Avanath Capital Management, LLC, a private real estate investment manager and Registered Investment Adviser, has purchased three affordable housing communities with a combined total of 317 units in Chicago and Maryland. The assets were acquired for a total of $55.05 million.
These acquisitions bring the company’s total holdings in Chicago to 1,063 units and its total holdings in the Washington DC metro area to 1,169 units, according to John Williams, President and CIO at Avanath Capital Management.
“We have been extremely active this year, rapidly expanding our AUM throughout many major markets across the nation,” says Williams. “We target markets where there is tremendous pent-up economic growth, exceptionally strong job and population growth, and an increasing need for affordable housing. Both Chicago and the DC metro area meet these qualifications.”
Williams explains that affordability is a major concern in many markets across America as home prices and rents continue to rise while wages remain stagnant.
“Our investment strategy is founded on preserving affordability for residents in some of the nation’s most cost burdened areas while simultaneously creating value for our investors,” he says. “Through our proven asset management strategy, we will make capital improvements to these newly acquired properties that will enhance value for investors and keep rents low for residents.”
Avanath’s asset management strategy includes value engineering renovations, incorporating sustainable features, and improving operational efficiencies through its integrated property management and the firm’s niche focus on affordable housing.
Avanath purchased the following properties:
156-Unit Scotland Yard Apartments in Chicago
Avanath Capital Management has acquired Scotland Yard Apartments for $28.3 million. Located in the Buena Park residential neighborhood in the Belmont-Montrose-Uptown District of Downtown Chicago’s Northside, the development is a 156-unit transit-oriented, apartment community consisting of 18 studios, 125 one-bedrooms, and 13 two-bedrooms. Built in two phases in 1915 and 1917, the property was completely renovated by the seller in 1982.
“Chicago’s northside is a very popular and affluent neighborhood that is known for its vintage condo buildings, tree-lined streets, and location near Lincoln Park, Wrigleyville and the Uptown Entertainment District,” says Ben Finley, National Head of Acquisitions at Avanath. “This was a rare opportunity to acquire a well-located asset in a neighborhood with an increasing need for affordability.”
In fact, according to Axiometrics, the submarket has experienced record high occupancy averaging 94.6 percent from 2000 to 2017, with very little new supply added recently. Over the last several years, the region added an average of approximately 162 units per year.
“Of this limited new development, almost none of these units are affordable,” explains Finley. “This lack of supply, coupled with the submarket’s high occupancy, is creating a deep need in the market for affordable housing, which will continue to drive demand to the property over time.”
The community is located close to diverse retail stores including national retailers Aldi, Target, and Jewel Osco; specialty retailers; and the city’s premier nightlife districts. It is also within one block of an elementary school, within two blocks of a high school, and convenient to several private and magnet schools. In addition, the transit-oriented property is blocks from a newly renovated $203 million CTA train station that opened in 2017.
“With all of our acquisitions, we have our residents top of mind,” says Finley. “This means ensuring the community is extremely walkable, located close to transit and is surrounded by a variety of retail and entertainment options.”
Avanath will execute a number of improvements to the property, including exterior tuck pointing, repairing metal framing on the cat walks and stairways, security cameras upgrades, LED lighting, and moving the office to a non-rentable unit to put the current office back online.
Scotland Yard Apartments is located at 4215-4261 Broadway Street in Chicago, Illinois.
59-Unit Renaissance North Apartments in Chicago
Avanath Capital Management also purchased Renaissance North, a 59-unit, mixed-income affordable housing community in Chicago, for $15.45 million. The transaction represents Avanath’s first public-housing deal.
Constructed in 2003, the property features one-, two-, and three-bedroom units in addition to first floor retail space. One of the first developments built in conjunction with the Chicago Housing Authority, Renaissance North offers both market-rate and affordable units.
“The apartment community is located between two neighborhoods with Lincoln Park to the north and Old Town to the south,” says Finley. “Both of these regions are experiencing meaning growth, which will continue to benefit the property.”
According to Finley, this acquisition is also a testament to the importance of public-private partnerships in preserving affordability in the region.
Avanath plans to make a series of renovations to the property that include interior renovations on the market rate units, pressure washing, security camera upgrades, replacing common area hallway flooring, and replacing drop ceilings in all hallways.
Renaissance North is located at 551 W. North Avenue in Chicago, Illinois.
102-Unit Victoria Park at Edgewater in Maryland
Avanath has also acquired Victoria Park at Edgewater, a 102-unit affordable senior housing community in Edgewater, Maryland for $11.3 million.
Located in the sought-after Annapolis submarket, the apartment community is the only senior affordable community in the region, according to Finley.
“The asset’s location in close proximity to major metros including Washington D.C. and Baltimore and the limited supply of affordable housing in the area will continue to drive long-term demand for the property,” explains Finley. “In fact, the property is currently 100-percent occupied with a waiting list of more than 200 individuals.”
The area’s current rising demand is proving out the firm’s investment strategy, Finley notes, adding that Avanath previously identified this region as an emerging market and currently owns six other properties throughout the D.C. metro region.
“Our expanding presence in the area will allow us to better serve our residents and drive down operating costs for investors through economies of scale,” explains Finley.
Victoria Park at Edgewater features a mix of one- and-two-bedroom units along with a variety of community amenities for seniors including billiards/game room, central laundry facilities, computer lab, fitness and wellness center, library, outdoor patio, theatre and entertainment center, and two elevators, among other features.
“We plan to make some interior and exterior renovations to the property including new LED lighting, new paint and landscaping, upgrades to the entertainment room, and the installation of barbecue grills,” says Finley. “We also plan to add Amazon lockers for residents.”
The apartment community is located at 87 Stewart Drive in Edgewater, Maryland.
About Avanath Capital Management
Avanath Capital Management is a privately-held, vertically integrated investment firm managing real estate and real estate-related investments generating attractive risk-adjusted returns through current income and capital appreciation from its investments. The firm is also a Registered Investment Adviser and provides property management services through Avanath Realty, Inc.
Founded by Daryl J. Carter, the Avanath management team averages 25 years of experience and has successfully guided investment funds in defining growth opportunities and delivering attractive returns. Avanath professionals have real estate operating expertise and long-standing relationships with strong local, regional and national sponsors that can access investment opportunities aligned with Avanath’s initiatives.