Monroe Capital, on behalf of its investment funds, announced it acquired a strategic minority ownership interest in Second Avenue’s operating company and has allocated about $250 million of additional capital to its investment platform through a mix of debt and equity capital.
The $250 million investment is structured as a follow-on investment expected to be deployed across various opportunities this year. This is in addition to Monroe’s previous $250 million investment in April 2021, which was fully deployed to acquire approximately 500 homes.
Second Avenue is a full-service, institutional, end-to-end single-family rental platform (SFR). This deal highlighted Second Avenue as being differentiated by its acquisition capabilities, end-to-end technology platform (Jiffy), and property management capabilities.
Second Avenue ended last year with around $1 billion in assets under management and had deployed approximately $800 million across 3,000 homes, representing a 114% year-over-year (YoY) increase in home count. With Monroe’s follow-on commitment and remaining previously committed capital, Second Avenue expects to double its home count this year.
This deal is part of Monroe’s Real Estate and Specialty Finance divisions within the Opportunistic Private Credit group. This group focuses on complex and unique situations, structured debt, and equity financings covering all asset types and geographies.
Last year, the Opportunistic Group closed over 15 debt and equity transactions. The team has a broad investment mandate and flexible capital while also moving quickly and efficiently and providing certainty of execution on complex transactions.
For over 20 years, Moroe has invested in asset-backed transactions with attractive collateral, cash flow, and enterprise value-based loans.
KEY QUOTES:
“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.”
– Ted Koenig, Chairman and CEO of Monroe
“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.”
– Mike Rothman, CEO and Founder of Second Avenue
“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.”
– Kyle Asher, Partner and Co-Head of Monroe’s Opportunistic Credit Group
