Renters Group: Hedge fund sucks $40M out of north Minneapolis
MINNEAPOLIS (FOX 9) - CORRECTION: A previous version of this story misstated the relationship between Progress Residential and the separate companies that owned the homes previously.
The largest renter of single-family homes in the U.S. has ‘extracted’ $40 million dollars in wealth from neighborhoods in North Minneapolis, according to a report from two renters' rights groups.
Progress Residential manages more than 600 homes in the Twin Cities Metro.
But more than one-third of the properties it manages, 220 homes, are in North Minneapolis.
Progress Residential is owned by the $51 billion dollar hedge fund Pretium Partners, the second largest owner of single-family homes in the U.S.
Pretium owns and manages its homes through layers of shell companies, according to a lawsuit filed by the Minnesota Attorney General.
Pretium acquired the homes in 2021 from Front Yard Residential which took over management of the homes from HavenBrook, the previous property manager.
Last year the FOX 9 Investigators examined how the various companies capitalized on the 2008 home mortgage crisis, targeting purchasing homes in economically distressed neighborhoods.
As part of that report, the FOX 9 Investigators calculated that HavenBrook had purchased 199 homes in North Minneapolis for $18,321,341 that were assessed at $30,112,000, a 64 percent increase in value.
The United Renters for Justice report by the Private Equity Stakeholder Project (PESP) expands upon that analysis.
The report calculates that 220 homes have more than doubled in value, on average, extracting a total of nearly $25 million. In addition, the report calculates monthly rent payments totaling $16.7 million to arrive at the $40 million figure.
The report is part of a larger critique of the changing nature of home ownership: From a way for families to build generational wealth to an investment product for private equity hedge funds.
It is a particular concern in the Twin Cities which has the largest racial gap in homeownership in the nation. In Minneapolis, Black home ownership is about 25 percent, while white home ownership is 77 percent, according to the Minnesota Demographic Center.
Depending on the neighborhood, out-of-town investors own between 16 to 24 percent of the single-family home inventory in North Minneapolis in some of the poorest census tracts in Minnesota, according to data from the Minneapolis Federal Reserve.
Minnesota Attorney General Keith Ellison filed a lawsuit against Progress Residential claiming the company deceived and defrauded its tenants through understaffing and under-resourcing the company.
The City of Minneapolis has also laid out 24 conditions for the Progress Residential’s continued operation in the city.
The FOX 9 Investigators revealed last year the city recorded 1,592 housing code violations and received 273 complaints against the company.
In a statement to FOX 9, a spokesperson for Progress Residential disputed the characterization of ‘wealth extraction’ in the PESP report.
"PESP’s narrative of wealth extraction is fundamentally anti-renter and anti-inclusion, creating barriers to access and limiting opportunities for inclusivity in neighborhoods where many desire to rent a home," the statement said.
"PESP's idea of ‘wealth extraction’ is deeply misleading. Asserting that rent paid represents an ‘extraction’ from residents ignores the basic value proposition of renting a home," the statement continued.