Hunter Street and Rice Park Capital launch residential loan investment platform
Hunter Street Partners (Hunter Street), a Minneapolis-based alternative investment management firm, has partnered with Rice Park Capital to invest in portfolios of loans secured by single-family and small multi-family properties.
The scalable investment platform closed an initial acquisition and will evaluate assets across the US, initially targeting performing and non-performing residential transition loans used to help renovate and sell properties in need of repair.
The Hunter Street and Rice Park Capital partnership brings together two veteran investment teams with significant investment experience in opportunistic residential real estate. Hunter Street CEO and CIO, Neal Johnson, brings two decades of experience, with prior roles at Isles Ranch Partners, Värde Partners, University Capital Strategies Group, and Piper Jaffray. Nick Smith, Founder and Managing Partner at Rice Park Capital, has 22 years of experience, including roles at the Blackstone Group, Incenter Mortgage Solutions, Two Harbors Investment Corp, Green Tree Investment Management, and GMAC ResCap.
“The recent uncertainty caused by the COVID-19 pandemic had led to a retrenchment of traditional capital providers in the residential transition loan market even though fundamentals for housing have remained relatively stable,” says Johnson. “We’ve known the team at Rice Park Capital for many years, and we’re excited to partner with them to meet the financing needs of transition loan borrowers, while also capitalising on dislocated and deep value opportunities we’re seeing in that market.”
“The outlook for the transition loan market is strong, driven by an ageing housing stock, resilient home prices, and a severe undersupply of affordable homes,” adds Smith. “Compounded with increases in home demand, we’re confident the home renovation industry will play a key role in meeting US housing demand.”
According to the National Association of Home Builders, the median age of the owner-occupied housing stock increased from 31 years in 2005 to 37 years in 2018. In addition, according to the June 2020 report regarding new residential construction by the U.S. Department of Housing and Urban Development (HUD), single-family housing starts were down 17.8 per cent year-over-year and total housing starts were down 23.2 per cent year-over-year. The HUD report also noted that the listed inventory of new and existing homes was down 5.4 per cent and 18.8 per cent year-over-year, respectively.