Last fall, I wrote about why single family rental (“SFR”) can be a sound investment strategy in an article titled Where’s the “Family” in Multi-Family? We like rental housing (both multi-family/apartments and single family rental) as an investment and continue to be active participants in that real estate sector. In this blog, I will talk about a specific financing deal we made last year in the SFR space.
Although institutional investors are increasing their presence in SFR, the sector is still very fragmented with mom and pop owners and only about 2% of SFR properties institutionally owned. Institutions like SFR when they can access these investments in very large chunks – typically with institutional-quality operating partners. Unlike multi-family, where a critical mass can be found on one property, the operations of single family rental are harder to streamline and require the sophisticated use of technology and operating systems to obtain high net margins. And that technology can require substantial investment.
So that brings me to my article from last year where I alluded to some different types of SFR investment structures in which Kaufman Capital was involved. I’d like to turn your attention to a specific one I referenced in that article:
“…we provided a working capital facility to a fast growing SFR platform that had institutional capital relationships for large SFR portfolios. However, this platform had a need for working capital to grow and was liquidity constrained due to large investments it was making in its state-of-the-art operating infrastructure.”
I can now reveal that the specific SFR company referenced above is Conrex which grew to about 10,000 homes. Congratulations to Conrex and their recent sale to Brookfield Asset Management (NYSE:BAM) as reported by Bloomberg News.
The Conrex team did an incredible job building out a successful SFR company with smart people, processes and technology. We are happy to have partnered with Berkeley Capital Partners as working capital lenders to Conrex. I am thrilled for the Conrex team and am delighted to have played a supporting role in their growth.
We continue to look for interesting opportunities to place investment capital. Let us know what you are seeing. As always, please call me (404-816-5534) or email (ckaufman@kaufmaninc.com) and let me know what you are thinking about.