Avanath Secures Hudson Valley Workforce Property

The company’s acquisition of the asset in Poughkeepsie, N.Y., reflects rising demand in big-city suburbs.

45-177 Grand Pointe Park PoughkeepsiePoughkeepsie, N.Y.—Avanath Capital Management, headquartered in Irvine, Calif., has acquired a 156-unit workforce apartment building in the New York City metro submarket of Poughkeepsie, N.Y. Grand Pointe Park is an apartment community situated at 161 Clubhouse Drive, a mere three miles from Poughkeepsie Station. The station serves commuters by providing train service to Grand Central Station in New York City.

“Grand Pointe Park’s prime location in a rapidly growing suburb of the New York metro, coupled with its proximity to public transit options, made this an attractive investment opportunity for our national affordable and workforce housing portfolio,” Avanath president and chief investment officer John Williams told MHN.

“The property is a 90-minute train ride into New York City and offers residents a more affordable alternative to urban living, while still providing access to employment opportunities in the urban core.”

A major trend currently impacting the multifamily market is the regional migration to suburban communities within commuting distance to urban cities, Williams continued.

“As the cost of living in major metropolitan areas continues to spiral upward, the suburbs are becoming much more attractive and affordable for many of today’s renters, making these suburban markets ideal targets for workforce housing investments,” he said. “Poughkeepsie is an industrious, emerging submarket that is poised for long-term growth. Employment has increased 2.2 percent annually, [the market adding] hundreds of jobs in the chip manufacturing, technology and healthcare industries, resulting in strong demand for quality affordable housing to support this growing workforce.”

Based on these fundamentals, Avanath views Grand Pointe Park as a stable long-term investment that will generate strong cash flow and attractive risk-adjusted returns to the company’s institutional investors, Williams said. Avanath is targeting mid-teen returns, believing the limited supply and virtually unlimited demand for quality workforce housing will enable the company to maintain high occupancies at Grand Pointe Park. Those in turn will drive strong net operating income and higher yields for Avanath’s investors.

“Our investment strategy is to preserve the existing supply of affordable and workforce housing by enhancing asset quality without sacrificing affordability,” Williams said.

“By investing in strategic renovations that require a minimal capital expenditure, we are able to deliver high-quality housing without the substantial rent increases associated with over-the-top improvements.”

There were several advantages that made Grand Pointe Park an attractive investment opportunity, Williams reported. The apartment community benefits from high-quality construction with upgraded interiors and attractive curb appeal. In addition, it offers a competitive unit mix and roomy floor plans. As a result, the property will likely attract a diverse resident base of families, roommates, singles and seniors, Avanath believes.

“There was heavy competition for this property, with five or six bidders competing for this asset,” Williams said. “Based on our ready access to capital, due diligence, and proven track record in the affordable housing space, however, we were able to emerge as the right buyer in this transaction.”