RIVERVIEW, Fla.–(BUSINESS WIRE)–ERC Homebuilders, Inc., a pioneer build-to-rent (B2R) real estate development company, announced today the first-known financing initiative to enable both Wall Street and Main Street investors to tap into growing millennial-driven demand for single-family rental homes.
Excited to announce new financing initiative for Wall Street and Main Street investors to tap into growing millennial demand for single-family rental homes.
Founded to wholesale mini-neighborhoods of B2R single-family homes, ERC Homebuilders plans to expand investor access and accelerate fundraising through concurrent offerings under both SEC Regulation D and, pending qualification, Regulation A+.
ERC’s offering is expected to capitalize on Freddie Mac’s recent entry into the contiguous, single-family rental market.
“As the Number 3 Freddie Mac lender in 2018, we are very excited about Freddie Mac’s entering the single family build-for-rent space,” said Keaton Merrell, Managing Director, Capital Markets at Walker & Dunlop. “Freddie Mac for the first time is applying its attractive multifamily underwriting to the build-for-rent communities. This will actively open up financing options for buyers in the build-to-rent space.”
Leveraging more than 100 combined years in real estate development, management and investment and over $1 billion in construction experience of its principals, ERC Homebuilders plans to presell homes first in Florida and later throughout the Southeast. The new homes, designed primarily for millennials, are intended to be wholesaled to institutional investors in bundles of at least 20 houses in contiguous areas for maximum efficiency and simplicity.
“By providing both Reg D and Reg A+ offerings, we want to enable a broad swath of investors – from institutional investors to wealthy individuals to everyday investors – to participate in the fastest-growing segment of the U.S. housing market,” said Jerry Ellenburg, chairman and chief executive officer of ERC Homebuilders and a 35-year real estate and finance veteran who has managed more than $750 million in debt and equity financings.
ERC Homebuilders has released a private offering to accredited and qualified investors pursuant to SEC Rule 506(c) of Regulation D. In addition, the company has submitted SEC Form 1-A filings for two planned offerings under Regulation A+.
“To my knowledge, this is the first time a Reg A+ offering has been used to raise growth capital for build-to-rent real estate development,” said Rod Turner, an ERC Homebuilders board member and the founder and CEO of Manhattan Street Capital, whose online fundraising platform ERC Homebuilders is using for its Reg D offering and plans to use for its Reg A+ offerings.
ERC Homebuilders is tapping into growing demand for B2R homes, especially among millennials who want the comforts and privacy of a home but can’t afford a down payment. Single-family for rent is the fastest-growing segment of the U.S. housing market, with the pace predicted to continue for years. (Please see the fact sheet and infographic linked below for statistics and housing trends.)
“This is just the beginning of a very long runway for the build-for-rent space,” said Michael Finch, principal of SVN | SFRhub Advisors, the first national, dedicated commercial real estate brokerage serving that sector. ERC Homebuilders will use SVN’s marketplace to sell its properties. “There is huge pent-up demand from institutional investors in the BFR market. We have a $2 billion backlog in requests from our clients for opportunities in this segment.”
Dennis Cisterna, CEO of Guardian Residential, established to acquire B2R housing, said: “We are still seeing tremendous demand for single-family rental product in nearly every major metro area throughout the South and Southeast regions of the United States. As distressed opportunities have faded away, we feel confident that build-to-rent is the next evolution in the sector and provides a tremendous risk-adjusted return.”
Contact Jeff Cline at SVN | SFRhub Advisors
SVN | SFRhub Advisors
2400 E. Arizona Biltmore Circle
Phoenix, AZ 85016