The Real Deal New York

Cerberus launches $500M for single-family rental investments

The private equity firm was among a number of major investors that poured big money into rentals last year
August 21, 2018 11:19AM

Cerberus Capital chairman and former U.S. Vice President Dan Quayle and a single-family home (Credit: Gage Skidmore via Flickr, Wikimedia Commons)

Cerberus Capital Management is diving deeper into the single-family rental market, hoping to seize on the sector’s increased activity nationwide.

The New York-based private equity firm is looking to raise $500 million through a new fund to purchase single-family homes, according to Bloomberg. Cerberus is making the fund evergreen, meaning there is no target date to return capital to investors.

There is growing competition among buyers for single-family rentals, which aren’t selling at distressed prices anymore. An evergreen fund means Cerberus won’t have to sell at lower margins to meet a specific deadline, according to Bloomberg.

Cerberus already manages single-family properties via FirstKey Homes and by the end of 2017, owned 11,000. FirstKey CEO Martin Esteverena has previously said the company has plans to buy up to 40,000 homes.

Last year was a big one for investment in single-family rentals. Large investors including Blackstone Group bought more homes than the previous year for the first time since 2013, when they were scooping up homes at a major discount toward the end of the financial crisis.

In total, investors bought 29,000 single-family rental homes last year.

There’s also more activity on the lower-end of the market. Smaller investors are buying up homes that many larger investors won’t go near because of higher risks.  [Bloomberg] — Dennis Lynch