Avanath Announces Initial Closing of Open-Ended Affordable Housing Fund
Avanath Announces Initial Closing Of Open-Ended Affordable Housing Fund, With Over $536 Million In Equity Commitments.
The Avanath Affordable Housing Renaissance Fund (the “Fund”) will serve as the firm’s sole investment vehicle for new affordable and workforce housing acquisitions moving forward.
IRVINE, Calif. (March 22, 2022) – Avanath Capital Management LLC, a multifamily owner and operator that primarily focuses on affordable housing, announces that it has completed the initial closing of its open-ended affordable housing fund, with $536 million in equity commitments. The initial equity commitments were used to seed the Fund with an $830 million affordable housing portfolio and will provide cash for additional acquisitions.
The Fund will serve as the firm’s sole investment vehicle for new affordable and workforce housing acquisitions moving forward, according to Daryl Carter, Chairman and CEO of Avanath.
“This closing of this perpetual-life vehicle marks the beginning of an exciting new chapter for the Avanath team,” says Carter. “In addition to accelerating the firm’s growth and expanding our acquisition capacity, the Fund’s infinite lifespan enables us to invest on an ongoing basis in affordable housing that serves residents and communities in need throughout the country.”
The Fund’s strong, institutional-quality seed portfolio includes 27 apartment communities featuring 4,256 units and totaling $830 million in gross asset value (GAV). This portfolio is characterized by stable, defensive cash flow, high occupancy, low turnover, and embedded growth opportunities, according to Wesley Wilson, one of Avanath’s Partners and CFO.
“This vehicle will continue to aid our successful strategy of investing in affordable and workforce communities in high-cost and high-growth job markets that are underserved by this type of housing,” says Wilson. “The entire Avanath team worked diligently to launch the Fund and views this first close as a huge stride in the firm’s cumulative progress and mission.”
The Fund also presents a significant market opportunity to combat the ongoing affordable housing crisis in this country. According to a JCHS report from 2020, only 24% of total apartment stock in the U.S. is rent-regulated, and there is a shortfall of 8.3 million of affordable and available rental units for very low-income households. “With the establishment of the Fund, our team will be able to continue our focus on markets that exhibit high income growth, high housing costs, and a significant supply-demand imbalance,” Wilson notes.
The Fund also benefits from the strong fundamentals traditionally enjoyed by affordable housing assets, Wilson adds. “Typically, properties in which this Fund invests will have enjoyed a 95%+ occupancy rate with significant waitlists. The tenancy of our portfolio has a median length of 6 years versus approximately 1+ years for market-rate properties, which positions these assets for stability.”
According to John R. Williams, President and Chief Investment Officer at Avanath, a distinguishing factor of Avanath’s new Fund is that it already owns a portfolio of stabilized assets, meaning the vehicle will have current cash flow from day one. The Fund is also expected to benefit from a proprietary pipeline of stabilized assets for future acquisitions.
“We’ve constructed something very attractive to investors,” explains Williams. “We worked closely with UBS (a core investor in the Fund) and Accord Capital Partners (exclusive capital advisor for the Fund) on the open-ended structure and launching this as a seeded investment vehicle.” According to Williams, the new Fund also reflects Avanath’s long-term objectives, which are driven by social impact initiatives.
“Our latest investment vehicle will allow us to continue to implement enhanced social impact and community building programs across properties to benefit residents, as well as sustainability initiatives to support long-term environmental goals,” says Williams.
ABOUT AVANATH CAPITAL MANAGEMENT
Avanath Capital Management is a privately held, vertically integrated investment firm managing real estate and real estate-related investments generating risk-adjusted returns through current income and capital appreciation from its investments. The firm is a Registered Investment Adviser and provides property management services through Avanath Communities, Inc.
Founded by Daryl J. Carter, the firm is led by a management team that averages 25 years of experience and that has successfully guided investment funds in defining growth opportunities. 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. More information is available at www.avanath.com.
ABOUT ACCORD GROUP HOLDINGS LLC
Accord Group Holdings LLC (“Accord”), through its affiliates, is a global capital advisor and principal investor. With its headquarters in San Francisco and personnel in Chicago, London and Seoul, Accord engages with a wide variety of participants in the real estate private equity industry. Accord Capital Partners LLC, its broker/dealer affiliate, provides advisory and capital raising services in the United States. For further information on Accord, visit: www.accord-group.net.
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