Introduction
As we approach the end of Q2, we’re happy to report that we’ve continued our path of growth (with the move to our new headquarters and the soon-to-be launched updated investor portal) and look forward to sharing another successful quarter in upcoming announcements. So with that in mind, I just wanted to remind you of some of our accomplishments in Q1 prior to our next quarterly update video.
From asset acquisitions to new hires, strategic developments to new fund offerings, here’s a comprehensive overview of what we’ve accomplished so far this year and a preview of what lies ahead.
AUM/EUM and Asset Breakdown
We ended Q1 2024 with a record-high $898 million in assets under management (AUM). Breaking this down by asset value, 71% of our assets are in NPLs, RPLs and REO; our multifamily portfolio makes up an additional 25% of assets; and commercial mortgages make up the remaining 4%. We also closed Q1 2024 with $370 million in equity under management (EUM), our highest ever, and are continuing to raise money and deploy it in an effective manner.
Loan Portfolio Updates
In Q1 2024, PPR’s loan acquisitions continued to build upon the momentum from Q4 2023. We purchased $40 million in non-performing loans (NPLs) and closed an additional $74 million in the first few weeks of April. Throughout Q1, we saw an uptick in defaulted residential transition loans and short-term business loans (STBLs), which we were able to acquire at attractive prices. PPR also completed a securitization in late January which allows us to lock-in longer term financing and de-risk our portfolio to align with our overall fund strategy and maximize returns.
50% of our current loan portfolio is made up of cash flowing, reperforming loans. For the remaining loans (Active Foreclosure, REO, Loss Mitigation and Bankruptcy), we plan to keep converting those into cash flowing loans and to either sell them as RPLs or get them resolved. Overall, Q1 was a strong buying and resolution quarter. Looking towards Q2, we expect to continue to experience the same momentum with more product being available, and an uptick in defaulted fix & flip and distressed loans coming to market.
REO and STBL By the Numbers
- 43 REOs sold in Q1 with a gross revenue of $9 million and an ROI of 20.4%.
- $3.7 million generated in third-party proceeds.
- Averaging 61 days on market (DOM), which is slightly longer than previous quarters as PPR navigates bringing REO functions in-house.
- Average list price is 98.32% with an average number of offers at 6.
- At the end of Q1, active REOs stood at 52, with the market favoring single-family homes.
- Currently, the property value of these assets combined with 9 active STBLs is $22.3 million.
Commercial Real Estate Updates
- Our three multifamily assets in Georgia are performing well. With rate caps expiring and loan maturations taking place, we are refinancing these properties.
- Our Austin, TX affordable development project, Frontier Valley, is progressing smoothly with significant construction milestones achieved in Q1. We are shifting the current strategy of the by-right from 50% tax exemption to 100% tax exemption and hope to finalize this in Q3 2024.
- In Ohio, our multifamily property saw positive rent growth in the first two months of Q1, but changing market conditions have encouraged one-time concessions so this had a slight impact on rent growth throughout the full quarter. The on-site team is looking to capitalize on the spring leasing market to help boost occupancy rates.
- Our Kansas multifamily property saw slight rent growth and consistent occupancy throughout Q1. The community is currently undergoing a unit renovation program and is being managed by a new, strong property management firm that took over in April.
Chris Cordes, our Real Estate Portfolio Manager, feels positive and confident about each of these assets and hopeful that new property management teams across a few of our assets will continue to increase property values.
PPR Next & Company Updates
2023 was the inaugural year of PPR Next – our company strategy initiated by Steve Meyer when he took over as CEO. This is a strategy focused on increased capital raise, effective deployment, improved client engagement, and value creation.
All aspects of that strategy have remained at the forefront of the company’s strategy as we headed into the new year. Capital raise started off strong with $27 million by quarter end.
In addition, PPR received some welcome recognition as we were named to the Financial Times Fastest Growing Companies in the Americas list for the second consecutive year.
Internally, our company also welcomed three new hires to the team!
- Siena Moore, HR Manager
- Rajib Baruah, Data Engineer
- Patrick McClatchy, Investor Relations Manager
Their addition to the company underscores our growth and commitment to building a strong, culture-driven team.
And on the community front, each quarter, our team selects a local charity to support. In Q1 2024, we volunteered with the Chester County Food Bank. PPR matched employee cash contributions to the Food Bank, donated over 1,000 lbs. of food, and packed boxes to be distributed to children and schools and churches throughout Chester County.
Whether it’s external strategy, internal growth, or community-based efforts, our new growth paradigm for 2024 has been “Evolve and Diversify,” which leads me to our next section of updates. “Evolve and Diversify” emphasizes expanding our offerings beyond NPLs into multifamily and other sectors, providing more diverse opportunities for our investors.
Our Investment Evolution – The PPR Opportunity Fund
As we continue to seek out opportunities to provide greater, and shared, upside to our investors, we launched Opportunity Fund I, in partnership with Olympus Pines, which focuses on investing in a platform of car washes across the US. This private equity venture fund offers a unique investment opportunity to our accredited investor base with an expected upside of 18-24% over a 4-to-5-year timeframe.
What’s Next in 2024?
With company evolution and portfolio diversification in mind, we remain committed to listening to our investors while staying true to our NPL roots. Our Income/Freedom Funds and the newly launched Opportunity Fund I are just the beginning. Stay tuned for more information about our Growth Fund, which is set to launch later this year!
