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.’
Managing Director, Pretium