Varde Partners Bets on Housing Market Boom in Sun Belt Suburbs

Varde Partners is investing more than $250 million to fund development of single-family homes in Arizona, Florida and Texas in a bet on Sun Belt suburbs.

With historically low mortgage rates driving a housing rally during the pandemic, Varde is putting money into the real estate market through a trio of transactions as Americans shift away from coastal cities in a search for larger properties.

The fund, which manages more than $14 billion, is acquiring a master-planned community in Austin, according to a statement. It’s also purchasing an active-adult community in Scottsdale, Arizona, where it will partner with builder Shea Homes to complete hundreds of houses for residents 55 and older.

In a third transaction, Varde is investing $100 million to develop land in Florida and Colorado.

The firm is making the investments as “traditional lenders continue to retrench,” according to a statement.

The transactions come at a time when the Covid-19 pandemic is accelerating demographic shifts to the suburbs. Wall Street firms have sought to invest behind those trends, placing bets on single-family rentals, suburban apartment buildings and land for developing new subdivisions.

Varde, which invests in credit, real estate and private equity, plans to monetize its land investments by selling lots to homebuilders or in the case of the Scottsdale transaction, partnering with a builder to sell finished homes into the housing market.

©2021 Bloomberg L.P.

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