Investment Activities

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SFR Total Return Fund

Pantelan’s Fund is being established to pursue a total return strategy, investing in single family residential real estate assets. By focusing on markets in which we have direct experience, we will leverage our relationships and market knowledge to identify investment opportunities which meet the requirements of the fund. Our objective with is to maximize the monetization value of each asset in the portfolio and to meet the overall targeted return.

 

 

Strategy

We believe that achieving the Targeted Returns will be the result of our “bottom-up”, metrics-driven business philosophy which continues to provide predictable, sustainable and consistent results and emphasizes the following key elements:

•   Investment Discipline

•   Entry Point

•   Cost Management

•   Achieving Target Timelines

•   Focus on Home Attributes

•   Attention to Detail

 

 

The Opportunity

The goal of this fund recognizes the decreased competition for distressed SFR assets, as the SFR rental market has entered a stage of consolidation and rationalization. Larger institutional investors have curtailed acquisitions, focusing on their operating performance, and smaller fund managers and investors have re-focused on alternative sectors due to the level of expertise required to succeed under current market conditions, which leaves limited competition at the institutional level, and while local investors remain active, they lack the financial capacity to have a significant market presence.

 

We believe the combination of these three factors has resulted in a renewed opportunity to acquire attractively priced properties at scale, and at levels which allow for outsized returns, particularly on a risk-adjusted basis.

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Approach

The Fund will acquire SFR assets through various acquisition channels, including public foreclosure auctions, negotiated transactions with banks and other holders of distressed SFR assets, owners of rental SFR asset pools, and individual acquisitions in local markets through our networks.

 

A comprehensive analysis is done on each property in order to support rent and value assumptions, which along with Pantelan’s proprietary mobile inspection application and overall investment return analysis, is instrumental in creating an individual property plan. Once purchased, each property will be stabilized pursuant to its individual plan. Depending upon which approach is most accretive, properties will generally be offered for sale or leased for a 1-2 year period.  In some cases a lease may be offered together with a purchase option for the renter.

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Operational Advisory Services

Pantelan provides operational advisory and support services to institutional investors within the Single Family Residential sector that have been key components in achieving targeted performance and desired yields.  From portfolio and operations assessment and advisory, to execution on acquisition, stabilization and disposition services, Pantelan has a proven track record of consistently providing our clients with optimum results.

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We have provided the following services in the past:

• Portfolio Assessment and Advisory Services

• Stabilization Management

• Property Management

• Underwriting and Acquisitions

• Buy-Side Portfolio Advisory

• Leasing and Marketing

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Case Study – Portfolio Assessment & Advisory

Status of Portfolio Prior to Engagement  (~1,000 properties)

Texas portfolio construction expenses consistently over budget with unpredictable timelines;  Leasing activity and collection results below expectations.

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Evolution of Assignment

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Observations / Key Learnings

‘Difficult’ assets present unique problems that can overburden business processes if not managed properly.  Performing a complete portfolio evaluation to identify those assets that may require special attention can improve overall performance by reducing distractions in the ‘normal course’ process.  Construction management begins with the budgeting process; timelines can be significantly impacted by delays in budget reviews and exception approval.  Loosely defined business processes lead to inefficiency.  Putting in place a clear, structured collections process made staff more efficient and collections more effective.

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Litigation Support Advisory Services

We support law firms in the preparation of expert witness testimony as well as throughout all stages of trial and settlement proceedings. Driven by our strong financial, legal, and data analytics experience, we possess the technology and capability to review all aspects of the mortgage finance industry.

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We perform the following services:

• Expert witness and rebuttal reports

• Deposition and trial preparation

• Case strategy advisory

• Comprehensive discovery services, including loan analysis and review of all litigation discovery materials

• Collateral valuation and financial modeling (single asset and portfolio)

• Due diligence review and analysis

• Analysis of large volumes of loan data

 

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Loan and Portfolio Level Analysis

Review of loan origination practices on an individual and/or portfolio basis. We define and assess actual practices and compare them against those generally accepted by the industry at the time.

 

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Due Diligence

Review of loan origination quality, consistency, and conformity with Representations & Warranties guidelines contained in the Registration Statements and Prospectus Supplements.

 

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Mortgage Loan Servicing

Review of loan servicing with a focus on servicing quality, adherence to internal and generally accepted guidelines, and performance.

 

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Compliance and Risk Management

Review of Sponsor’s compliance and risk management procedures with focus on methodology and practices relating to Policies and Procedures.