A tenants’ advocacy group is calling on one of America’s largest public pension funds to review its relationship with Landmark Partners, affiliate title Secondaries Investor has reported.
On Wednesday, at a public meeting of the Minnesota State Board of Investment, Chloe Jackson of United Renters for Justice asked the pension’s board not to invest with the secondaries firm because of its connection with residential real estate manager Pretium Partners.
Pretium is a minority shareholder in Front Yard Residential and its subsidiary HavenBrook Homes, which together form the second-largest provider of single-family homes in the US.
At the meeting, residents said that HavenBrook mismanaged its properties and raised costs through hidden fees. Residents also claimed that the company ignored or insufficiently addressed the complaints of residents, predominantly people of color.
“My issue has to do with HavenBrook, who is also benefiting from private equity companies that the state invests in. Me and my family have experienced health conditions due to the poor management of HavenBrook,” said one resident.
In 2019, Landmark led the $1.5-billion recapitalization of 2013-vintage Pretium Residential Real Estate Fund, later renamed Single-Family Rental Fund I, in one of the biggest GP-led transactions in the real estate space.
“[MSBI] has invested $150 million with Landmark Real Estate Fund VIII and in 2019 Landmark Partners in turn invested in Pretium Partners. Pretium has now purchased HavenBrook Homes… The state is basically investing money in companies that exploit and extract from housing primarily on the north side of Minneapolis,” said Jackson.
Single-Family Rental Fund I, the Landmark-backed continuation fund, is not invested in Front Yard Residential, according to a spokesman for Pretium. Landmark has no direct exposure to HavenBrook Homes.
After the testimonies, Minnesota attorney general Keith Ellison said that while his office had received complaints with regards to HavenBrook, he could not share anything further.
“Where you see any market participant dominating a market, including housing, that is a particular concern,” he said.
Minnesota invested $150 million in Landmark’s 2016-vintage eighth flagship real estate vehicle, according to PERE data.
A memo drafted on August 9 by the pension’s investment advisory council contained a recommendation to the board to re-up in Landmark Real Estate Partners IX. No investment decision appears to have been made at Wednesday’s meeting and reference to a consideration of commitment to Landmark Real Estate Partners IX no longer appeared on Minnesota SBI’s website as of Friday morning.
A spokesman for Ares declined to comment.
This is not the first time an investor has been asked to re-examine a relationship with a manager because of the firm’s ties to Pretium and Front Yard. In June, PERE reported that the California Public Employees’ Retirement System was taking a closer look at its relationship with Ares Management after an advocacy group called the Private Equity Stakeholder leveled harsh accusations at Front Yard during the pension plan’s board meeting for flouting federal guidelines restricting evictions.