Talk about an improbable business partnership.
Jennings Lyon, who grew up in a trailer in Laurens, South Carolina, before attending seminary in South Africa, joins forces with J.K. Jay, a Christ Church Episcopal School grad who went on to play offensive tackle for Dabo Swinney’s Clemson Tigers — in a real estate company: their eponymous LyonJay.
Today, that unlikely pairing runs an equally surprising upstart, LyonJay, which they started in June 2019. The company has a combined experience building, developing, managing or investing in tens of thousands of units worth $5 billion across 11 states.
And last month, the company launched another major venture, Hudson Oak, alongside Dwight Capital. The New York mortgage-banking firm, one of the nation’s largest FHA/HUD lenders for multifamily and health care properties, services more than $5 billion in loans.
“Our goal,” says Lyon, founding partner and CEO, “is to be able to hit the workforce and service industry — your teachers, police officers, service people. Our service industry downtown has been decimated by COVID, obviously.”
Hence “build-to-rent,” a development strategy Lyon calls “the newest sector in the real estate business.”
“It’s the same product that we would sell, but the goal is to be competitive with a two- or three-bedroom apartment for whatever corridor we’re in,” Lyon says.
For instance, one of their single-family, three-bedroom, 2.5-bath townhomes, with a yard, would run $1,300-$1,700 a month, he says. Compare that with the average $1,136 rental rate for a 954-square-foot apartment in Greenville, according to RENTCafé.com‘s February numbers.
Jerome K. “J.K.” Jay III, founding partner and president, says the company is now “looking at a pipeline of about 4,000 homes over the next three years across the southeast.”
LyonJay also develops lots for the likes of such homebuilders as Dan Ryan Builders, D.R. Horton, NVR Inc. (the parent company of Ryan Homes, not affiliated with Dan Ryan), Meritage Homes Corp. and others.
Though residential real estate comprises 80% of LyonJay’s portfolio, the company in February announced its partnership with San Francisco-based Kimpton Hotels & Restaurants for a $60 million boutique hotel at Rhett and Markley streets. Lyon purchased the now-red-hot West End property seven years ago.
Three years ago in Greenville, the duo happened to meet Brad Weiser, principal at Hostmark Hospitality Group, a hospitality-management firm headquartered in Illinois.
“The quality of people that you partner with in business is ultimately so important,” Weiser says from his Key Biscayne, Florida, office. “We struck up a good relationship, and I think very, very highly of them.”
Weiser seeks out developers with deep local roots.
Jay, 30, and Lyon, 47, tout more than 75 years’ combined experience with their five-person real estate team.
Although Lyon studied for the ministry in Johannesburg, South Africa, he pivoted to real estate, returning home, where his father, Mike, who once bagged groceries for BI-LO, built his own construction company. Likewise, Jay, also a second-generation builder, left Clemson and worked for a private-equity firm that purchased single-family rental properties out of the 2008-2009 downturn.
“So that’s the expertise I came in with,” Jay says.
Lyon seems to speak for both when he says, “My passion has always been housing. I enjoy building, it’s fun to watch, it’s fun to provide something that the community needs.”
Weiser says he appreciates the pair’s commitment to product and place.
“We take that very seriously — giving back to the communities that we’re working in — and being able to have a local partner like these guys,” he says, “they’re truly special.”
Dwight Capital’s CEO, Adam Sasouness, echoes that: “We are excited to have partners that are like-minded and conduct business with the utmost level of integrity and character.”
A Lyon in South Africa
Jennings and Nicolette Lyon celebrated their 19th wedding anniversary in July. She’s a native of South Africa, where he studied for the ministry — and learned real estate.
Next thing you know, he invested in INDLU, an app that connects landlords and tenants in what’s known as the country’s “backyard market.”
The app was launched in Tembisa, one of the nation’s largest townships, on the outskirts of Johannesburg. Apartheid pushed the Black population into these impoverished settlements — essentially squatter camps.
Now, though, township landlords are converting backyard shacks into livable brick-and-mortar dwellings, paying INDLU a portion of the rent as a management fee.
“A portion of every transaction is going to go back into that community for schools and clean water and health care and things like that,” Lyon says.
According to an INDLU PowerPoint presentation Lyon provided, the company that operates the app, Melana Housing Development, values South Africa’s backyard market at more than $900 million annually. The pilot launched in 2017 with eight rooms (actually, cottages), completed 233 rooms in 2019 and forecasts more than 3,300 by next year.
Lyon, still invested in the company, has implemented a similar strategy in their Build For Rent initiative.
“Our goal is to be the low-cost provider. We know we still have to make a profit, obviously, to stay in business,” he says, “but we found that it’s been a very productive business model for us. I think everybody deserves some housing, right?”