Final Close Announced for Avanath Affordable Housing II Fund
How Avanath Capital Management has fared since its first fund.
By Jeffrey Steele, Contributing Writer
Irvine, Calif.—Avanath Capital Management has held the final closing on the $200 million Avanath Affordable Housing II Fund. The announcement was made by John R. Williams, president and chief investment officer of the privately held Irvine, Calif.-based firm managing real estate and related investments.
The Avanath Affordable Housing II Fund has 10 investors: three state pension funds, three insurance companies, a pair of banks, one foundation and one family office. Six of these 10 are repeat investors, which according to Avanath is a clear indication of the strength of its first fund.
Avanath focuses on the acquisition and operation of affordable and workforce housing assets across the country. The firm particularly specializes in markets where the supply of such housing is sharply constrained.
Following the fund’s first closing a year and a half ago, Avanath Affordable Housing II has invested in 13 affordable and workforce multifamily properties. They are located in Southern California; Northern California; the Washington, D.C. metro area; the New York City metro area; Orlando and Naples, Fla.; and Cary, N.C.
“We believe this is one of the largest underserved markets in the multifamily industry,” Williams told MHN. “Eighty percent of renters make between 50 and 80 percent of AMI [Area Median Income]. Generally, new construction in major cities is slated for 150 to 200 percent of AMI.”
The fund is currently 75 percent committed. “It’s anticipated the fund will be fully invested by the end of 2015,” Williams said.
“With anticipated returns at 13 to 15 percent net to investors, we and all of our investors are focused on bottom-line profitability,” he added. “In addition, the breadth of financial organizations involved in our second fund also shows support for the value of the social benefits we provide. In the communities surrounding our investments, we are raising the bar for the quality of affordable housing in areas where it is most needed.”
The company now has under management and ownership about 31 multifamily properties, encompassing more than 5,700 units.
What’s ahead for Avanath Capital Management?
“We plan to begin marketing a $300 million Avanath Affordable Housing Fund III in the 3rd quarter of 2015,” Williams said.