Pretium Raising Funds for Affordable Single-Family Rentals

Pretium carved out a niche as a major player in the single-family rental space. It’s looking to expand its reach into affordable housing.

Don Mullen’s investment manager is raising money earmarked for acquiring single-family homes that can be rented affordably, people familiar with the matter told Bloomberg. It would be the first time Pretium is raising a fund for the category.

The $60 billion asset manager plans to acquire properties, renovate them extensively and rent them out to those with Section 8 housing vouchers. The program subsidizes rents for those earning 50 percent or less of the area median income.

More than 2.3 million households are in the federal program; Pretium rents to 2,500 households with vouchers already, according to its website.

The company declined the outlet’s request for comment on its plan.

Pretium’s motivation could have something to do with elevated borrowing costs. The company reportedly sees an opportunity to acquire properties at prices that could deliver better yields than what it may earn at higher price points.

While Pretium owns and manages nearly 100,000 single-family rentals, the traditional aspects of the business are not what they once were a few years ago. When interest rates that cratered at the beginning of the pandemic skyrocketed, it became more challenging to purchase homes and garner sufficient rent to cover mortgage payments.

Pretium’s most recent newsworthy acquisition came almost two years ago, when it bought $1.5 billion worth of homes from D.R. Horton, 4,000 properties largely in the Southeast and Southwest parts of the country.

The Section 8 program is facing its own set of issues as Donald Trump’s administration rattles the federal government. Layoffs, funding shortfalls and regulations are threatening the nation’s largest rental assistance initiative for low-income families.

A budget proposed by the House of Representatives could result in approximately 283,000 households losing voucher access in what the Center on Budget and Policy Priorities called “the most severe funding shortfall in the history of the voucher program.”

— Holden Walter-Warner