The Promise Homes Company, Largest Black-Owned Single-Family Rental Company in the U.S., Secures $200 Million Debt Facility From Barings
Transaction Represents One of the Largest Capital Raises for a Black-Owned Company Over the Last Decade
Facility is Part of Recapitalization to Form New Joint Venture with Other Institutional Investors to Accelerate Growth of Promise Homes’ Unique Impact Housing Product and Financial Empowerment Offerings to Thousands of New Residents
ATLANTA–The Promise Homes Company, the largest Black-owned manager of institutional-quality, single-family residential rental homes in the United States according to Black Enterprise, recently announced that it has closed on a $200 million institutional debt facility from Barings, the global investment management firm. This transaction represents one of the 10 largest capital raises for a Black-owned company over the last decade.
This facility is part of a recapitalization to form a new joint venture with other institutional investors to grow Promise Homes’ portfolio of single-family rental homes to an institutional scale, thereby providing investors expanded access to Promise Homes’ model of resident empowerment and attractive returns while also expanding the reach of its unique financial incentive offerings to middle-class and working-class residents across the country. Promise Homes’ existing portfolio of 663 homes is seeding the new joint venture, as it continues to pursue additional institutional equity and debt capital to grow the portfolio to more than 10,000 homes over the next two to four years.
Promise Homes Founder, Chairman and CEO John Hope Bryant will continue to lead the organization as Managing Principal, and he is the largest individual shareholder of the new joint venture.
“This transaction provides an unparalleled proof point that Promise Homes’ mission of ‘doing well by doing good’ can in fact be profitable for all stakeholders. We are doing this by offering a quality roof over families’ heads, providing the financial literacy skills to help residents enhance their creditworthiness and build wealth, rewarding residents for consistent on-time rent payments, and giving opportunities to small, local minority firms to provide critical maintenance services to our growing portfolio,” said Mr. Bryant. “Now, Promise Homes is growing from an entrepreneurial concept to a scaled business. We are gaining momentum with large national institutional investors seeking to invest in our unique model, which empowers both residents and vendors, delivers attractive returns as well as enhances corporate citizenship by providing steady income to minority small businesses.”
“We are excited to partner with Promise Homes, which has proven that providing housing at affordable prices and free financial coaching and incentive programs for residents can be good business,” said William Awad, Head of the Global Private Structured Finance Group at Barings. “Barings is proud to be a part of this company’s mission and is committed to investing in attractive companies under strong leadership that also address a critical social need.”
As a result of this transaction, the Promise Homes platform will provide more quality housing at affordable prices in leading markets across the U.S. and enhance the financial stability and creditworthiness of even more residents. Existing and future Promise Homes residents will benefit from new property management and continued services from local vendors, which are primarily minority- or women-owned businesses. The Promise Homes business model utilizes an innovative, multi-stakeholder approach to include a shared wealth creation objective that goes beyond equity returns for the business owner. They include:
- No-cost financial literacy education for residents through a partnership with Operation HOPE.
- Majority of property maintenance contracts awarded to minority- and women-owned/led businesses.
- Assistance to residents seeking to obtain mortgage commitments to transition from renters to homeowners.
Deutsche Bank served as financial advisor, Kirkland & Ellis served as legal advisor, and Aprio and Ernst & Young served as tax and accounting advisors to Promise Homes on the transaction.
About Promise Homes
Launched in May 2017, The Promise Homes Company is one of the largest minority-owned managers of institutional-quality, single-family residential rental property in the United States, with a focus on working class and middle-class communities. Promise Homes offers its residents quality housing at affordable prices as well as financial empowerment and assistance that would position them financially to eventually own a home. Promise Homes also contracts with local, minority-owned businesses for property maintenance services, thereby creating local, sustainable jobs in the communities where it invests. Promise Homes is led by John Hope Bryant, an entrepreneur, author, philanthropist, and prominent thought leader on financial inclusion, economic empowerment and financial dignity. For more information, please visit http://www.thepromisehomescompany.com.
Barings is a $391+ billion* global investment manager sourcing differentiated opportunities and building long-term portfolios across public and private fixed income, real estate, and specialist equity markets. With investment professionals based in North America, Europe and Asia Pacific, the firm, a subsidiary of MassMutual, aims to serve its clients, communities and employees, and is committed to sustainable practices and responsible investment. Learn more at www.barings.com.
*As of December 31, 2021