Home Industry News Avanath Capital Management Acquires Kent Asset for $32.2MM

Avanath Capital Management Acquires Kent Asset for $32.2MM

SHARE

OAKLAND, Calif., (March 21, 2016) – Avanath Capital Management, LLC, a private real estate investment manager that specializes in affordable and workforce housing, has acquired two affordable multifamily assets, including Silver Springs, a 251-unit property in the Seattle metro suburb of Kent, Washington, as well as Oak Village, a 117-unit property in Oakland, California. Silver Springs is the firm’s first acquisition in the Pacific Northwest.

“The Seattle metro is booming with potential, making it a highly competitive market that is extremely attractive for investors,” explains John Williams, President and Chief Investment Officer of Avanath. “The market’s growing technology sector, mass transit infrastructure, and manufacturing industry are driving employment in this region, which translates to enormous demand for affordable housing. In addition, our Oak Village acquisition boasts a prime location in a market with access to thousands of jobs in the tech and financial industries. Given the strong correlation between job creation and rent increases, these acquisitions demonstrate our commitment to targeting markets where affordable housing is most needed.”

These two acquisitions constitute the last two assets purchased through Avanath Affordable Housing II, LLC, an institutional fund with $200 million in equity commitments. Avanath is currently working toward closing its third institutional fund.

Since 2008, Avanath has invested in the acquisition and operation of more than 35 affordable and workforce housing assets across the U.S., targeting metropolitan markets with economic growth and strong fundamentals. The firm strategically identifies urban markets near major employment hubs, leveraging the growing workforce demand for affordable housing.

“In addition, both the Silver Springs and Oak Village acquisitions strongly align with our ongoing strategy to acquire affordable assets with deep value-add potential, allowing us to generate competitive returns for our investors while also positively impacting entire communities with the provision of high-quality affordable housing,” says Williams.

Silver Springs Acquisition
Avanath Capital Management acquired Silver Springs, a 100 percent affordable apartment community in Kent, Washington, for $32.2 million.

“Located in the third largest industrial area in the U.S., Silver Springs is extremely well-positioned to cater to the demand for workforce housing. The recent job creation in this market, combined with rapidly rising rents, presents a golden opportunity for us to provide high quality, affordable housing to this working class demographic,” Williams affirms.

Kent, a burgeoning submarket of Seattle, Washington, is one of the nation’s fastest growing industrial areas and is home to some of the most prominent warehouse distribution and manufacturing centers in the United States. Boeing Space and Defense, REI, Tazo Tea, and Starbucks Coffee’s roasting plant are just a few of the distinguished operations in the Kent submarket which has experienced tremendous economic growth in the past few years.

“The Seattle MSA is characterized as a high barrier to entry market where affordable product is extremely limited. Our ability to source and acquire this property truly speaks to our deep expertise in supply-constrained markets,” comments Williams, who notes that demand for affordable housing continues to outpace supply in this area.

Built in 2000, the Silver Springs apartment community, which was 98 percent occupied at acquisition, features high quality construction and a competitive amenity package which includes a pool and spa, washers and dryers in most apartments, storage units, and garages. Avanath plans to renovate the property with upgrades to the clubhouse and leasing center, keeping the quality of the asset competitive with market-rate housing.

In addition to these quality amenities, the property is located only five minutes from the newly developed downtown Kent station, which hosts an array of shopping, dining, and retail services as well as commuter rail service that provides direct transportation into downtown Seattle.

Avanath purchased the property from a local private developer. Silver Springs is located at 22416 88th Avenue South in Kent, Washington.

Oak Village Acquisition
Avanath has also acquired Oak Village, a 100 percent affordable housing community in Oakland, California, for a total consideration of $12.6 million.

“Rents in the Bay Area are soaring to unprecedented heights,” affirms Williams, adding that the region continues to see double digit rent increases every year. “According to a 2015 report by Trulia, Oakland experienced the second largest rent growth in the nation, with a 12.1 percent increase from 2014 to 2015. The average market-rate multifamily property in the area charges twice the amount of the maximum rent at Oak Village.”

According to Williams, the Oak Village apartment community is situated within walking distance to two other affordable assets owned by Avanath, Mohr One and Oak Center.

“Our repeat success in the area immediately attracted us to this off-market opportunity,” says Williams. “We continue to view Oakland as a prime market for affordable and workforce housing investments based on its major employment drivers and rising rents. The Oak Village acquisition will allow us to capitalize on strong demand, while also bringing renovated, quality housing to a much-needed area.”

Constructed in 1973 and extensively renovated in 2004 under the Low Income Housing Tax Credit (LIHTC) program, Oak Village, nearly 100 percent occupied at acquisition, offers amenities that include a fitness center, laundry room, clubhouse, and a computer room. Avanath plans to upgrade the property by implementing drought-tolerant landscaping to reduce utility costs, keeping the asset both sustainable and affordable for tenants.

Oak Village benefits from its close proximity to jobs across the Bay Area, a region that continues to demonstrate continuous growth in the healthcare, financial services, and biotech industries. The property also offers immediate access to a BART transit station, providing excellent mobility for the residents of the community.

Avanath acquired the property from a repeat seller, a large private developer and owner. Oak Village is located at 801 14th Street in Oakland, California.

About Avanath Capital Management
Avanath Capital Management is a privately-held, vertically integrated investment firm managing real estate and real estate-related investments generating attractive risk-adjusted returns through current income and capital appreciation from its investments. The firm also provides property management services through its two affiliates, Avanath Property Management and McKinley- Avanath Property Management. Founded by Daryl J. Carter, the Avanath management team averages 25 years of experience and has successfully guided investment funds in defining growth opportunities and delivering attractive returns. Avanath professionals have real estate operating expertise and long-standing relationships with strong local, regional and national sponsors that can access investment opportunities aligned with Avanath’s initiatives.