Nuveen, an arm of pension fund and investment giant TIAA, is effectively getting out of the single-family rental business by inking a deal to shift management of about 3,000 rental homes to SFR specialist Invitation Homes, Bloomberg reports, citing anonymous sources.

Nuveen will retain ownership of the properties, which it has owned for about four years.

Last year, Invitation launched a third-party management business for single-family rental houses, agreeing to manage about 8,500 properties for Starwood Capital Group. Earlier in 2023, Invitation acquired about 1,900 homes from Starwood outright for $650M.

In an email to Bisnow, an Invitation spokesperson didn't comment on the deal with Nuveen. Nuveen did not respond to a request for comment.

Founded in 2012, Invitation started by acquiring distressed homes in the wake of the Global Financial Crisis and, until recently, focused on renting properties to a growing number of households that want to live in a single-family home but can't or don't want to purchase one. Invitation owns 88,000 homes, either on its own or through joint ventures, and manages another 17,000.

Nuveen acquired its SFR holdings by making an investment of as much as $400M in a rental home company called Sparrow in 2020 when SFR properties were a hot item for investors.

As interest rates have risen, however, and with rental growth moderating in 2023 compared to the previous two years, investors and lenders have backed off the property type, according to John Burns Consulting.

Rents for single-family detached homes grew only 1% year-over-year in 2023, John Burns notes, while townhome-style rents gained 2% over the same period.