MetLife Closes $390M SFR Fund As Some Back Away From Asset Class
MetLife Investment Management is doubling down on single-family rentals, closing its latest fund with $390M to target the sector, the company announced Tuesday.
Capital for MetLife Single Family Rental Fund came from institutional investors around the world for the first closed-end vehicle of the firm’s real estate equity team, according to the release.
"We have a high level of conviction in the demand for single family rentals, and we see this fund as a natural extension of our experience investing in other housing segments, where our perspective as a leading institutional investment manager has served clients well,” Robert Merck, global head of real estate and agricultural finance at MetLife Investment Management, said in a statement. “We believe there’s a significant and sustained opportunity to give renters access to well-located units designed specifically for their use.”
SFR has seen a rush of institutional investment in recent years. In the last quarter of 2021, investors bought roughly 80,000 U.S. homes worth a total of $50B, a 44% rise over the year before, according to Redfin data. The jump in investment raised the ire of local communities, with many residents claiming it was worsening the nation's housing crisis.
But investors and lenders have backed off SFR as interest rates have risen and general economic conditions have worsened. Last year, SFR investment was at $13B, down from $44B in 2021, per John Burns Research and Consulting. As of July this year, $2.3B has been invested in the property type.
Some institutional players who piled into the asset class are already looking to reduce their holdings. Starwood's nontraded real estate investment trust was reportedly looking in June to offload a 2,000-unit SFR portfolio.
Demand is still high, however, with SFR reaching 97% occupancy in May, per RentCafe, better than the 95% nationwide figure for standard apartments. Incoming supply may dent SFR occupancy, however. There were more than 44,000 SFR units under construction in the spring, triple the number of deliveries from 2022, according to RentCafe.
