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DF Capital Management Raises $322mm for Residential Land Fund
Rhea-AI Impact
(Neutral)
Rhea-AI Sentiment
(Very Positive)
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Rhea-AI Summary
DF Capital Management announced the successful closing of DF Residential II, LP, achieving $322 million in equity commitments, surpassing its $250 million target. The fund will focus on investing in residential land to supply finished lots for entry-level home construction, addressing a significant housing shortage. Partnering with Dream Finders Homes (Nasdaq: DFH), a prominent homebuilder, enhances capital efficiency and scaling opportunities. Despite industry supply challenges, strong market fundamentals support the strategy of providing single-family homes.
Positive
Exceeded fundraising target with $322 million in commitments.
Focus on residential land investment addresses entry-level housing shortage.
Partnership with Dream Finders Homes enhances capital efficiency.
Negative
Homebuilders face supply constraints and inflationary pressures.
JACKSONVILLE, Fla.--(BUSINESS WIRE)--
DF Capital Management, LLC announced the final closing of DF Residential II, LP in the first quarter of 2022 with $322mm of equity commitments--exceeding its target raise of $250mm. The Fund’s commitments span nearly 100 investors of various profiles led by multiple institutional investors.
Fund II is investing in residential land to provide finished lots to homebuilders for the construction of entry-level homes which remain in short supply across the country. DF Capital executes this strategy by investing in fully entitled land, while securing all builder contracts and deposits prior to land purchase.
“While homebuilders are contending with the same supply constraints and inflationary trends affecting most companies today, the underlying fundamentals of the market remain strong,” said Chris Butler, Managing Partner of DF Capital. “Housing supply remains at record lows and favorable demographics in our target markets should continue to underpin demand. We believe our strategy is an attractive way to invest in this secular shift back to single-family living.”
The Fund’s value proposition is further enhanced through DF Capital’s partnership with Dream Finders Homes, Inc. (Nasdaq: DFH), a Jacksonville based national homebuilder that closed over 4,800 homes this past year (2021). This partnership allows DF Capital to efficiently scale its land investments with the growth of Dream Finders Homes, while Dream Finders Homes adds an important capital source to execute on its asset light model.
“By utilizing land partners like DF Capital, Dream Finders Homes can focus on being a great homebuilder, while our land partners with different investment objectives can receive a premium return on their capital. It’s a win-win for both parties,” said Patrick Zalupski, CEO and Founder of Dream Finders Homes. “Over the last 5 years we have built a great partnership with DF Capital which has helped scale our business.”
About DF Capital Management, LLC
DF Capital Management, LLC (DFCM) is the Investment Manager of DF Residential I, LP (2017) and DF Residential II, LP (2021). DFCM invests in residential real estate by selling finished lots to homebuilders for the construction of single-family homes across the country. Target markets include Jacksonville, FL | Orlando, FL | Austin, TX | Denver, CO | Raleigh, NC | Charlotte, NC | Savannah, GA | Hilton Head, SC.
About Dream Finders Homes, Inc. (Nasdaq: DFH)
Dream Finders Homes, Inc. is a top-20 national homebuilder based in Jacksonville, FL, with industry leading returns on shareholder’s equity. Dream Finders Homes achieves its industry leading growth and returns by maintaining an asset light homebuilding model. Dream Finders Homes, LLC, the primary operating subsidiary of Dream Finders Homes, has a 49% membership interest in DF Capital Management and has entered into land bank financing arrangements and a Memorandum of First Offer with Fund II.
What is DF Capital Management's recent funding announcement related to DF Residential II, LP?
DF Capital Management announced the closing of DF Residential II, LP with $322 million in equity commitments, exceeding its $250 million target.
How does DF Capital's strategy address the housing market's challenges?
DF Capital's strategy focuses on investing in residential land to provide finished lots for entry-level homes, addressing the ongoing housing supply shortage.
What role does Dream Finders Homes (DFH) play in DF Capital's investments?
Dream Finders Homes partners with DF Capital to enhance capital efficiency and scale land investments, allowing them to focus on homebuilding.
What are the potential market impacts of DF Capital's funding success?
The successful funding could lead to increased availability of entry-level homes, potentially stabilizing prices amid existing supply constraints.
How does DF Capital Management plan to invest the raised capital?
The raised capital will be invested in fully entitled residential land to provide finished lots, primarily targeting homebuilders.
