Transcendent, Electra America Debut SFR Investment Platform
Electra Transcendent will target newly built homes, vacant at acquisition with builder guarantees, in the $175,000 to $300,000 price range.
Transcendent Investment Management and Electra America have established a fund, Transcendent Electra, to acquire newly built, single-family rental homes in suburban neighborhoods in Florida, Georgia, Texas, North Carolina, South Carolina and Tennessee.
Both Transcendent Investment Management, a private equity firm focused on the housing market, and Electra America, a private equity firm specializing in the multifamily sector, have existing footprints in the Southern suburban markets. Jordan Kavana will serve as Transcendent Electra’s CEO.
Electra Transcendent will target newly built homes, vacant at acquisition with builder guarantees, in the $175,000 to $300,000 price range. It is eyeing average rent between $1,500 to $2,300 per month. Transcendent Electra plans to acquire and develop 15,000 new single-family units over the next five years.
Joe Lubeck, CEO of Electra America, told GlobeSt.com that his company had been eyeing the single-family rental sector for six years. He felt single-family rentals would complement his apartments.
“Across our portfolio of 33,000 units, we only have 4% three bedrooms, and we always felt that we were losing people,” Lubeck told GlobeSt.com. “That only accelerated during COVID where people wanted more bedrooms or a home office or more privacy.”
But Lubeck never liked that many of the rental homes on the market needed renovation and lots of maintenance. After identifying Transcendent as a partner and seeing single-family build-to-rent take off, Lubeck felt it was time to jump in. “Transcendent has a strong relationship with builders,” he told GlobeSt.com. “We’re buying both completed homes as well as pre-buying homes to be delivered.”
As people have left cities in search of more space, single-family rentals grew more popular in 2020. In December, US single-family rent growth increased 3.8% year-over-year. That was an improvement over the 1.4% reported in June and 2.9% in December 2019, according to the CoreLogic Single-Family Rent Index (SFRI).
Rent growth was most substantial in higher-priced rentals, defined as properties with rent prices greater than 125% of a region’s median rent. In that category, rents increased 4.3% in December 2020, up from the 2.4%-increase posted in December 2019.