Thread by @ICIJorg

NEW in #PandoraPapers, w/@washingtonpost & @TorontoStar: We dig into a billion-dollar real estate venture, part of an unprecedented flow of global finance into US suburbs — and the effect on residents when secret investors cash in on the American dream. 🧵bit.ly/3F5un0w

#PandoraPapers reveals the investors and business plan behind Progress Residential — one of the largest owners of single-family homes in the US and corporate landlord to tens of thousands of families — which is owned by investment firm Pretium Partners. bit.ly/3F5un0w

Pretium was founded by Don Mullen, known for Goldman Sachs’ “big short” before the 2008 housing crash.

#PandoraPapers shows his pitch to investors to profit off the resulting foreclosure crisis by buying up cheap homes for big returns and minimized taxes. bit.ly/3F5un0w

Pretium Partners raised more than $1 billion for the project by sending confidential invitations to people wealthy enough to put up at least $2 million, projecting annualized returns of 15% to 20%. bit.ly/3F5un0w

Here's an excerpt from the pitch memo in #PandoraPapers:

According to dozens of interviews, Progress Residential went on to ring up big profits for wealthy global investors while outbidding middle-class home buyers and allegedly subjecting tenants to unfair rent hikes, shoddy maintenance and excessive fees. bit.ly/3F5un0w

#PandoraPapers reveals Pretium investors included:
♦️A Cayman Islands trust funded by one of Canada’s most powerful political donors: Seagram spirits heir Stephen Bronfman
♦️A Singapore-based trust of former online gambling executive Vikrant Bhargava
bit.ly/3F5un0w

To understand how the venture has affected US residents, we visited Rutherford County, Tennessee, an area rich with “entry-level” homes targeted for purchase by Progress Residential.

On one street, they bought 19 of the 32 homes over the past six years. bit.ly/3F5un0w

Progress acquires as many as 2,000 houses a month with a property-assessment algorithm that allows the firm to make all-cash offers within two hours of a listing — a significant advantage over families bidding on “entry-level” homes in growing suburbs. bit.ly/3F5un0w

Rutherford County property assessor Rob Mitchell says mega house-rental ventures are “equity-mining our community — removing generational wealth for an entire demographic of people” by pushing middle-class families out of the chance at homeownership. bit.ly/3F5un0w

Progress tenant Ashley Baltimore, a delivery driver, says rising rents and house prices make it hard for her family to save enough to buy a home locally.

“I can’t tell you who is behind Progress Residential … All we can tell you is it’s been bad.” bit.ly/3F5un0w

In interviews, tenants and former employees say Progress Residential is slow to fulfill maintenance requests but quick to charge fees, penalties and file evictions.

The firm said it treats tenants fairly. bit.ly/3F5un0w

Pretium is one of several big rental firms being investigated by Congress over allegedly aggressive pandemic-era evictions.

@SenSherrodBrown has requested that it explain why the filings appear to have fallen more heavily on majority-black communities. bit.ly/3F5un0w

Pretium has repeatedly denied such allegations, and its executives have said that the firm is providing options and a living experience to residents who don’t otherwise have the means or financing options to buy a house. bit.ly/3F5un0w

More from the firm's pitch memo:

An ICIJ and @washingtonpost analysis shows that Pretium investors saw strong returns from betting on housing renters after the foreclosure crisis.

An outsized share of profits would go to fund managers and be taxed at a lower rate as carried interest. bit.ly/3F5un0w

Plus, #PandoraPapers show plans to route the investment money through a Cayman Islands partnership and then into a Delaware limited partnership that owned real estate investment trusts—a complex arrangement experts say minimizes US taxes for the investors. bit.ly/3F5un0w

Asked about the tax arrangements, Pretium Partners told us that “our investment vehicles are structured and managed in accordance with industry best practices.”

Want to keep up with all our #PandoraPapers investigations? Subscribe to ICIJ: bit.ly/3bkNEOJ

We previously reported on how trusts holding money for a religious order disgraced by a global pedophilia scandal backed Pensam Capital — one of a wave of investment firms to plow billions into global real estate in the wake of the 2008 financial crisis. bit.ly/3ytvLaC

Plus, @MargotGibbs breaks down how and why offshore maneuvers are used to plow tons of money into real estate, fueling inequality and driving up prices globally, here: bit.ly/3bFy2oB

See #PandoraPapers case studies from around the world: bit.ly/3EKjfVU

And if you want to see more hard-hitting reporting like this, please consider donating to ICIJ.

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