The Wall Street Journal: Rental-Home Owner Pretium Buys Home-Flipping Lender for $1.5 Billion

Investment firm Pretium Partners is acquiring home-flipping lender Anchor Loans for $1.5 billion, the latest sign that big investors believe the record-setting housing boom has more room to run.

The deal gives Pretium, one of the country’s largest owners and managers of rental houses, a large new revenue stream in the hot business of turning homes into investment properties. Soaring home prices have been compelling more families to turn to rental homes to live in prime suburban neighborhoods.

The sellers were a group of investors that included Wafra Capital Partners Inc., an affiliate of a Kuwait government pension fund, which had acquired a controlling stake in the company in 2019.

Thousand Oaks, Calif.-based Anchor has originated more than $10 billion in debt, specializing in small loans to professional home-flippers as well as rental landlords. According to the company, 95% of its loans go to borrowers that have completed at least 40 projects. Flip loans are generally short-term—about one-year and high-interest.

In bringing Anchor in under its roof, Pretium is betting on continued business from investors looking to buy and renovate houses. The company points to both a shortage of homes and the needs of the country’s roughly 64 million existing homes built before 1990, many of which require updates and repairs to remain viable long-term investments.

“It’s not only that we don’t have enough houses, it’s that we don’t have the right houses,” said Ted Huffman, senior managing director and head of strategic development at Pretium.

Anchor and its large loan book will provide Pretium with possible leads for its rental-property management operation, Progress Residential, and a potential pipeline of newly renovated homes that Pretium might want to purchase, Mr. Huffman said.

The single family-rental market has had a banner year. Rents in the sector reached record high growth in July, rising 8.5% annually, according to housing data firm CoreLogic. Institutional investment in the single-family rental sector is also soaring. Large firms such as Blackstone Group Inc. and Invesco Real Estate recently have made multibillion-dollar commitments, while big home builders are becoming more focused on building homes for rent.

In the second quarter, one in four home buyers was an investor in hot markets such as Phoenix and Miami, according to real-estate company Redfin. Nationally, some 80,000 home sales that quarter were flips, meaning they were sold one year or less after purchase, the most flips since 2006, according to Attom Data Solutions. Home sale prices rose nearly 23% during the second quarter compared with the previous year, according to the National Association of Realtors.

Pretium owns about 70,000 single-family rental homes and in September launched a joint venture to invest $1 billion in the construction of new homes built to rent. Previous to that, Pretium and other investors took publicly traded landlord Front Yard Residential private in a $2.4 billion deal. Pretium has roughly $30 billion in total assets under management, the company said.

Appeared in the November 3, 2021, print edition as ‘Pretium Acquires Anchor Loans.’

Sarah Kong

Managing Director, Pretium

Creditflux: Sarah Kong on structured credit


Structured Credit

October 20, 2021

Large investors will have an edge as RMBS loan volumes pick up

The rebound in the real estate market following the worst of the covid-19 pandemic has led to a brighter outlook for investors in residential mortgage-backed securities (RMBS) going into the fourth quarter.

Pretium’s Kong says she is most bullish on the fundamentals of sub-performing and non-performing residential loans.

“Most borrowers’ equity position is in a much better place today, therefore there is more potential to work with them to restructure their debt so they can re-perform and stay in their home,” Kong says.

“Housing demand will continue to support and enhance today’s equity positions, which will benefit borrowers in the future and also bodes well for both residential loan purchasers and RMBS investors.”

Kong says that available capacity to complete any third-party scope of work or service has been greatly impacted by the pandemic. Organisations that have internal platforms that can bypass these capacity constrains will have a competitive advantage, she adds.

Record sales volume of loans underlying RMBS is expected to continue in the fourth quarter amid increased demand.

“Asset managers that have the ecosystem and ability to execute restructuring strategies will continue to be the most competitive and successful in this sector,” says Kong. “In addition, I expect the higher supply in the loan markets will also drive an increase in securitisation issuance.”

US 10-year treasury rates line graph 2021
Although not as sharp as the rise in February, US 10-year treasuries climbed steeply in late September from 1.32% on 22 September to 1.55% by month end

Sarah Kong

Managing Director, Pretium

Private Credit Fund Intelligence: Pretium plans fundraising blitz following hiring spree


Pretium plans fundraising blitz following hiring spree

August 31, 2021

Private Credit Fund Intelligence: Pretium plans fundraising blitz following hiring spree

$26bn manager opens Dubai office and adds two senior US investor relations pros

Pretium Partners has added three senior investor relations pros as it looks to capitalise on recent hiring activity in its investment team, PCFI has learned.

The $26bn alternative credit manager has hired Jamal Saab to open a new Dubai office, as well as adding US-based investor relations pros Ralph Canada and Katherine Plavan in managing director-level roles. A spokesperson for Pretium confirmed the hires.

The new hires come hot on the heels of a string of new additions to Pretium’s investment team, with the firm beefing up its residential credit team and launching a new litigation finance strategy over the summer.

Saab, who will run Pretium’s new Dubai office, joins after a seven-and-a-half-year stay at PineBridge, where he was responsible for building out its Middle East and North Africa business development strategy. Before that, he spent nineand-a-half years in a similar role for Natixis Global Asset Management, sitting on the firm’s international strategic committee.

Meanwhile, Canada will be responsible for Pretium’s investor relations efforts in the western region of the US. He joins after a two-year stay at Partners Group, and previously spent six years in the IR team at Ares Management, latterly serving as a partner at the firm.

Finally, Plavan will serve as managing director in the strategic accounts team. Plavan, who is based in New York, was most recently head of investor relations at real estate investment firm Amherst Holdings. Earlier in her career, she spent seven years at hedge fund MKP Capital, latterly as a partner.

“We are excited to welcome such exceptional business development professionals as Jamal, Ralph and Katie,” said Jennifer Strickland, head of business development at Pretium. “With their talents, we look forward to better serving institutional investors.”

The hires come shortly after a string of senior hires in Pretium’s investment team, which has seen the firm launch a new litigation finance strategy and add to its residential credit team.

In June, PCFI reported that the firm had brought in Charles Schmerler and John Salomon as senior managing directors in a newly created legal, regulatory and process investments unit.

The pair will report to Matt Cantor, who joined Pretium last year as a senior managing director focusing on distressed and distressed credit.

Meanwhile, last month saw Pretium announce the hires of Goldman Sachs’ Sarah Kong, Fortress Investment Group’s Andrew Miller and Cadwalader’s Peter Morreale, all of whom joined the firm’s residential credit team.

The firm previously announced the hires of Matt Johnston and Kyle Mitts, who joined in March as managing directors focusing on investments in the single-family rental and build-to-rent industries.

by James Harvey




June 2022

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