It’s been another year of dealmaking for Daryl Carter, founder, chairman and CEO of Irvine’s Avanath Capital Management LLC, one of the larger apartment owners based in OC, and one of country’s largest proponents of investing in economically disadvantaged communities.
A year ago, it counted a portfolio of about 80 properties with 12,000 units, including 1,500 apartments added in 2020.
The firm—which acquires and operates affordable, age-restricted and workforce housing on behalf of institutional investors—now has a much larger portfolio, one approaching 100 communities with 13,500 units spread among 53 cities.
That growth should push the company to near the largest 20 of the country’s largest affordable housing owners, according to multifamily industry data.
The company says it has more than $2.6 billion in assets under management.
Thank the unprecedented influx of investor money pouring into the industry for helping fund Avanath’s recent growth, according to Carter, who has been in the apartment sector for over 40 years.
Domestic and foreign investors “continue to invest in all segments of the multifamily industry, with the greatest focus on two sectors—affordable housing and single-family rentals,” Carter said in a recent company newsletter.
“This will continue to fuel the growth of Avanath’s affordable preservation business.”
National, Local Buys
A notable recent addition to the firm’s holdings was Washington, D.C.’s 2M Street apartments, an affordable housing complex about 12 blocks from the Capitol; it paid a reported $103.5 million for the site near the end of the year.
Closer to home, this month it reported buying Yorba Linda Palms, a 44-unit complex along Yorba Linda Boulevard, next to Imperial Highway. Terms of the purchase were not immediately disclosed.
The Yorba Linda Palms buy comes three months after Avanath paid $11.8 million for St. John’s Manor, a 36-unit complex in East Side Costa Mesa.
Also late last year, Avanath paid a reported $65 million for Corona’s River Run Senior, a 360-unit affordable seniors housing community just north of the 91 (Riverside) Freeway, along River Road.
The Corona complex traded hands for about $180,000 a unit. River Run Senior is about 3 miles from Orange County.
Avanath now owns 13 properties in Southern California with over 2,200 units under management in the region.
River Run is the company’s second acquisition in Riverside County, and first since 2014.
The investor’s also been extremely active in Orange County of late, with a quartet of acquisitions over the past two and half years. Other recent local buys included the Overlook at Anaheim Hills, an $87.5 million deal inked in mid-2021. That complex, also close to the 91 Freeway, is about a dozen miles west of River Run. It sold for about $335,000 per unit.
Near the start of 2021, it made its first OC acquisition, paying $19.9 million, or about $234,000 per unit, for The Grove Senior Apartments, an 85-unit independent living community in Garden Grove.
While the multifamily market at large has been on fire of late, there’s also been a recent growth of multifamily investment in non-gateway markets, Carter noted in the company’s latest quarterly newsletter.
“Working from home is shifting the demographic landscape of America. While cities like New York City, Washington, D.C., Los Angeles, and San Francisco will continue to be the major focus of investors and developers, other cities are becoming more attractive because they are affordable and have progressive development policy,” he told investors.
“Two cities I am bullish on are Detroit and El Paso,” he said. “Detroit and El Paso are border cities and major distribution hubs. We are breaking ground on a development property in Detroit next spring that will have a cost basis that is 35% of new construction in coastal cities.”
What to watch for the apartment sector in 2022?
ESG—short for Environmental, Social, and Governance—will continue to grow in importance in the multifamily industry, according to Carter.
“Avanath’s mission has put much emphasis on the ‘S’—social impacts—in many of the services we provide our residents, including wellness, after school programs, and financial literacy,” he wrote recently.
Now, he says, the company is “putting more emphasis on the ‘E’—clean energy and water preservation. We see many credible options/strategies for greater solar power usage. These strategies are certainly important to multifamily investors, but increasingly important to our residents.”
To that end, early this month Avanath announced that it had become one of the first affordable housing owners to achieve the “Well Health-Safety Rating” across its portfolio.
The recognition, made via the International Well Building Institute, comes a year after Avanath launched an ESG platform, dubbed Amplify, to extend its “authentic social commitments and programs, building an environmental, social and governance program.”
“The health and safety of our residents is a top priority for us and one of the major reasons we decided to roll this initiative out portfolio-wide,” said David Natt, senior vice president of Asset Management at Avanath.
“We’ve always placed a focus on health, even prior to the pandemic.”
The company notes that in 2019, it began to convert underutilized spaces in some senior communities into wellness facilities with screening rooms that have exam tables, medical supplies and medical exam equipment.
It also started to provide residents with free cholesterol checks, flu vaccines, health and wellness classes and fitness classes, among other programs.