Transcendent Electra to Purchase Nearly 2,000 New Single-Family Rental Homes

In February, single-family rental (SFR) platform Transcendent Investment Management and multifamily owner and operator Electra America 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.

Two months later, the venture announced that it has purchased nearly 2,000 homes in the very hot single-family rental space in its first significant acquisition since it launched.

In all, Transcendent Electra added 1,889 new single-family homes to its portfolio. It has $496 million in the contract process and closing and another $1 billion in the pipeline. The new single-family homes were purchased from homebuilders. They are scattered through Birmingham and Huntsville, Ala., Florida, Savannah and Atlanta, Ga., North Carolina and South Carolina, Nashville, Tenn., and Dallas, Houston, San Antonio and Austin, Tex.

“Single-family rentals continue to outperform other asset types across many metro markets,” said Jordan Kavana, CEO of Transcendent Electra, in a prepared statement.  “Our longstanding relationships with some of the nation’s top homebuilders have allowed us to locate product in markets where demand exceeds supply, and we’re able to leverage Electra’s multifamily expertise and presence in those markets to reach prospective residents and capitalize on economies of scale.”

Transcendent Electra plans to acquire or develop approximately $3 billion in SFR housing over the next three years. It will focus on new-build homes in the $175,000 to $300,000 price range, where average rent will be $1,500 to $2,800 per month.

The pandemic supercharged growth in the single-family rental market. With rising home costs and economic disruption, more people turned to single-family home rentals throughout the US, triggering increased interest from institutional capital and a boom in development, according to research from Trepp. 

Last year, 50,000 new single-family rental homes were added to the market, a 66% increase in the average number of new homes built annually over the last decade.

In an earlier interview, 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.”