UBS Enters Affordable Housing with $248M Portfolio Deal

The bank's asset management arm together with Avanath Capital Management formed a new fund for the 14-property, 2,085-unit multifamily portfolio. Most of the assets are located in California and Florida.
Rancho Carrillo Apartments. Image courtesy of Avanath Capital Management

Avanath Capital Management has recapitalized a $248 million affordable multifamily portfolio, selling interests in the bundle of properties to a group of institutional investors advised by UBS Asset Management.

The Elevate Portfolio, 65 percent of which is located in California and Florida, spans 14 multifamily communities with a total of 2,085 units nationwide. The portfolio was previously held by Avanath’s inaugural fund, Avanath Affordable Housing I. Avanath will manage the assets, which were transferred to the newly formed Avanath/UBS Asset Management vehicle.

The Multi-Managers (MM) business of UBS Asset Management’s Real Estate & Private Markets (REPM) arm advised on the strategic recapitalization deal, which marks the Swiss bank’s first foray into the affordable housing segment.

The portfolio includes Rancho Carrillo Apartments, a 116-unit affordable housing community in Carlsbad, Calif., built in 1999. The property at 6053 Paseo Acampo features one-, two- and three-bedroom units, and offers reduced rent for households earning less than 60 percent of the area’s median income. Information about other assets in the Elevate Portfolio has not been disclosed.

UBS, Avanath team up for impact investing

“The Elevate Portfolio provides REPM MM rare access to a fully stabilized and diversified portfolio of affordable housing assets offering our clients strong risk-adjusted total returns with highly durable cash flow,” noted David Kozlicki, executive director & portfolio manager at REPM, in prepared remarks.

“This strategic recapitalization with REPM MM represents an opportunity to continue to make an impact in underserved markets throughout the U.S.,” commented Daryl Carter, Avanath founder & CEO in the statement. “Demand for affordable housing continues to outpace supply at a rapid pace.”

Privately held Avanath Capital Management specializes in buying, owning, operating and upgrading affordable and value-oriented rental housing properties across the U.S. The real estate investment firm announced the final close of its Avanath Affordable Housing III and Avanath III NYC Co-Investment funds, two of the country’s largest vehicles dedicated to affordable housing, with equity commitments of $388 million in January 2018.