay on as property manager. Partners has also agreed to invest in Kairos' fast-growing BTR business.

Nexpoint Advisors, an investment platform founded by former Highland Capital Management CEO Jim Dondero, has put $250M of equity toward a new investment fund seeking to raise more than $1B to purchase single-family houses either straight from developers or ones that were recently built, Bloomberg reports

It already raised $1B for single-family rental affiliate VineBrook Homes Trust, but while that fund focused on older Midwestern homes, the new fund is looking to buy in high-growth Sun Belt markets.

Nexpoint said in a statement that it would advise a new REIT with aims of buying, building and managing single-family rental properties in partnership with property manager HomeSource Operations. The REIT plans to purchase several thousand homes before the end of 2022 and already owns more than 1,000.

The single-family rental market exploded during the pandemic, as investment firms and tech platforms seized the opportunity of rapidly rising housing prices. Investment firms have been betting big on single-family housing since the Great Recession when private equity groups purchased discounted homes out of foreclosure and turned them into rentals. Confidence in the single-family rental market only grew during the pandemic: The number of build-to-rent homes increased by 30% between 2019 and 2020, The New York Times reported

This is Partners Group’s second billion-dollar investment in the U.S. housing market within the past six months, CoStar reports. In December last year, Partners Group entered into a billion-dollar joint venture with Texas-based developer StoryBuilt to produce luxury housing in urban areas.