(Bloomberg)—Pretium Partners LLC, the third-largest owner of U.S. single-family rentals, is working with Morgan Stanley and Ardea Partners to explore options that could include a sale of most of the company’s homes, according to people with knowledge of the matter.
Pretium, founded by former Goldman Sachs Group Inc. partner Donald Mullen, is considering ways to provide liquidity to early investors, said some of the people, who asked not be identified because the discussions are private. Pretium could sell as many as 20,000 homes valued at as much as $5 billion, and is open to transactions in which it either does or doesn’t maintain management rights, one of the people said.
Representatives for Pretium, Morgan Stanley declined to comment. A representative for Ardea Partners didn’t immediately respond to a request for comment.
Pretium owns more than 26,000 rental homes in 15 markets, which it operates through its property-management arm, Progress Residential. Even a partial sale could wind up as the largest transaction in the industry since Invitation Homes Inc. and Starwood Waypoint Homes agreed to merge in August 2017.
Mullen founded Pretium in 2012, after overseeing Goldman’s bet against the subprime mortgage market. His initial fund raised $1.18 billion to buy single-family rentals, joining Blackstone Group LP, Tom Barrack’s Colony Capital Inc. and other Wall Street firms that bought foreclosed homes after the U.S. housing market crash.
In addition to rental houses, Pretium invests in mortgage finance and corporate credit, and has more than $10 billion in assets under management. The firm announced today that it acquired a residential mortgage servicer, Selene Finance LP, from funds managed by Oaktree Capital Management LP and Ranieri Partners LLC.
Pretium is exploring options for its first single-family rental fund at a time when many investors in the business have come to a crossroads. Institutional demand, which slowed as the foreclosure crisis abated, is picking up again, and some companies are looking to cash in on potential gains. Apollo Global Management LLC, Magnetar Capital LLC and Pacific Investment Management Co. are among landlords that have sought to sell holdings as their funds approached maturity.
Others, like Amherst Holdings LLC, Cerberus Capital Management LP and Tricon Capital Group Inc., have raised funds recently to expand their single-family holdings.
Pretium is remaining acquisitive even as it considers its options. In July, the company said it had closed a $1 billion fund, and a new chief executive officer was hired for its property-management arm, Progress Residential.
To contact the reporters on this story: Gillian Tan in New York at [email protected]; Patrick Clark in New York at [email protected]; Natalie Wong in Toronto at [email protected] To contact the editors responsible for this story: Debarati Roy at [email protected] Christine Maurus
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