A History of Commitment to Growth in Real Estate
Radian combines strategy, innovation to support the American Dream
Single-family rental real estate is an institution that arguably dates to feudal times, and the single-family rental has existed in various forms in the U.S. since the founding of Jamestown. Radian may not date to colonial days, but the company does boast more than four decades in the mortgage insurance and SFR services space.
The roots of Radian run deep, and they’ve grown even deeper due to the efforts of corporate leaders dedicated to reimagining real estate whenever necessary.
“We looked very different back in 1977, when we first established ourselves in the mortgage industry as Commonwealth Mortgage Assurance Company (CMAC),” said Tim Reilly, executive vice president of asset management operations.
Reilly, like most Radian employees, has a long history with the company and in the real estate industry.
“At Radian, we have tremendous experience and expertise. On average, our management team has more than 25 years’ experience each in real estate, and we are the longest-standing REO asset management provider with a launch date of 2003,” Reilly said.
This long tenure in the industry and with the company means that Radian brings serious horsepower to the table. And it shows when it comes to both working with investors and evolving as the industry changes.
For example, the com-pany was the first to be involved with valuation of single-family rental securitizations in 2013 when the asset class debuted, and it has been involved with every subsequent issuance in that sector as well. Radian also provided due diligence and valuation guidance when government-sponsored enterprises launched a pilot program for financing SFR securitizations (see timeline).
“We have a broad reach across capital markets in the single-family space,” Reilly said. “We try to stay ahead of where the industry is going, so we can anticipate what our clients may need.”
Building Upward and Outward for Decades
Radian’s roots are in the mortgage industry. Its predecessor company, CMAC, was founded in 1977. After CMAC went public in 1992, the company spent another seven years focused on growth before merging with three Amerin companies to form Radian.
“We have always been focused on the power offered by data-informed technology,” Reilly said. “Our business revolves around delivering new and better ways for our clients to conduct real estate transactions and manage risk.”
To that end, the company debuted the first-ever mortgage insurance rate-quote app, Radian Rates, in 2012 and acquired established REO asset management provider Green River Capital in 2014. The evolution continued with the 2015 acquisitions of Red Bell Real Estate LLC and ValuAmerica, both of which contributed to streamlining client workload via centralized title and closing services. The company also obtained “cutting-edge vendor management technology” and new machine-learning and artificial intelligence resources via acquisitions in 2018 and 2019.
“One thing we have learned over this journey of building up Radian as a business serving real estate investors and the real estate industry is the importance of listening carefully to investors and the industry,” Reilly said. “We are always watching and listening to determine what will best serve our clients next and what will better serve them at this moment.”
Radian’s most recent acquisition of Five Bridges Advisors LLC, which was recently rebranded as Radian Technology Services, is one such forward-thinking move.
“Five Bridges brought powerful tools to our arsenal, including strengthening our ability to reduce risk using data analytics, artificial intelligence, machine learning and more traditional econometric techniques,” Reilly said.
Keeping Core Values Close to the Heart and Near the Surface
With a company as big and varied as Radian, investors sometimes may fear getting lost in the shuffle—even really big clients managing massive SFR portfolios. Radian encompasses more than a dozen unique companies under its umbrella. But, Reilly explained, Radian’s core values and Code of Conduct and Ethics, usually referred to as “The Code” in company vernacular, spans all aspects of the Radian family and keeps the focus on “acting with integrity…and making good decisions.” It keeps focus squarely on clients across the board.
“Our employees espouse and breathe these core values every day because they define who we are as an enterprise,” Reilly said. “Our people are our difference. We rely on that difference to enable us to successfully create shareholder value, partner to win and always do what’s right. That is all part of ensuring the American Dream, which we have been doing since 1977.”
Those values, in conjunction with the company’s extended track record in the industry, played a significant role in Radian’s evaluation of a brand-new, industry-altering product in 2013.
“It was a brand-new [for the time] type of securitization that a large bank was forming to take to the market with a new institutional sponsor,” Reilly said.
Radian was involved in the due diligence on that very first SFR securitization and has been involved with every single subsequent single-borrower issuance since—about 52 deals over the last seven years.
Because Radian SFR clients may own upward of 85,000 properties, the company has been able to leverage its relationships and experience serving clients at all portfolio volumes.
“We use that experience to apply the appropriate levels of technology and evaluation strategies to all our clients, be they huge institutions or regional players with fewer than 10,000 properties in their portfolios,” Reilly said.
Because many Radian clients are borrowers, aggregators and sponsors in the SFR space, the company feels it serves an essential role in the juxtaposition of lending and borrowing in the industry.
A Powerful Team Putting Client Success First
While humility is not mentioned specifically in The Code, Reilly said it is one of the things he is proudest of about his own asset management services team.
“Many of my team members are recognized as subject-matter experts in the industry. They have industry accolades dating back to 2014 when the SFR space really took shape, and they still are laser-focused not on those accolades but on the success of our clients,” Reilly said. “It might sound strange to say, but I’m super proud of the humility that keeps client success as a core value in our organization.”
Sometimes, Reilly admitted, that laser focus can lead to learning opportunities when the team gets overzealous about preparation for the future. He recalled a project that called for a certain type of predictive tool he and his team believed SFR investors would need soon. Although Reilly still believes the tool is useful, he admitted, “It kind of fell flat.”
Fortunately, by listening to clients and experts on his team and elsewhere in the industry, the group was able to leverage the work on that tool toward other predictive and analytic tools that more users wanted at the time.
“That’s what happens sometimes when you are attempting to form products for an industry that barely exists yet!” Reilly said. “Fortunately, the experience led us to hone our listening skills even further, and we still have the ability to provide the tool and its services should we need to do so.”
Executing Updated, Timely Strategies in 2020 and Beyond
One thing Radian prides itself on is foresight—leveraged for the good of the client and shareholder, of course. In 2020, that predictive, analytic ability is coming to bear in a new way that will benefit both property owner and residential renter. The benefits, Reilly says, will be particularly evident in portfolios where the owner has established and implemented a clear, thoughtful, timely plan of action for dealing with the year’s variety of unexpected and unprecedented events.
Radian’s data, metrics, valuative technology and decadeslong experience in the SFR space will be there for reference and guidance every step of the way, Reilly said.
“Renting single-family homes is not just a passing fad,” he said. “More people, not fewer, are choosing a renting lifestyle, moving from densely populated urban centers to single-family homes. Investors in this space must know what their strategy and plan
will be in order to serve this population.”
Radian believes its long-established relationships with large- and midsize-portfolio owners will serve all clients in 2020 and forward. “They all have forged business plans in this space already,” Reilly explained. “They have
the right technology, the right partners and the right networks to deal with the fallout in times of crisis. Smart money says the industry’s best days are still ahead.”
Sidebar: SFR’s “Best Days” are Still Ahead
As of the end of August 2020, Radian executive vice president of asset management operations Tim Reilly estimated there were roughly 17 million SFR properties in the country. On top of that generous estimate, Reilly predicted the space would see even more growth in the coming year.
“The SFR is the darling of real estate asset classes right now, and that is in the middle of coming through and out of a pandemic,” Reilly said. “This is due in large part to the way that institutional and midsize players in the industry have been building over the years by deploying sophisticated, customer-centric operations and technology in their business plans.”
Reilly predicted that 2020 and 2021 will see a resurgence and growth in the population of lifestyle-based renting households, those that are not renting out of necessity but rather by preference. According to Freddie Mac’s 2019 housing survey, about 2 in 5 renters said they would “likely never” own a home (up from fewer than 1 in 5 in 2017) and 4 in 5 renters said renting was a “better fit for their current lifestyle.” The COVID-19 pandemic is likely to magnify those numbers as more households find it preferable to be able to move relatively quickly and home prices in most areas of the country continue to rise.
Reilly cited SFR owners’ ability to implement technological updates and changes quickly on a national level as crucial to the success or failure of companies in the space.
“Those who had the right vendor partners and the right networks in place were able to create positive outcomes for residents and investors. Capital market investors have already taken notice and like what they see,” Reilly said. “That’s during a pandemic! That tells me the industry’s best days are still ahead of it.”
Sidebar: The Radian Timeline: 1977-Present
1977: Established in the mortgage insurance industry as Commonwealth Mortgage Assurance Company (CMAC)
1992: CMAC goes public
1999: CMAC merges with Amerin companies to create Radian and its mortgage insurance subsidiary, NYSE:RDN
2003: Green River Capital (parent company, Radian) launches REO asset management services, making the company the longest-standing REO asset management provider in the industry
2012: Radian debuts the first-ever mortgage-insurance rate quote app, Radian Rates
2013: Green River Capital approached to do due diligence and valuation of a new SFR securitization, leading to Radian’s involvement in every subsequent borrower issuance of that nature from that time forward
2014: Radian officially acquires Green River Capital, an established REO asset management provider
2015: Radian adds title and closing services to its offerings, partners with the Asian Real Estate Association of America, the National Association of Hispanic Real Estate Professionals, and the National Association of Real Estate Brokers to “help lenders better serve homebuyers”
2017: Radian provides due diligence and valuation services for government-sponsored enterprises SFR-financing pilot program
2018: Radian Title Insurance brings title and settlement services directly to homebuyers, Radian acquires cutting-edge vendor-management technology
Radian unveils its One Radian model, blending decades of risk-management expertise with the power of data, technology and analytics.
2019: Radian acquires Five Bridges Advisors LLC to strengthen resources and the ability to reduce risk using data analytics, AI, machine learning and traditional econometric techniques.
