NEW YORK--(BUSINESS WIRE)--Investment firm C-Star has exited its Fund I, which aggregated a portfolio of single-family rental homes in the Atlanta metro area, to an institutional SFR operator, almost doubled the purchasing price.
Fund I sold at an in-place cap rate of sub 4%, C-Star CEO Sherry Li said. C-Star received multiple cash offers from key players in the SFR space and sold at 10% over its asking price to an institutional investor that currently owns 40,000 homes across the United States. The deal closed in 35 days at a 35.4% gross IRR (27.1% net IRR), at a 10% portfolio premium on top of market price.
Investors in Fund I, which fully deployed in June 2019, included high net worth individuals, family offices, and small- to mid-sized institutional sources of capital. C-Star’s acquisition criteria for homes targets middle-income, entry-level properties, with rental rates falling between $1,500 and $2,500. The fund’s average tenant profile tends to have an annual income of around $60,000 to $100,000, Li said.
“The stunning success of Fund I is a testament to the burgeoning single-family rental space, and the velocity with which we were able to complete this transaction – after five unique offers for the aggregated portfolio – speaks to the enduring institutional demand for SFR assets in the US market,” said C-Star CEO Sherry Li. “We look forward to building upon this success as we capitalize our next two funds and expand our presence across the Sun Belt.”
Li said the fund’s outperformance is also related to its strategy of buying individual assets from retail markets with higher going-in cap rates and then selling to institutional investors at compressed cap rates.
C-Star’s second fund consists of $24 million in assets with a focus on the Research Triangle and Charlotte metro areas in North Carolina. The investment firm plans to hold Fund II for an additional two years to capture the market growth.
C-Star is also currently raising $50 million in equity for its third fund, which will focus on deploying $200 million in capital to buying single-family houses and converting them to rentals across a larger swath of the Southeast states including the Carolinas, Florida, and Georgia. Fund III has raised $10 million thus far from high net worth investors and family offices.
Ackman-Ziff served as the broker on the transaction.
For more information, visit www.c-star.co.
C-Star SFR Advisors is a tech-empowered real estate investment management firm operating in the single-family rental sector. The firm was created in 2018 by innovative female founders and has since rapidly expanded its presence in key markets across the Southeast. It is headquartered in New York.
