Avanath Capital Management has acquired two low-income housing tax credit properties in the San Francisco Bay Area submarket of Novato for $131.5 million.
Purchased with equity from the firm’s Renaissance Fund and debt financing through CBRE and Fannie Mae, the purchase expands the firm’s presence in Northern California and marks its 17th and 18th acquisitions in the market, according to Daryl Carter, founder, chairman, and CEO of Avanath Capital Management.
“There is a significant need for affordable housing in the greater San Francisco market,” Carter said. “Currently, 26% of the total units in the market are designated as affordable housing. While planning to develop new properties exists within the market, only 16% of newly completed units would be affordable. There is a genuine affordable housing crisis, and we are determined in our mission to contribute to its resolution.”
The portfolio comprises two communities totaling 297 units: Bay Vista at Meadow Park and Creekside at Meadow Park, which were built in 2005 and 2003, respectively, using housing tax credits. Both properties are over 98% occupied.
“With the acquisition of the Novato Portfolio, Avanath brings two well-located apartment communities into its San Francisco area holdings that provide housing to low-income families in the most expensive housing market in the country,” said Carter. “Based on the lack of development pipeline in the immediate area, both properties will remain as some of the highest-quality affordable communities in fast-growing Marin County, serving an incredibly strong demand for years to come.”
Avanath now manages over 3,000 units in Northern California and owns more than 800 units in the Bay Area.
Bay Vista and Creekside provide housing for residents at rents between 30% and 60% of the area median income.
While noting that the communities are in exceptional condition, the company plans to leverage its deep experience operating affordable and workforce housing communities to invest in the assets through strategic upgrades and the implementation of environmental, social, and governance (ESG) initiatives, according to John R. Williams, president and chief investment officer.
“Washers and dryers are currently not offered at Bay Vista and are in high demand by renters, so we have budgeted for the installation of both in each unit over the first four years of the investment term,” explains Williams. “As some mechanical systems are approaching the end of their useful lives, the budgeted funds per unit are extremely important when replacing equipment such as water heaters and roofing.”
Avanath will also be assessing the amount of greenhouse gas that has been emitted from the property and will recommend property-level initiatives to reduce energy consumption and greenhouse gas production.
“Our goal is to reduce our portfoliowide greenhouse gas emissions by 50% by the year 2030. To reach this goal, action starts now,” said Williams.
The firm will be installing LED lighting, electrical appliances, and electric water heaters to the Novato portfolio units and may potentially add electric vehicle charging stations. Both Bay Vista and Creekside offer a day care center for resident use. As part of the firm’s social impact initiatives, Avanath plans to implement even more social programs for residents.
Bay Vista is composed of 15 two-story buildings totaling 220 units, a leasing office that also serves Creekside, and a laundry building across 16.4 acres. The property offers two- and three-bedroom units, and property amenities include the day care center, a swimming pool, a spa, and picnic areas.
Creekside has 26 two-story buildings totaling 77 units with a day care center and playground across 7.81 acres. Creekside offers two-, three-, and four-bedroom floor plans.
The transaction was marketed by CBRE on behalf of the prior owner, Shea Homes.