Transcendent Electra to Buy $1.25B in BTR Homes

Photo by Michael Tuszynski on Unsplash
Photo by Michael Tuszynski on Unsplash

Transcendent Electra, a joint venture between single-family rental platform Transcendent Investment Management and longtime multifamily owner/operator Electra America, is adding nearly 3,500 new single-family homes and townhomes to its growing portfolio in transactions with a single seller that will surpass $1.25 billion.

Construction has started on the first phase that will feature 1,424 properties to be acquired for more than $504 million from the unidentified corporate seller. The single-family homes and townhomes will be built in communities in Atlanta; Athens, Ga.; Tampa, Fla.; and Pinehurst, N.C. The second phase will begin shortly and will add more than 2,000 units that will be purchased for $750 million in Georgia, Florida, South Carolina and Texas. The entire portfolio is expected to be delivered by the end of 2022.

Launched in February 2021, the joint venture aims to acquire or develop approximately $3 billion in SFR housing over the next three years. The focus will be on newly-built single-family homes and townhomes in the $175,000 to $300,000 range, where the average rent will be $1,500 to $2,800 per month.

Joe Lubeck, chairman of Electra America, said in a prepared statement each of the communities will have extraordinary architecture and be highly amenitized.

Jordan Kavana, CEO of Transcendent Electra, told Multi-Housing News the investment platform is currently looking at additional opportunities for acquisitions this year.

In late November, the joint venture stated its pipeline exceeded $850 million. Combined with acquisitions and the development pipeline, Transcendent Electra was investing almost $1.35 billion on more than 5,100 units throughout the Sun Belt.

Longtime SFR Investors

TIM has been in the SFR space since 2008 as one of the first large-scale investors. In 2014, the firm shifted its strategy from buying through traditional channels and began bulk buying new and warrantied units at discounts from large homebuilders.

Both TIM and Electra America have longtime experience in investing in U.S. Sun Belt markets. TIM has completed more than $1 billion in real estate transactions and Electra America’s portfolio encompasses more than $6 billion in property holdings and debt in the multifamily, single-family rental home and hospitality sectors.

While both firms are also experienced in the SFR and build-to-rent sector, the demand has been unprecedented, according to Kavana.

“We were fortunate to be in front of what is clearly now a major housing trend,” Kavana told MHN. “The relationships are one thing and we are grateful to have them, but at the end of the day, it is about performance, and we have proven that our processes are ideal for this platform.”

Kavana noted that the SFR investments are an ideal enhancement to their multifamily activities because they offer larger properties.

“In the large multifamily portfolio, only 4 percent of our units are three bedrooms or larger. Through the SFR portfolio, we can now offer great rental choices to our residents looking for more space,” he said.

Asked whether all the institutional investment that has occurred in the SFR and BTR sector in the past year has created any new challenges, Kavana acknowledged there is more competition in the marketplace now.

“Many are solid organizations for which we have a great deal of respect. That said, we had a vision for this platform before most, and are confident that the wonderful team we have been able to assemble ideally positions Transcendent Electra,” he said.

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