The growing real estate market force of Build-To-Rent (BTR) has received a major boost with the announcement that the real estate investment management firm Pretium Partners will invest $1 billion in the purchase of new rental homes from builders. Pretium Partners, LLC is an American investment firm that focuses on investments in residential real estate. Bloomberg estimates that the investment firm has more than $50 billion in assets under management. Bloomberg also reported that Pretium has to date invested more than $2.5 billion to buy and develop purpose-built rental homes. The investment firm has adopted Environmental, Social, and Governance (ESG) principles and practices. Pretium Partners has also adopted 2024 Sustainability Targets. A key target is: New Construction Sustainability: Pretium aims for at least 25% of its new construction home investments to have sustainability-focused certifications or energy ratings. The 2023 Pretium State of ESG Report states that 46% of the new homes they purchased have HERS Index ratings. Rental housing economist Jay Parsons stated that buying purpose-built rental homes in new subdivisions or building new BTR communities gives rental investors several major advantages over traditional scattered-site single-family rental homes: 1) Lesser political heat. Since these are net new homes that would not get built otherwise, groups like Pretium can add to the nation’s housing supply — which undercuts the (often misleading) criticism that investors are taking homes from individual homebuyers. 2) Faster to deploy capital at scale. Single-family home inventory is super limited, and it’s tough to build scale — especially within a certain buy box. Furthermore, large investors often prefer writing large checks as opposed to countless small checks. Buying newly built homes in bulk is more efficient. 3) Easier to manage. Newly built homes require less maintenance; and when they’re clustered in the same subdivision or BTR community, it allows maintenance teams to reduce travel and simplify/consolidate the number of SKUs needed for appliances, parts, etc. More like an apartment community versus scattered-site SFR. Additionally, new construction and BTR allow operators to serve a relatively under-served niche in the rental market — upper-income families who may not be ready to buy a home yet for one reason or another but have also graduated past the apartment-living stage of life. Pretium’s head of real estate Josh Pristaw was quoted by Bloomberg: “A persistent housing shortage is driving demand, coupled with a demographic shift that is leading young families to trade downtown apartments for suburban homes. That’s pushing Pretium to buy homes from large builders, focusing on three- and four-bedroom properties with backyards and two-car garages. When people form new households, they tend to want a single-family experience. We see a tremendous opportunity to continue doing what we’re doing.” RESNET® sees BTR as a key element in meeting its goal of a million RESNET ratings being conducted annually by the end of 2028. To position RESNET and the HERS® industry in positioning itself to take advantage of this opportunity a RESNET Executive Director Build-To-Rent Advisory Group has been formed. The Advisory Group is composed of representatives of builders and HERS rating firms with experience in the BTR market.
