Pretium, an alternative investment management firm, and
funds managed by Ares Management, have closed on their $2.4 billion acquisition
of Front Yard Residential, making Pretium the second-largest owner and operator
of single-family rental properties in the U.S.
As a result, Pretium now has more than 55,000 SFRs. It will
manage the venture and partner with Ares to further expand Front Yard’s
portfolio of assets.
“There is significant opportunity in the SFR market and
a clear sense of urgency among institutional investors to deploy capital to
this asset class given record-high occupancy rates, stable cash-flow
characteristics, and potential for continued capital appreciation,” said
Pretium chairman and CEO Don Mullen.
Joel Holsinger, partner and co-head of Alternative Credit in
the Ares Credit Group, said the asset class is particularly strong given its
“compelling secular market tailwinds.”
The transaction demonstrates investors’ increasing demand
for SFR assets and the unique investment opportunities available to operators
such as Pretium that possess the requisite scale to drive margins. Pretium led
the transaction and will manage the venture following closing.
“This transaction further establishes Pretium as both a
pioneer and a leader in the SFR space since 2012, having completed the
industry’s largest strategic recapitalization in 2019 and now leading the
industry’s first public-to-private transaction,” stated Mullen.
“We firmly believe that scale is paramount to
outperformance and continuing to create meaningful liquidity for SFR investors
is necessary to ensure robust valuations and the continued flow of
institutional capital into the SFR asset class.”
Fried Frank acted as counsel to Pretium Partners in
connection with the joint venture with Ares Management and other investors. RBC
Capital Markets served as financial advisor to Pretium. BofA Securities is financial
advisor to Ares. Sidley Austin is served as M&A legal counsel and Hunton
Andrews Kurth as special tax and financing counsel to Pretium. Latham &
Watkins is serving as legal counsel to Ares.
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