Avanath Capital Closes $85M Workforce Housing Deal
- Oct 11, 2016
By Samantha Goldberg
Seattle—Institutional fund manager Avanath Capital Management shelled out $84.8 million for two workforce housing communities in Seattle and Ft. Lauderdale, Fla., to preserve more affordable housing in those areas.
Avanath acquired The Lodge at Peasley Canyon, a 339-unit property in Seattle, and Harbor Pointe, a 34-unit property in Ft. Lauderdale that the firm acquired in a joint venture with Oak Tree Residential.
“Each of these assets presents an opportunity to leverage market growth while also preserving much-needed workforce housing in cities that have experienced some of the highest rent increases in the nation,” said John Williams, president & chief investment officer of Avanath.
Seattle is the third-ranked market for annual effective rent growth and Broward County, Fla., continues to experience strong rent growth year over year as well.
Continuous rent growth is coupled with a “severe shortage of quality workforce housing” Williams said.
“Our investment strategy is to capitalize on this underserved market sector by acquiring and repositioning well-located workforce housing assets in high-rent markets in order to generate attractive risk-adjusted returns, while also providing workers with high-quality housing they can afford,” he said.
For more on Avanath’s investment strategy, see MHN’s exclusive video interview with Founder & CEO Daryl Carter.
The firm has acquired and managed more than 41 affordable and workforce housing properties totaling more than 7,000 units since 2008, focusing on acquiring assets near major employment hubs in markets with a shortage of affordable housing supply.
These two acquisitions fit the mold. The Lodge at Peasley Canyon, which Avanath bought for $73.3 million from an institutional owner, is located in “one of the fastest-growing metros in the nation, making this a highly attractive market for multifamily investors,” Williams said. “The region is quickly gaining ascendancy as one of the premier tech hubs in the Pacific Northwest, with a demographic profile and rent growth similar to that of the Bay Area. Situated in this thriving tech corridor, The Lodge at Peasley Canyon is uniquely positioned to cater to middle-income tech support workers that are unable to afford new luxury apartments or other expensive options.”
Seattle is also home to major employers like Microsoft, Nordstrom, Amazon and Starbucks, which has resulted in a boost in luxury apartment development.
“While most of the new luxury apartments that have come online are focused on attracting highly paid tech workers, there is a deeper need for quality housing that appeals to a larger demographic in the region,” Williams said. “The Lodge at Peasley will serve as the highest quality option in the area for these workers, and will offer rents that are approximately half of the average rent for new luxury apartments in the area.”
The Lodge at Peasley, located at 32200 Military Road, was built in 2004 and offers amenities like a pool, spa and fitness center. Avanath plans to renovate the property by enhancing the community’s clubhouse and upgrading interior units, kitchens and bathrooms.
Avanath’s other acquisition, Harbor Pointe, was bought with joint venture partner Oak Tree Residential for $11.5 million from a private seller. It’s one of the “most affordable apartment complexes on the ocean side of Fort Lauderdale,” making it an attractive option for hospitality and cruise industry workers, Williams said. He added that the tourism industry is the market’s second largest industry, attracting 180,000 workers, and Fort Lauderdale is home to one of the world’s busiest cruise-line ports.
Located at 2201 Southeast 18th St., Harbor Pointe offers large units for “workers who prefer to live with roommates when not on a ship,” Williams said. The community was built in 1976 and renovated in 2006, offering two-bedroom/two-bathroom units. Avanath plans to upgrade the 100 percent-occupied property by upgrading the fitness center and adding storage space for residents.