Pretium to launch $600M JV for build-to-rent development

Firm partnering with Onyx+East on 2K properties

National /
Jan.January 24, 2022 10:45 AM

From left: Don Mullen, chief executive officer, Pretium Partners; Kelli Lawrence, chief executive officer, Onyx+East (Pretium Partners, Onyx+East, iStock)

A major player in the build-to-rent space has signed a new partnership to expand its share of the booming market.

Pretium Partners inked a joint venture with Indianapolis-based developer Onyx+East for approximately $600 million, Bloomberg reported. The venture aims to build more than 2,000 rental homes including either three or four bedrooms in Ohio, Indiana and the west coast of Florida.

Pretium signed a similar deal with Crescent Communities in September, Bloomberg noted, in which the two companies agreed to partner to build 3,000 homes at the time.

“We really want to be a leader in build-to-rent and make an impact on solving the great need for housing in the U.S.,” said Pretium managing director Matt Johnston.

New York City-based Pretium Partners is already a leader in the single-family rental business, including a portfolio of more than 70,000 properties. It also appears to have ambitions to keep adding to its stock.

In November, the investment firm agreed to buy 2,000 homes from Zillow as the company began to wind down its iBuying program. Pretium reportedly paid market price for the homes, scattered across 20 markets in the United States.

The single-family rental sector has been booming as more Americans are finding homeownership increasingly out of reach or not worth the commitment.

Through the end of July, asking rents on single-family rentals had jumped nearly 13 percent year-to-date, the highest increase in five years.

The New York Times reported the number of build-to-rent homes soared by 30 percent from 2019 to 2020. As of October, the fastest-growing housing sector in the nation accounted for 6 percent of all homes being constructed.

Investors in the space are consistently notching strong returns based on sustained demand, short supply and high prices. In November, securities advisory Green Street reported the expected risk-adjusted return on build-to-rent investments was 8 percent on average, greater than the weighted average return of 6.1 percent across 17 other sectors combined.

[Bloomberg] — Holden Walter-Warner





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