Front Yard Residential Corp., a single family home company, is being privatized by an alternative investment management firm Pretium and a group of its investors and funds powered by Ares Management Corp.'s real estate equity and alternative credit strategies. to get managed. The cash transaction valued Front Yard at $ 2.4 billion.
Upon completion, Pretium will be the second largest owner and operator of SFR real estate in the US with a portfolio of more than 55,000 rental properties. It should also be noted that this is the industry's first public-private transaction.
Front Yard was under pressure to be liquidated by at least two of its investors– –Ocwen Financial and Altisource Portfolio Solutions. Investors argued that Front Yard was not performing well and that its equity stake should be much higher, according to a report by Mortgage Professional America.
According to Don Mullen, Chairman and CEO of Pretium, Scale is the answer to the company's problems. "We strongly believe that scaling is paramount to outperformance and that creating meaningful liquidity for SFR investors is required to ensure robust valuations and the continuous flow of institutional capital into the SFR asset class," he said in prepared remarks.
Rockpoint forms another single family home JV
The single-family home market is booming as investors take an interest in its strong business model. As another example, Rockpoint Group, a global real estate investment management company, has just announced that it has an exclusive $ 250 million joint venture with Resicap, an Atlanta, GA, single-family rental owner and operator. USD founded. Together, Rockpoint and Resicap anticipate the acquisition, renovation and rental of 4,500 to 5,000 single-family homes at affordable prices in suburban neighborhoods in the southeastern United States, Florida and Texas.
Rockpoint also recently announced a $ 375 million joint venture with Invitation Homes in Dallas.
And in August Blackstone reentered the house With a preferred stake of $ 300 million in Toronto-based Tricon Residential.
The Front Yard transaction is expected to close in the first quarter of 2021, subject to customary closing conditions.
RBC Capital Markets, LLC is acting as financial advisor to Pretium. BofA Securities is acting as financial advisor to Ares. Sidley Austin is serving as legal advisor to M&A, Fried Frank is serving as legal advisor on partnerships, and Hunton Andrews Kurth is serving as special tax and finance advisor to Pretium. Latham & Watkins is Ares' legal advisor.
Margaret Whelan of the Whelan Advisory Group exclusively advised Rockpoint Group and Resicap on their venture.