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Second Avenue Group Lands ~$250MM Investment from Monroe Capital

April 29, 2022, 07:52 AM
Filed Under: Real Estate

Second Avenue Group, a full-service, institutional quality single-family rental platform ("SFR"), announced that Monroe Capital committed approximately $250 million to its investment platform through a mix of debt and equity capital.

The commitment brings Second Avenue's current capacity for new investments to an approximate $1.7 billion fully levered capital base. Other recent commitments include $500 million from investment manager Waterton, $150 million from BLG Capital along with significant amounts from other institutional capital partners.

Second Avenue, which was founded in 2017, is currently active in 10 markets, primarily in the Southeastern and Southwestern United States.  The firm has targeted an additional 10 markets for entry in the next year and expects to deploy as much as ~$1 billion annually.

The firm's growth outlook is consistent with the long-awaited and now widely recognized boom in the single-family rental sector, addressing the growing demand for high-quality suburban rental housing.

"As the demand for single family rental assets has grown, the processes for organizations to invest in the market has become more complex and fragmented," said Mike Rothman, Founder and Chief Executive Officer at Second Avenue. "There are an estimated 17 million single-family rental homes located throughout the United States. Our experienced team, data-rich technology platform and multi-channel, multidisciplinary sourcing capabilities provide investors with a single source of truth and one platform for investment administration and analysis. Streamlining the process for investors and providing premiere rental opportunities for residents."

Second Avenue features a purpose-built technology-enabled platform that manages all aspects of single-family rental investment into one centralized, nimble, and data-rich platform. "We have unlocked value delivering better outcomes for residents in servicing single-family homes over the past decade including as Founder, Chairman and former CEO of SMS Assist in delivery of managed maintenance services across ~100,000 single-family rental homes, actively participating to enhance the rental experience and the homes available," said Rothman. "In the founding of Second Avenue, we bring to market clean, safe and functional homes that are managed by an experienced team. Ultimately, residents are well served by the efficiencies made possible by a professional management platform."

CEO and Founder Mike Rothman commented, "Our investment capital partners have made significant commitments to our platform with the knowledge that we have been building a leadership, investment and property services team that can make risk-adjusted investments and provide a concierge-quality service to our residents. We are intentionally growing at an impressive rate to fully unlock this historic opportunity.  Monroe Capital's Opportunistic team moved swiftly, efficiently and collaboratively; they really understand the real estate and structured finance side of this business; we look forward to many years of partnership."

Kyle Asher, Co-Head of Monroe Capital's Opportunistic Credit group, stated, "We are pleased to partner with Mike Rothman and the Second Avenue team to support their growth and construct a high value portfolio of SFR properties in key markets around the United States. Second Avenue's precise, thoughtful, and timely strategy in the build-to-rent SFR market stood out to our investment team. 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."

This transaction is representative of Monroe Capital'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 2021, the Opportunistic Group closed over 20 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 18 years, the firm has been investing in asset-backed transactions with attractive collateral, as well as cash flow and enterprise value based loans.

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