United States: based in California property management company AvantStay has announced the closure of a $500m PropCo funding round led by real estate advisory and asset management firm, Saluda quality.
As a result of the transaction, the newly created PropCo fund will acquire real estate assets worth $500 million, meaning that Saluda Grade will own the income-generating real estate. [homes] and AvantStay will serve as property manager. The move accelerates the institutionalization of a burgeoning asset class in the short-term rental segment, known as securitization.
This is Saluda Grade’s first foray into the short-term rental space, having secured 12 securitizations worth over $2 billion in the last 12 months across the asset classes of single-family and multi-family dwellings, although it participated in AvantStay’s most recent Series B funding round in December. which raised $160 million.
The increase jointly benefits Saluda Grade and AvantStay, with the former identifying alternative lending sectors in need of institutional capital to fuel growth, while the latter will use the funding to expand into new markets and strengthen its rental property portfolio short term. AvantStay currently operates over 1,000 premier vacation rental homes in over 100 cities across the United States and Cabo San Lucas [Mexico].
Sean Breuner, Founder and CEO of AvantStay, said, “AvantStay continues to break down barriers for the short-term rental industry. With this new capital and our partnership with Saluda Grade, we will pioneer and institutionalize a new asset class that will inevitably pave the way for travelers to have a better experience and for investors to generate attractive returns.
“I couldn’t be prouder of the whole team for what we’ve achieved over the past few months, as this news follows our announcement of Series B in December. Our accelerated growth shows that there is a deep understanding of our offering.
“With Saluda Grade as our instrumental partner, we will continue to fulfill our brand mission and provide groups with thoughtful and elevated experiences,” he added.
Ryan Craft, Founder and CEO of Saluda Grade, said, “We believe AvantStay’s dynamic and rapidly growing customer base makes them the ideal partner for our business to finally enter the thriving short-term rental space. We were attracted to their higher yielding product and differentiated sourcing channels, and are confident they will continue to lead the industry with their strong hospitality, technology, design and real estate offering in as an all-in-one package.
Fiona Quinn, AvantStay’s Senior Vice President of Commercial Affairs, said, “AvantStay’s focus on engaging with local communities and following their regulations enables communities to get the most out of tax revenue, direct and indirect job growth, as well as tourism dollars directed to local small businesses.
“Our investment in our proprietary operating and experience platform protects the character of the community. Our partnerships with local regulators and community groups allow us to meet the highest operating standards and ensure that plans AvantStay’s growth plans align with those of our communities,” she added.
Since its inception in 2017, AvantStay had raised approximately $186 million in funding, prior to the latest transaction.
The creation of the PropCo fund is part of a broader trend where more and more institutional investors are venturing into the frenetic short-term rental sector to buy real estate [rental homes] as they look for alternative investments that will help them capitalize on a post-pandemic travel boom.
One such company – based in Ohio real estate investment company ReAlpha – announced last June that it plans to spend up to $1.5 billion, including debt, to acquire a portfolio of 5,000 short-term rental units in US cities including Austin, Dallas and Miami . ReAlpha has since raised up to $75 million in a public offering to expand its rental housing inventory.
Institutional investment in the hotel space through REITs [REITs] is already a fairly old phenomenon, but the rise of Airbnb and the growing maturation of the short-term rental segment has pushed more entrepreneurs into the short-term rental space, where they believe they can earn better returns. than in other more traditional asset classes.
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