Investment firm Pretium has acquired the leading fix-and-flip lender Anchor Loans LP from affiliates of Wafra Capital Partners Inc. and other owners. The terms of the deal were not disclosed.
California-based Anchor Loans, founded in 1998, provides capital for professional residential real-estate investors through bridge and construction products. To date, it has originated more than $10 billion – 95% of them to borrowers who have completed more than 40 projects, the company claims.
Don Mullen, CEO and founder of Pretium, said the deal improves the investment firm’s private capital solutions to the U.S. housing market during a shortage of housing supply and an insufficient stock of move-in ready homes.
“We are seeing a significant increase in the investments required to upgrade today’s aging homes and modernize our infrastructure,” said Mullen in a statement.
According to the transaction terms, American Equity Investment Life Insurance Company provided financing for the deal and acquired $1 billion of loans originated by Anchor.
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Andrew Pollock, chief executive officer at Anchor Loans, will remain in the position. “We see immediate opportunities for cross-collaboration that will naturally accelerate our growth and strengthen the services we provide to our clients.”
A lack of housing supply has made the fix-and-flip business take off this year, and its lenders, benefited by the scenario, are attracting more capital to grow.
Last month, New Residential Investment Corp., a publicly-traded mortgage REIT, entered into a definitive agreement to acquire Genesis Capital LLC from Goldman Sachs. Genesis is expected to generate about $2 billion in loans this year.
AlphaFlow, an investment firm, estimates that 60 banks and other firms were financing flippers in March 2021, a 50% increase in two years. They are attracted by the average annual rate on a fix-and-flip mortgage around the 8% range, appealing in a rising rate environment.