Previously unreported documents illustrate how a venture backed by wealthy investors has become one of the country’s largest landlords: by scooping up homes before middle-class buyers can.
Progress Residential, which is backed by New York-based Pretium Partners, has compiled tens of thousands of homes in its portfolio and is acquiring up to 2,000 homes a month, the Washington Post reported. The firm uses an algorithm to find properties before making fast, all-cash offers, boxing out traditional buyers.
Progress has created a tight market in Tennessee’s Rutherford County, where the company owns more than 1,500 homes. County property assessor Rob Mitchell told the Post nearly 1 in 10 homes in the area belongs to a real estate trust, and ATTOM Data Solutions ranks it the fifth-least-affordable county for homebuyers.
The documents show how the company generates big profits for investors, and interviews detail tenants’ complaints of big rent hikes, poor maintenance and evictions during the national moratorium.
As Pretium set out to buy distressed properties in the wake of the 2008 housing crash, the New York-based firm solicited investments of at least $2 million and projected annualized returns of 15 to 20 percent, according to documents reported by the Post. It ultimately raised more than $1 billion for Progress Residential.
The documents were in the Pandora Papers, a trove of previously confidential financial records obtained by the International Consortium of Investigative Journalists (ICIJ) and shared with multiple outlets.
One investor named in the documents is gambling mogul Vikrant Bhargava, whose investment through a Singapore-based trust grew from $6.6 million to $9.4 million in five years.
“All of our entities conduct business according to the highest ethical and legal standards,” Progress told the Post. “Pretium is dedicated to being a part of the solution to our nation’s housing crisis through unparalleled efforts to support our residents and communities.”
But some tenants and former employees told the Post that the firm put residents on the hook for maintenance costs and unfairly hiked rents. Some accused the venture of evicting residents during the first year of the pandemic, despite the moratorium.
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A House of Representatives select subcommittee sought eviction documents from Pretium and other major landlords, the Post reported in July. The company’s eviction filings appear to target Black areas, according to the Post. Progress denied wrongdoing.
“No resident covered by a CDC declaration has ever been evicted from Pretium’s homes for non-payment of rent,” a spokesperson fro Pretium told The Real Deal.
Investors have become an increasing presence in the housing market. Redfin reported that investors accounted for 18.2 percent of home purchases in the country in the third quarter, a record high. Investors spent $120,000 more than the median sale price during the quarter.
Those premiums may be contributing to a growing housing affordability crisis. Pretium has made public moves to purchase more homes, recently agreeing to buy thousands from Zillow, which reportedly received market price.
[WaPo] — Holden Walter-Warner