Monroe Capital, on behalf of its investment funds, has acquired a strategic minority ownership interest in Second Avenue’s operating company and has allocated approximately $250 million of additional capital to its investment platform through a mix of debt and equity capital. The $250 million is structured as a follow-on investment that is expected to be deployed across various opportunities in 2024. This is in addition to Monroe’s previously $250 million investment in April 2021 that has been fully deployed to acquire approximately 500 homes.
Second Avenue is a full-service, institutional single-family rental platform (“SFR”). This transaction further demonstrates Second Avenue’s standing as a premier end-to-end single-family rental platform differentiated by its acquisition capabilities, end-to-end technology platform (“Jiffy”) and property management capabilities. Second Avenue ended 2023 with approximately $1.0 billion assets under management having deployed approximately $800 million across 3,000 homes, representing a 114% YoY increase in home count. Second Avenue expects to double its home count in 2024 with Monroe’s follow-on commitment plus remaining previously committed capital.
This transaction is representative of Monroe’s Real Estate and Specialty Finance divisions within the Opportunistic Private Credit group. The group focuses on complex and special situation structured debt and equity financings covering all asset types and geographies. In 2023, the Opportunistic Group closed over 15 debt and equity transactions. The team has a broad investment mandate, flexible capital and prides itself not only on its “bottoms up” expertise but also on its ability to move quickly and efficiently and provide certainty of execution on complex transactions. For over 20 years, the firm has been investing in asset-backed transactions with attractive collateral as well as cash flow and enterprise value-based loans.
Ted Koenig, Chairman and CEO of Monroe, said: “We have been extremely impressed with Mike Rothman, who has decades of experience building and leading companies, and his ability to attract a seasoned management team and utilize technology to enable growth at scale. We believe Monroe’s long-term investment can strategically enhance Second Avenue as one of the largest and more importantly efficiently managed SFR platforms in North America.”
Mike Rothman, CEO and Founder of Second Avenue, said: “Second Avenue is extremely excited to announce our continued partnership with Monroe Capital, both from a PropCo and now an OpCo perspective. It speaks volumes when an investor doubles down on its initial commitment and illustrates how Second Avenue’s industry leading, technology-driven SFR platform delivers for investors and residents alike. Further, Monroe Capital’s OpCo investment creates a strategic partner that Second Avenue can leverage for additional growth in an asset class with increasing investor demand based on strong, recession resistant fundamentals.”
Kyle Asher, Partner and Co-Head of Monroe’s Opportunistic Credit Group, stated, “We are pleased to continue our successful partnership with Second Avenue to support their growth and grow our existing SFR portfolio, at a time when we believe the market is beginning to be very ripe for activity. This partnership represents the continued growth of our specialty finance and real estate businesses and demonstrates our conviction in the Second Avenue platform and in the SFR asset class in general.”