Texas Teachers, GIC Join Wall Street Hunt for U.S. Rental Homes

(Bloomberg) -- A U.S. public pension fund and a sovereign wealth fund are joining forces to hunt for profits in Sun Belt rental houses.

The Teacher Retirement System of Texas and Singapore’s GIC Pte formed a joint venture with Toronto-based Tricon Capital Group Inc. to acquire as many as 12,000 rental homes, according to people with knowledge of the deal, who asked not to be named because it’s private. Each of the three partners has pledged $250 million, allowing the venture to acquire about $2 billion of houses, according to a June 27 statement from Tricon that described the joint venture but didn’t name the partners.

Representatives for Tricon and Texas Teachers declined to comment. A GIC representative didn’t immediately respond to a request for comment.

The investment comes from a relatively new source for an industry that has been historically dominated by small investors. Single-family rentals started attracting Wall Street interest following the foreclosure crisis, when hedge funds and private equity firms purchased homes cheaply and built systems to manage them more efficiently. Large companies bought more single-family rental homes last year than in 2016, the first increase since 2013, according to data compiled by Amherst Holdings LLC.

“You had some pension and insurance money come in very early, and now they are circling again,” said Dennis Cisterna, chief executive officer of Investability Solutions, which provides services to single-family investors. “Sovereign wealth is looking hard now also.”

Tricon already owns 15,500 rental homes in such U.S. metropolitan areas as Phoenix and San Antonio and has been busy acquiring more. The joint venture will focus on buying “middle market” homes in areas where Tricon already invests, according to the statement.

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