Our single family rental home strategy is focused on the fastest growing metros in Sun Belt markets. We aim to capture strong future demand driven by the growth in the single family renter demographic, those aged 35-44 years, projected to grow 1.3% per annum during the next 10 years, compared to 0.6% per annum for the U.S. population overall.
There are existing barriers to entry for both acquisitions and operations in Single Family Rentals that create immediate alpha to traditional sectors. Nuveen has the capability, capacity, and strategic partnerships to execute in this strategy. To operate in this highly fragmented segment of the housing market, we partnered with Sparrow, an asset manager who offers a fully-integrated platform with expertise across the investment life cycle. The GCREIT’s SFR portfolio has been achieved by purchasing one-off assets and aggregating a portfolio creating a yield premium for investors, rather than paying up for existing SFR portfolios. The Fund intends to continue to increase its allocation to this high growth sector.
Our strategy targets middle class renters who typically have better credit quality and longer tenancy. We aim to focus on quality, affordable homes in excellent school districts near major employment centers. Our target homes are 1,750-2,000 square feet with 3-4 bedrooms and minimum of 2 bathrooms priced at $250,000-$350,000 and below replacement cost. In addition, key environmental criteria are considered in all acquisitions to reduce flood and storm surge risks.
We are building a portfolio of rental properties that will provide working families with quality, affordable homes in excellent school districts near major employment centers.
The target Sun Belt markets are expected to outperform the broader U.S. in terms of population and employment growth over the next five years. The affordability index is below U.S. average, demonstrating downside protection in a recessionary environment and upside if target geographies continue to normalize to U.S. median. These focus cities are: Phoenix, San Antonio, Dallas/Ft. Worth, Tampa, Orlando, Atlanta, Raleigh, Charlotte, and Nashville.
