AION, Goldman Sachs Partner on Workforce Housing
The deal includes a $700 million recapitalization made through an AION discretionary fund vehicle.
AION Partners has formed a strategic partnership with Vintage Strategies at Goldman Sachs Alternatives and a global institutional investor to recapitalize a multifamily portfolio and increase workforce housing across the eastern U.S. The partnership will recapitalize the AION 12 Portfolio, which includes 3,962 apartments across 12 stabilized workforce housing properties in New Jersey, Pennsylvania, Delaware, Maryland and Virginia.
The $700 million recapitalization was made through the AION Value Add III LP, the company’s third discretionary fund vehicle. The joint venture combines a 49 percent investment from a global institutional investor with 51 percent by AION.
AION originally acquired the assets in the portfolio between 2015 and 2021, according to Michael Betancourt, founding partner and managing director, AION Partners. Given their quality locations, physical characteristics and remaining repositioning opportunities, the 12 properties were attractive candidates for a continued value-add business plan, he told Multi-Housing News.
“The venture’s outlook is focused on the homeownership affordability crisis remaining a problem,” Betancourt said. “Buyers are priced out of the market and become renters for longer, and Class B and C rents remain affordable compared to Class A.”
The joint venture plans to add 4,000 to 6,000 apartment units, backed by a $300 million equity commitment, in its current seven-state operational footprint: New Jersey, Pennsylvania, Delaware, Maryland, Virginia, Ohio and Indiana. Betancourt anticipates that the Mid-Atlantic and Midwestern regions, underpinned by minimal supply, will continue to lead in rent growth.
“The venture is primarily focused on garden-style construction located in supply-constrained infill markets near various modes of transportation, robust employment drivers, reliable incomes and strong public schools,” he said.
Goldman Sachs Alternatives is set to become an investor in AION Value Add III LP’s first close, slated for the last quarter of 2024. AION’s renovations to the portfolio will focus on interior unit upgrades, expanding amenity offerings, enhancing property appeal and building functionality.
“We target older housing stock constructed in the 1960s, 70’s and 80’s that require ongoing reinvestment and offer significant opportunities to reduce operating costs through infrastructure investment,” Betancourt said.
Since 2011, AION has acquired and redeveloped over $3.9 billion in workforce housing, comprising more than 29,000 apartment homes. This recapitalization marks the company’s fifth large-scale transaction.
Last month in another large-scale affordable deal, Standard Communities purchased a 6,000-unit portfolio of 60 affordable housing communities for $1 billion, the year’s largest affordable acquisition. The deal spanned across Arizona, Texas, Colorado and California markets.
