TIM, Electra America Partner on SFR Venture

Plans call for the acquisition and development of 15,000 new single-family units during the next half decade.
Photo by Maximillian Conacher on Unsplash

Transcendent Investment Management (TIM) and Electra America have partnered in a joint venture to develop a single-family rental (SFR) housing platform. That platform will target recently-constructed housing in rapidly-expanding markets across the Sunbelt.

TIM is a private equity firm focused on the housing market. Electra America is a private equity firm specializing in the multifamily sector. The combined entity, Transcendent Electra, has created a fund expressly intended for the acquisition of high-quality single-family dwellings from leading new home builders. The acquisitions will focus on Florida, Georgia, Texas, North Carolina, South Carolina and Tennessee. All are states where both TIM and Electra America already have a presence. Plans call for the acquisition and development of 15,000 new single-family units during the next half decade. Three months ago, Electra America made news for closing 10 deals since February 2020.

Newly-built homes that are vacant at acquisition, backed by builder guarantees and priced in the range of $175,000 to $300,000 will be the initial focus. Such homes will generate rents of between $1,500 to $2,300 monthly, the JV said in a statement.

Demand surge

“The housing industry is on fire. While many capital players are rushing in with big plans, we have been in the space, vertically, since 2008, learning from our mistakes and most importantly, how to optimize growth,” Transcendent Electra CEO Jordan Kavana told Multi-Housing News. “While capital is plentiful . . . the combination with an experienced multifamily platform and the cost (and) operating efficiencies it brings made this the right choice for us. I would rather split the pie with people I respect and like, and do more collectively, than try to do it all alone.”  

The SFR market has witnessed a spike in demand during the pandemic. Individuals and families alike have exited cities, many relocating to less-densely populated suburban areas in the Southeast U.S. According to a report by the National Rental Home Council and John Burns Real Estate Consulting, 59 percent of new single-family rental home residents relocated from urban settings, and 53 percent of owners reported homes leasing quicker than a year earlier, with market occupancy climbing to 97 percent.

“We know how to buy a little at a time consistently, or a lot all at once,” Kavana said. “This is critical, as most funds just want to put capital out and don’t want to waste their time with small deals. We will do big, small or anything in between, as we are not going anywhere. This is what we do. We are not just financial arbitrage opportunists.”