Landlord Cashes Out Foreclosure Crisis Bet in $300 Million Deal
JUN 30, 2021 | REPUBLISHED BY LIT: JUL 3, 2021
GTIS Partners, which amassed a portfolio of homes in the aftermath of the foreclosure crisis, is selling more than 1,000 U.S. rental properties to Pretium Partners for about $300 million, according to people familiar with the deal.
The homes are located across Atlanta and Nashville, Tennessee. Pretium plans to spend $15,000 per property to upgrade the houses, one of the people said. GTIS confirmed the sale but declined to name the buyer. A representative for Pretium declined to comment.
Pretium owns more than 55,000 single-family rental houses through Progress Residential and Front Yard Residential Corp.
The deal comes as Wall Street investors increasingly chase returns in the housing market. The pandemic has fueled demand for suburban living, but ownership is moving out of reach for many Americans as prices surge. That’s boosted single-family rentals, which offer backyards and extra space to people who can’t afford to buy.
New York-based GTIS acquired more than 4,000 houses in the years following the U.S. foreclosure crisis, when Wall Street-backed investors bought thousands of discounted homes at auctions and other distressed-property sales and rented them.
The deal with Pretium “substantially completes” the disposition of those properties.
GTIS has recently joined other investors focusing on acquiring newly built homes designed specifically as rental properties.
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“This sale represents an important milestone for our firm as we shift our focus to providing a new purpose-built rental product to a market that is in desperate need of new, high-quality supply,” Tom Shapiro, president of New York-based GTIS, said in a statement.
Investors have committed billions to buy rental houses in recent months, with Blackstone Group Inc., KKR & Co. and Brookfield Asset Management Inc. among the firms to make new bets on the demand for suburban living from Americans without the cash to buy homes.
Pretium has also raised new capital for single-family rentals. It partnered with Ares Management to acquire Front Yard for roughly $2.5 billion earlier this year, and also launched a joint venture with Canadian pension manager PSP Investments to invest $700 million in rental houses.