Pretium closes residential loan fund at $1.7 billion

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Premium, a specialty investment firm with more than $40 billion in assets under management, closed its largest residential lending fund with $1.7 billion in capital commitments. The amount exceeded its goal of $1.5 billion and is nearly double the size of its initial home loan fund.

Pretium Residential Credit Fund II has received significant support from a wide range of institutional investors and consultants around the world, including insurance companies, pension plans and wealth managers. The Illinois state teachers’ retirement system has committed $150 million, according to Private debt investor.

The fund invests in US residential mortgages that fall outside the traditional mortgage system and are less likely to be serviced by traditional banks. Pretium is able to maximize value creation for investors using industry-leading specialist mortgage services, loan origination platforms and loan-level analytics.

Jonathan Babkow, senior managing director and co-head of residential credit at Pretium, said in a prepared statement that the firm’s investment strategy reflects the team’s decades of experience in all aspects of mortgage investing and through multiple economic cycles. He said strong housing demand and record levels of home equity are creating new opportunities in an unprecedented residential credit market.

Matt Nichols, senior managing director and co-head of residential credit at Pretium, said in prepared remarks that the firm’s returns are driven by its ability to successfully restructure loans to help borrowers find sustainable payment structures for keep them in their home and maximize the value of the loans for fund investors.

Pretium has also expanded its ability to find, create and invest in a wider range of mortgage products thanks in part to several recent new hires, including managing directors Sarah Kong, Andrew Mile and Peter Morreale.

Simpson Thacher & Bartlett LLP served as legal counsel to the fund.

Pretium Residential Investments

Pretium is a leader in the single-family rental and build-to-rent markets. Late last month, Pretium and Crescent Communities acquired land for its third project which is part of a billion dollar commitment to develop new BTR communities. The land will be used to develop Harmon Legacy Trail in Nokomis, Florida, which will include 78 three- and four-bedroom homes ranging from 1,600 square feet to over 1,900 square feet.

In October 2020, Pretium and Ares Management Corp. have partnered to acquire Front Yard Residential Corp., a supplier of SFR, in a transaction valued at approximately $2.4 billion. The portfolio had over 55,000 homes, making Pretium the second largest SFR owner and operator in the country at the time.

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