Pretium Acquiring $1.5B of D.R. Horton Homes

Pretium Partners is adding thousands of homes to its portfolio in a bet on the single-family rental market and a microcosm of how investors may operate in the high interest rate environment.

D.R. Horton is selling the homes to Pretium at a value of roughly $1.5 billion, Bloomberg first reported. There are more than 4,000 homes involved in the transaction, largely in the Southeast and Southwest, the Wall Street Journal added; the homes were planned as rentals and many are already leased.

The transaction includes both finished and unfinished homes. Neither company commented to Bloomberg about the deal.

While low inventory has hurt buyers, it has proven to be a boon for homebuilders like D.R. Horton, one of the biggest in the nation. Net sale orders for the builder rose 73 percent from the fourth quarter to the first quarter and the stock has surged this year.

Pretium, a leader in the single-family rental space, has shored up its standing with a series of deals in recent years.

Last year, the New York City-based company launched a joint venture with Onyx+East in a $600 million plan to build more than 2,000 rental homes in Ohio, Indiana and Florida’s west coast. That came on the heels of a 3,000-home joint venture with Crescent Communities.

Two years ago, Pretium agreed to buy 2,000 homes from Zillow as the latter wound down its iBuying operation, paying market price for the scattered properties.

The single-family rental sector boomed at the start of the pandemic as an increasing number of Americans were either priced out of homeownership or decided against it. Investors looking to capitalize on the shift started facing a major hurdle a year ago, however, when interest rates rose and mortgage rates jumped alongside them.

In the first quarter, investors purchased 48.6 percent fewer homes than a year earlier, according to a recent report from Redfin. The annual decline was the largest fall in Redfin’s 23-year history of tracking the metric.

— Holden Walter-Warner