Minneapolis firms team up to launch residential loan investment platform

Hunter Street Partners has announced a new partnership with Rice Park Capital to invest in portfolios of loans secured by single-family and small multi-family properties. The new, scalable investment platform closed an initial acquisition and will evaluate assets across the U.S., initially targeting performing and non-performing residential transition loans used to help renovate and sell properties in need of repair. This partnership of two Minneapolis-based firms 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. Hunter Street Partners provides capital solutions to operating partner teams and lower middle market companies across corporate finance, real estate, and specialty finance. Nick Smith, founder and managing partner at Rice Park Capital, has 22 years of experience, including roles at 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," said Johnson at Hunter Street. 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% year-over-year and total housing starts were down 23.2% year-over-year. The HUD report also noted that the listed inventory of new and existing homes was down 5.4% and 18.8% year-over-year, respectively. "The outlook for the transition loan market is strong, driven by an aging housing stock, resilient home prices, and a severe undersupply of affordable homes," added Rice Park’s Smith. "Compounded with increases in home demand, we're confident the home renovation industry will play a key role in meeting U.S. housing demand." Rice Park Capital Management has deep roots in real estate and structured products. Rice Park manages active investment strategies in the fixed income alternatives, real estate and financial technology markets.

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