(RTTNews) - Pretium and a group of its investors and funds managed by the Real Estate Equity as well as Alternative Credit strategies of Ares Management Corp. (ARES) said Monday they have agreed to acquire Front Yard Residential Corp. (RESI) in an all-cash transaction valued at $2.4 billion.
Front Yard Residential is a provider of affordable single-family rental or SFR housing. Shares of Front Yard are rising almost 32 percent in Monday's pre-market activity.
Pretium is a specialized alternative investment management firm focused on residential real estate, mortgage finance, and corporate credit. Ares Management is a global alternative investment manager operating integrated businesses across Credit, Private Equity and Real Estate.
Pretium led the transaction and will manage the venture following closing. The transaction is expected to close in the first quarter of 2021.
The companies noted that Front Yard will benefit from the scale, expertise, data analytics, and operational and capital markets capabilities of Pretium as well as its wholly owned property and asset management platform, Progress Residential.
In a separate announcement, Front Yard Residential noted that under the terms of the deal, its stockholders will receive $13.50 in cash per share. The per share purchase price represents a nearly 35.5 percent premium over Front Yard's closing share price on October 16, 2020, the last trading day prior to today's announcement.
Front Yard added that its board of directors has unanimously approved the merger agreement and intends to recommend that the company's stockholders vote in favor of it at a special meeting of stockholders, to be scheduled as soon as practicable. Stockholders representing about 14.8 percent of Front Yard's voting stock have agreed to vote in favor of the transaction.
On completion of the transaction, Pretium will become the second-largest owner and operator of SFR properties in the U.S., with a portfolio of more than 55,000 cash-flowing single-family rentals throughout the country.
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