Monroe Capital acquired a 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 an institutional single-family rental platform (SFR). The company ended 2023 with approximately $1 billion assets under management, having deployed approximately $800 million across 3,000 homes, representing a 114% year-over-year increase in home count. Second Avenue expects to double its home count in 2024 with Monroe Capital’s follow-on commitment plus remaining previously committed capital.
This transaction is representative of the work of Monroe Capital’s real estate and specialty finance divisions within the firm’s 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 more than 15 debt and equity transactions.
“Second Avenue is extremely excited to announce our continued partnership with Monroe Capital, both from a PropCo and now an OpCo perspective,” Mike Rothman, CEO and founder of Second Avenue, said. “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.”
“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,” Ted Koenig, chairman and CEO of Monroe Capital, said. “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.”
“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,” Kyle Asher, partner and co-head of Monroe Capital’s opportunistic credit group, said. “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.”
