Avanath Capital Management has added two affordable housing properties to its portfolio.
The real estate investment firm has purchased Silver Springs, a 251-unit property in the Seattle metro suburb of Kent, Wash. The property is the firm’s first acquisition in the Pacific Northwest.
The company also acquired Oak Village, a 117-unit property in Oakland, Calif.
“The Seattle metro is booming with potential, making it a highly competitive market that is extremely attractive for investors,” said John Williams, Avanath president and chief investment officer, in a statement. “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.”
The two acquisitions are the last two assets purchased through Avanath Affordable Housing II, an institutional fund with $200 million in equity commitments. Avanath is currently working toward closing its third institutional fund.
Silver Springs, a 100% affordable apartment community, was purchased 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,” said Williams.
Built in 2000, the Silver Springs apartment community, which was 98% occupied at acquisition, features 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.
The property was purchased from a local private developer.
Oak Village, also a 100% affordable housing community, was purchased for a total consideration of $12.6 million.
“Rents in the Bay Area are soaring to unprecedented heights,” said Williams. “According to a 2015 report by Trulia, Oakland experienced the second-largest rent growth in the nation, with a 12.1% 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 program, Oak Village, nearly 100% 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.
Headquartered in Irvine, Calif., Avanath acquired the property from a repeat seller—a large private developer and owner.