Two Minneapolis-based firms focused on alternative investments have teamed up to invest in portfolios of loans secured by single-family and small multifamily properties across the U.S. Hunter Street Partners and Rice Park Capital Management LP will be evaluating targeting performing and nonperforming residential transition loans used to renovate and sell properties.
The firms’ first acquisition has been completed but the partners declined to disclose details about the initial purchase and would not release information about how much they are expecting to invest for their platform. Asked if they were targeting any particular area or areas of the United States, the partners told Multi-Housing News they were “market agnostic in terms of where we plan to invest.”
In announcing their residential loan investment platform, Hunter Street Partners and Rice Park Capital pointed to data from the National Association of Home Builders that stated the median age of the owner-occupied housing stock in the U.S. has increased from 31 years in 2005 to 37 years in 2018. The partners also cited a June report from the U.S. Department of Housing and Urban Development that noted single-family housing starts declined 17.8 percent year-over-year and total housing starts were down 23.2 percent year-over-year. HUD also reported the listed inventory of new and existing homes was down 5.4 percent and 18.8 percent respectively.
Nick Smith, the founder & managing partner of Rice Park Capital Management, said in a prepared statement the outlook for the transition loan market is strong because of the aging housing stock, resilient home prices and a severe under-supply of affordable homes.
Neal Johnson, the CEO & CIO of Hunter Street Partners, noted in prepared remarks the uncertainty caused by the COVID-19 pandemic had led to a retrenchment of traditional capital providers in the residential loan market even though housing fundamentals have remained relatively stable.
The launch of the residential loan investment platform brings together two veteran investment teams with experience in opportunistic residential real estate. Smith’s experience includes roles at the Blackstone Group, Incenter Mortgage Solutions, Two Harbors Investment Corp., Green Tree Investment Management and GMAC ResCap. Johnson had previous roles at Isles Ranch Partners, Värde Partners, University Capital Strategies Group and and Piper Sandler Cos.
Jones noted the two teams have known each other for many years and are looking forward to meeting the financing needs of transition loan borrowers while capitalizing on what he called dislocated and deep value opportunities they are seeing in the market.
Hunter Street Partners is an alternative investment management firm that provides capital solutions to operating partner team and lower middle-market companies across corporate finance, real estate and specialty finance. Rice Park Capital Management is an alternative investment firm that manages active investment strategies in the fixed-income alternatives, real estate and financial technology markets.