Lafayette has built a diversified investment portfolio in the single-family space, mainly across the Southeast region, ranging from rental homes, to residential land lots, to investor loans.
BFR investment platform
Lafayette Communities (LC) was launched in December 2019, capitalized with a $50 million commitment from a large institutional global asset manager. LC is Lafayette’s build-to-rent platform, focused on developing, building, and acquiring entire communities of single family homes for rent, from reputable developers and home builders across the nation. LC already manages seven BFR communities in Florida and Texas and is rapidly expanding its pipeline.
SFH FUND III
SFR Acquisition & Lending
Closed in December 2018, SFH Fund III targets both debt and equity investments, primarily in the single-family-homes asset class. As of 12/31/2019 the Fund had deployed $130 million. It targets a combination of high yield (lending) and high appreciation potential (acquisitions), with significant diversification and inflation protection, strong macro fundamentals (low supply, high demand), and a solid operational track record.
Scaling investments in SFR
On October 2018 Lafayette Longview LLC, a longer-term investment company, was formed via the merger of the portfolios of Fund I and Fund II.
SFH FUND II
Building on the successful track record of Fund I, Lafayette launched Fund II in 2014 to continue and scale investments in the single family home for rent (SFR) industry.
Fund II deployed approximately $100 million across 750 single-family homes all purchased and renovated one at a time.
Fund II’s portfolio was contributed to Lafayette Longview in October 2018.
Acquisition of vacant lots in residential areas
In the housing recovery of 2012 and 2013, it was almost impossible to secure bank financing to buy single family homes. Land, by nature, offers leverage in a recovery: land price variations have historically been more pronounced than houses’, amplifying price changes – both up and down – by two or three times. Throughout the downturn, homebuilders focused on survival by generating cash: they sold land and reduced inventory to preserve their balance sheets. The largest homebuilders came back to the market in 2012 but were focused on larger developments.
Throughout 2013 we acquired approximately 150 lots in residential areas with a focus on smaller developments where we faced little competition. With construction now ramping back up, we are selling these lots and are optimistic about the expected returns for this fund.
SFH FUND I
In the midst of the subprime crisis, U.S. banks started selling single-family homes at heavily discounted prices while the demand for rental homes remained strong. Lafayette’s founder saw the opportunity and raised capital, mostly from European investors, to acquire, renovate and rent vacant single-family-homes in the south-east regions of the US. Thus was Lafayette started.
Fund I comprises close to 600 houses across eight markets. The team managed to stabilize the portfolio at a 95% occupancy level within 18 months, which allowed for debt financing and the return of two–thirds of investors’ original capital in February 2014.
In October 2018 Lafayette Longview LLC, a longer-term investment vehicle, was formed via the merger of the portfolios of Funds I and II, and the Fund’s existing debt was refinanced by a large US insurance company.