MetLife Investment Management Launches $390M SFR Fund
By Andrew Coen August 15, 2023 4:34 pm
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Commercial real estate’s increased appetite for single-family rental (SFR) has extended to the largest U.S. life insurance company.
MetLife Investment Management announced on Tuesday the closing of its new SFR closed-end fund with $390 million in capital commitments.
“We’ve been a significant investor in U.S. housing developments for many decades, and this is largely a response to the shift in demand for high-quality, well-located rentals in lower density environments,” said James Ray, portfolio manager of MetLife’s new SFR fund.
The MetLife SFR strategy is aimed at developing and acquiring “purpose-built, single-family rentals” in the 75 largest U.S. markets. Commitments to the fund were secured from an undisclosed global group of institutional investors.
Ray, who previously oversaw MetLife’s regional acquisitions and development activity in the Southwest U.S, said the fund will be “primarily focused” on locations with solid schools, job opportunities and retail options. He said there will be seven regional teams that will provide a bottom-up screening process to determine the best areas to target.
The new SFR fund was launched by MetLife shortly after the Federal Reserve hiked interest rates in late July to their highest level in 22 years, as part of a nearly year-and-a-half-long hawkish strategy to combat inflation. Yardi Matrix released an August report showing that while higher interest rates have slowed SFR rent growth and acquisitions in the first half of 2023, demand for the asset class is projected to remain strong as millennials seek alternatives to homeownership and apartment rentals.
“Our focus is on creating value through the development of assets, which is much less sensitive to short-term changes in interest rates,” Ray said.
Andrew Coen can be reached at acoen@commercialobserver.com.
