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3/24/22
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Avanath Capital Management LLC has completed the initial closing of its open-ended affordable housing fund, with $536 mil in equity commitments. The initial equity commitments were used to seed the fund with an $830 mil affordable housing portfolio and will provide cash for additional acquisitions.
The fund will serve as the firm’s sole investment vehicle for new affordable and workforce housing acquisitions moving forward. Avanath worked closely with UBS (a core investor in the Fund) and Accord Capital Partners (exclusive capital advisor for the Fund) on the open-ended structure and launching this as a seeded investment vehicle
The fund’s strong, institutional-quality seed portfolio includes 27 apartment communities featuring 4,256 units and totaling $830 mil in gross asset value (GAV). This portfolio is characterized by stable, defensive cash flow, high occupancy, low turnover, and embedded growth opportunities, according to Wesley Wilson, one of Avanath’s Partners and CFO.
The fund also presents a significant market opportunity to combat the ongoing affordable housing crisis in this country. According to a JCHS report from 2020, only 24% of total apartment stock in the U.S. is rent-regulated, and there is a shortfall of 8.3 mil of affordable and available rental units for very low-income households.
The Fund also benefits from the strong fundamentals traditionally enjoyed by affordable housing assets, Wilson adds. “Typically, properties in which this Fund invests will have enjoyed a 95%+ occupancy rate with significant waitlists. The tenancy of our portfolio has a median length of 6 years versus approximately 1+ years for market-rate properties, which positions these assets for stability.”
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