Pretium Closes Residential Credit Fund at $1.7B

2 min read

The vehicle invests in residential loans that fall outside the traditional mortgage system.

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Pretium, a specialized investment firm with more than $40 billion in assets under management, has closed its largest residential credit fund with $1.7 billion in capital commitments. The amount exceeded its $1.5 billion target and is nearly twice the size of its initial residential credit fund.

Pretium Residential Credit Fund II received strong support from a broad range of investors and institutional consultants across the globe, including insurance companies, pension plans and wealth managers. The Teachers’ Retirement System of the State of Illinois committed $150 million, according to Private Debt Investor.

The fund invests in U.S. residential mortgage loans that fall outside the traditional mortgage system and are less able to be serviced by traditional banks. Pretium is able to maximize value creation for investors by using industry-leading specialized mortgage servicing, loan origination platforms and loan-level analytics.

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

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

Pretium has also expanded is ability to source, originate and invest in a broader 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 fund counsel.

Pretium Residential Investments

Pretium has been 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 that’s part of a $1 billion commitment to develop new BTR communities. The land will be used to develop Harmon Legacy Trail in Nokomis, Fla., which will feature 78 three- and four-bedroom homes ranging from 1,600 square feet to more than 1,900 square feet.

In October 2020, Pretium and Ares Management Corp. partnered to acquire Front Yard Residential Corp., a SFR provider, in a deal valued at approximately $2.4 billion. The portfolio had more than 55,000 homes making Pretium the nation’s second-largest SFR owner and operator at the time.

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