PGC and Twin Summits launch US Single Family Rentals Homes fund
Real estate investment management firm Pure Global Capital (PGC) has launched its latest business platform by signing a joint venture agreement with Twin Summits Capital.
The JV’s new US Single-Family Rental Homes (SFRH) fund will aim to raise USD200 million of equity in the first round from approved investors.
The fund will invest across the breadth of the states and also provide bespoke separately managed account services.
The fund is PGC’s first move into the US market, following the firm’s launch in late 2016. The SFRH fund will be managed by Twin Summits Capital, an independent investment manager based in the UK and US.
The move by PGC and Twin Summits Capital comes in the context of declining home ownership levels in the US over the last 20 years, coupled with increasing demand for suitable rental accommodation significantly outstripping supply by over 10 per cent. This has led to substantial upward pressure in rental levels, which is set to continue, potentially for the next five years.
The joint venture SFRH fund will seek to capitalise on this trend by investing in research led and targeted cities benefitting from strong capital appreciation and high rental demand, with the aim of delivering a 9 per cent unleveraged return and distributing a circa 5 per cent annual coupon.
Jeff Morton, head of investment management and founder of PGC, says: “We are very excited about this opportunity and the outlook for the US SFRH market due to sound, tried and tested basic economic fundamentals. US home ownership levels have been in persistent decline and with strong tenant demand and restricted supply due to a low pipeline of available stock, we consider that it is an excellent time to invest in the market.”
To execute this strategy, the fund will use K2 Transparency (K2T), a bespoke big data platform and acquisition analyser developed by Twin Summits Capital. This technology will allow the fund to transact in large acquisition volumes of up to USD20 million per month, whilst being able to source and underwrite each asset separately, in targeted micro locations and property specific units.
Dorian Germain, co-portfolio manager at Twin Summits Capital, says: “Our big data investment platform, which we have called K2 Transparency (K2T), is incredibly efficient at analysing large data inputs and providing accurate stock selection targets. We can identify in significant detail, favourable micro-locations where potential outperformance exists, while also being able to execute transactions with far greater certainty and speed than our competitors.
“K2T, which we choose to host in the cloud, provides fast and accurate real-time information for our analysts, and improves our portfolio strategy, asset selection and implementation. We have market tested the software and have now identified locations where we see excellent capital and rental prospects ahead and as such these locations will form the basis of the initial first phase of our capital investment.”
Stephen Green, co-portfolio manager at Twin Summits Capital, adds: “Putting aside large-scale portfolio acquisitions, which can lead to investors acquiring numerous non-performing assets, institutional investors have had particular difficulty accessing this market due to both the granular nature and limited efficiencies in scaling this asset class. K2T enables highly focused stock selection, which is both fast and efficient, allowing investors to quickly create large portfolios and start generating returns on their capital. From our past investment experience, we believe that after an initial setup period of one month, it will be possible to source, close and invest circa USD20 million a month, distributing a paid coupon to investors quarterly.”