{"id":40004,"date":"2021-06-07T11:45:00","date_gmt":"2021-06-07T08:45:00","guid":{"rendered":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/?p=40004"},"modified":"2021-06-07T12:05:11","modified_gmt":"2021-06-07T09:05:11","slug":"residential-private-lending-the-next-frontier-for-institutional-capital","status":"publish","type":"post","link":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/2021\/06\/07\/residential-private-lending-the-next-frontier-for-institutional-capital\/","title":{"rendered":"Residential Private Lending: The Next Frontier for Institutional Capital"},"content":{"rendered":"\n
\"\"<\/a><\/figure><\/div>\n\n\n\n

Andrew Schnissel<\/strong>, Partner at Nationwide Private Lender <\/em>We Lend LLC<\/em><\/a>, examines the migration of institutional capital into the residential private lending landscape.<\/em><\/p>\n\n\n\n

<\/p>\n\n\n\n

<\/p>\n\n\n\n

<\/div>\n\n\n\n

After the subprime meltdown of 2008, major institutions \u2014 which, at the time, were facing significant losses \u2014 began investing in residential real estate in a more prudent manner. At that time, the government was offering incentives to Wall Street to acquire foreclosed residential properties en masse. <\/p>\n\n\n\n

So, institutions such as Blackstone and Colony Capital began pioneering a new approach. Their model was simple: Acquire single-family units at scale and then set up management companies to lease and manage those assets. In Blackstone\u2019s case, the company that it formed \u2014 Invitation Homes \u2014 became the largest owner<\/a> of single-family rental units in the country with 82,500 homes at its height.    <\/p>\n\n\n\n

However, this institutional investment strategy eventually shifted from owning residential assets to lending on them. In fact, throughout the last several years, we\u2019ve witnessed some major investments and acquisitions in the private lending industry. This trend is enabling institutions to tap into both the residential fix-and-flip and permanent financing space by both providing capital to loan originators, as well as outright acquiring and scaling of such originators.<\/p>\n\n\n\n

Not only is this approach providing institutions with a novel alternative to access the high returns associated with the single-family market but investing in the residential private lending space also sidesteps the scalability issues inherent in the acquisition and management of thousands of individual residential assets.<\/p>\n\n\n\n

<\/span>Investments & Acquisitions<\/strong><\/span><\/h3>\n\n\n\n

The inflow of institutional capital is taking two principal forms: Limited Partner (LP) investments and acquisitions. On the investment front, we\u2019ve seen numerous LP investments from large institutions into private lenders.<\/p>\n\n\n\n

For example, back at the tail end of 2019, global investment firm KKR injected $500 million into an LP investment in the private lending intermediary Toorak Capital Partners, which buys notes from private lenders. Then, in 2020, private lender and developer Churchill Real Estate Holdings raised $2 billion in institutional and foreign capital for residential lending.<\/p>\n\n\n\n

Meanwhile, leading global players within the global investment banking space have made some bold moves in acquisitions. For instance, an affiliate of Goldman Sachs acquired Genesis Capital<\/a> in 2018 to scale its lending in the residential real estate market. Then, in 2019, Redwood Trust became quite active in the acquisitions space, acquiring 5 Arch for $50 million<\/a> and CoreVest Finance for $490 million<\/a>.<\/p>\n\n\n\n

Also on the acquisition front, Pacific Western Bank purchased<\/a> California-based private lender CIVIC Financial Services for an undisclosed amount in February of this year to enable Pacific to expand into the residential private lending space. And, most recently, at the beginning of May of this year, MFS Financial announced<\/a> that it had acquired Lima One\u2019s origination platform, as well as its $1.1 billion portfolio of loans.<\/p>\n\n\n\n

<\/span>Looking Ahead<\/strong><\/span><\/h3>\n\n\n\n

Going forward, the effect of the pandemic is only going to turbocharge the influx of capital into the residential private lending space. Residential real estate values are soaring across most suburban markets as people increasingly relocate from cities. This will ensure demand for both fix-and-flip loans, as well as permanent refinances in the coming years.<\/p>\n\n\n\n

And, with institutions looking to diversify their portfolios during the continued uncertainty of COVID, the long-term stability and high yields offered by lending on residential assets will attract more institutions into investing in private lenders in the space.<\/p>\n\n\n\n

In the coming years, we can expect to see a continuation of this significant influx of institutional capital into the residential private lending space. Major institutions will continue to make LP investments in private lenders and will also continue to acquire private lenders. Expect to see widespread consolidation in the residential private lending space during the next few years as large institutional players and new entrants compete to take over smaller lenders and then scale those respective platforms over time.<\/p>\n\n\n\n

For more information on this topic, <\/em>watch this webinar recording<\/em><\/a> hosted by We Lend LLC in May 2021, and take a deep dive into these types of investments and what they mean for the industry. The webinar features Toorak Capital Partners CEO, John Beacham; Partner and Attorney at PrivateLenderLaw.com Jon Hornick; Partner and Attorney at Geraci LLP Kevin Kim; and Partner at We Lend Andrew Schnissel.<\/em><\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Andrew Schnissel, Partner at Nationwide Private Lender We Lend LLC, examines the migration of institutional capital into the residential private lending landscape. After the subprime meltdown of 2008, major institutions \u2014 which, at the time, were facing significant losses \u2014 began investing in residential real estate in a more prudent manner. At that time, the…<\/p>\n","protected":false},"author":49,"featured_media":40011,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8283],"tags":[],"class_list":["post-40004","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-national"],"yoast_head":"\nThe Next Frontier for Institutional Capital | PropertyShark<\/title>\n<meta name=\"description\" content=\"Andrew Schnissel, Partner at We Lend LLC, examines the migration of institutional capital into the residential private lending landscape.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/2021\/06\/07\/residential-private-lending-the-next-frontier-for-institutional-capital\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Residential Private Lending: The Next Frontier for Institutional Capital\" \/>\n<meta property=\"og:description\" content=\"Andrew Schnissel, Partner at We Lend LLC, examines the migration of institutional capital into the residential private lending landscape.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/2021\/06\/07\/residential-private-lending-the-next-frontier-for-institutional-capital\/\" \/>\n<meta property=\"og:site_name\" content=\"PropertyShark Real Estate Blog\" \/>\n<meta property=\"article:published_time\" content=\"2021-06-07T08:45:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-06-07T09:05:11+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/wp-content\/uploads\/sites\/98\/2021\/05\/Residential-private-lending.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1920\" \/>\n\t<meta property=\"og:image:height\" content=\"1280\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Eliza Theiss\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Eliza Theiss\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"The Next Frontier for Institutional Capital | PropertyShark","description":"Andrew Schnissel, Partner at We Lend LLC, examines the migration of institutional capital into the residential private lending landscape.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/2021\/06\/07\/residential-private-lending-the-next-frontier-for-institutional-capital\/","og_locale":"en_US","og_type":"article","og_title":"Residential Private Lending: The Next Frontier for Institutional Capital","og_description":"Andrew Schnissel, Partner at We Lend LLC, examines the migration of institutional capital into the residential private lending landscape.","og_url":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/2021\/06\/07\/residential-private-lending-the-next-frontier-for-institutional-capital\/","og_site_name":"PropertyShark Real Estate Blog","article_published_time":"2021-06-07T08:45:00+00:00","article_modified_time":"2021-06-07T09:05:11+00:00","og_image":[{"width":1920,"height":1280,"url":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/wp-content\/uploads\/sites\/98\/2021\/05\/Residential-private-lending.jpg","type":"image\/jpeg"}],"author":"Eliza Theiss","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Eliza Theiss","Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/2021\/06\/07\/residential-private-lending-the-next-frontier-for-institutional-capital\/","url":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/2021\/06\/07\/residential-private-lending-the-next-frontier-for-institutional-capital\/","name":"The Next Frontier for Institutional Capital | PropertyShark","isPartOf":{"@id":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/2021\/06\/07\/residential-private-lending-the-next-frontier-for-institutional-capital\/#primaryimage"},"image":{"@id":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/2021\/06\/07\/residential-private-lending-the-next-frontier-for-institutional-capital\/#primaryimage"},"thumbnailUrl":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/wp-content\/uploads\/sites\/98\/2021\/05\/Residential-private-lending.jpg","datePublished":"2021-06-07T08:45:00+00:00","dateModified":"2021-06-07T09:05:11+00:00","author":{"@id":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/#\/schema\/person\/de1353a5de72f96494054df3ecca7de4"},"description":"Andrew Schnissel, Partner at We Lend LLC, examines the migration of institutional capital into the residential private lending landscape.","breadcrumb":{"@id":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/2021\/06\/07\/residential-private-lending-the-next-frontier-for-institutional-capital\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.propertyshark.com\/Real-Estate-Reports\/2021\/06\/07\/residential-private-lending-the-next-frontier-for-institutional-capital\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/2021\/06\/07\/residential-private-lending-the-next-frontier-for-institutional-capital\/#primaryimage","url":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/wp-content\/uploads\/sites\/98\/2021\/05\/Residential-private-lending.jpg","contentUrl":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/wp-content\/uploads\/sites\/98\/2021\/05\/Residential-private-lending.jpg","width":1920,"height":1280},{"@type":"BreadcrumbList","@id":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/2021\/06\/07\/residential-private-lending-the-next-frontier-for-institutional-capital\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/"},{"@type":"ListItem","position":2,"name":"Residential Private Lending: The Next Frontier for Institutional Capital"}]},{"@type":"WebSite","@id":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/#website","url":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/","name":"PropertyShark Real Estate Blog","description":"Market Reports for Real Estate Writers","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/#\/schema\/person\/de1353a5de72f96494054df3ecca7de4","name":"Eliza Theiss","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/96965f7dc4c1c5276e67c2727672b8636c299791a627dca31fda556cf0db9758?s=96&d=retro&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/96965f7dc4c1c5276e67c2727672b8636c299791a627dca31fda556cf0db9758?s=96&d=retro&r=g","caption":"Eliza Theiss"},"description":"Eliza Theiss is a senior writer reporting real estate trends in the US. Her work has been cited by CBS News, Curbed, The Los Angeles Times, and Forbes among others. With an academic background in journalism, Eliza has been covering real estate since 2012. Before joining PropertyShark, Eliza was an associate editor at Multi-Housing News and Commercial Property Executive. She has also contributed extensively to CommercialEdge. Reach her at eliza.theiss@yardi.com","url":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/author\/eliza\/"}]}},"jetpack_featured_media_url":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/wp-content\/uploads\/sites\/98\/2021\/05\/Residential-private-lending.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/wp-json\/wp\/v2\/posts\/40004","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/wp-json\/wp\/v2\/users\/49"}],"replies":[{"embeddable":true,"href":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/wp-json\/wp\/v2\/comments?post=40004"}],"version-history":[{"count":6,"href":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/wp-json\/wp\/v2\/posts\/40004\/revisions"}],"predecessor-version":[{"id":40019,"href":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/wp-json\/wp\/v2\/posts\/40004\/revisions\/40019"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/wp-json\/wp\/v2\/media\/40011"}],"wp:attachment":[{"href":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/wp-json\/wp\/v2\/media?parent=40004"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/wp-json\/wp\/v2\/categories?post=40004"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.propertyshark.com\/Real-Estate-Reports\/wp-json\/wp\/v2\/tags?post=40004"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}