Calgary-based Avenue Living’s $52-million US acquisition of a 386-unit multiresidential rental property in Columbus, Ga., has increased the real estate company’s portfolio to more than 15,000 residences in 23 regions across North America.
The company began in 2006 with the purchase of 24 rental units in Brooks, Alta., for $3 million. Today, it has about $4 billion Cdn in total assets under management. In addition to multiresidential, its real estate portfolio includes a growing self-storage presence in both Canada and the U.S., in addition to farmland and some commercial properties.
“Since entering the multifamily space in 2006, we’ve focused on creating an operating model that puts the residents’ needs first,” said Anthony Giuffre, founder and chief executive officer at Avenue Living. “Our experience has shown that these needs transcend geographies, which presents opportunities to expand our defensible model across key locations in Canada and the United States.”
Giuffre said the recent purchase of The Palms Apartments reinforces the company’s business model.
“We found what we deemed as our niche which is workforce housing and the interesting part of workforce housing . . it’s a very tenacious, wonderful customer to work with. They cross all geographies . . . workforce housing really transcends all markets,” Giuffre told RENX.
“What we’ve really done over the course of the last few years, with significant, dynamic growth, is we’ve really stuck with the narrative of who our customer was and in really focusing on operating best in class . . . really continuing to focus on customer service, the customer experience and continue to increase the level of service and quality whether it would be in relationship to the customer interactions or building quality. . . .
"Again, bringing them to a higher standard.”
The workforce housing demographic
Giuffre defined workforce housing on an income basis as individuals making between $15 and $50 per hour.
Properties targeted to the workforce housing market are typically 10 years old or more and Avenue Living’s strategy is to restore those buildings to their original standards.
“We’ve done that effectively,” added Giuffre.
Avenue Living will invest $5.8 million US in improvements for its latest acquisition.
Avenue Living’s 16-year consolidation strategy focuses on low-to-medium density workforce housing located in key markets.
The company continues to target moderate growth markets that exhibit a diversified economic base and low institutional penetration.
Avenue Living has a track record of immediately adding value to buildings and improving resident satisfaction.
In the U.S., Avenue Living now has 10 properties located in five states: Colorado Springs, Colo.; Kansas City, Kan.; Madison, Wis.; Cincinnati, Ohio; and Columbus Ga.
It has more than 1,360 multiresidential units in the U.S., representing about 10 per cent of the company’s overall multiresidential portfolio.
Avenue Living’s first acquisition in the multiresidential market south of the border was the purchase of 129 units in Colorado Springs in October 2020.
Giuffre said there remains a supply imbalance in housing.
“We hear it in the Canadian news. We hear it in the U.S. news. There is just not enough housing,” he said.
"But when we look at what’s out there, a lot of that existing supply either hasn’t been repurposed or brought to a particular standard that it was created in.
“That’s why it’s so important and that’s why we create that value add piece to our process.
“We want to create housing affordability for the consumer, . . . What we’re trying to do is really keep rents in that sub-30 per cent of their pre-tax income. . . . We want to make sure that obviously rent is affordable for these folks.”
Properties available for future growth
Giuffre said there is a significant supply of those types of properties for Avenue Living to acquire and reposition in the future.
“We really don’t have a target. What we try and do is we try and find opportunity. Obviously by now having a 10 per cent sleeve in the United States it allows us - in a very robust management platform - it allows us to continue to scale the business through operational efficiencies.
"We don’t really have a target in mind per se, in a number hurdle that we’re trying to get to. I think the market is very dynamic as we know, watching the rising interest cost environment, inflation, all of that stuff. . . . Undersupply of housing,” he said.
This year, Avenue Living has acquired 2,031 ,” multiresidential units. Since the start of 2021, it has grown its unit count by 46 per cent, acquiring over 4,800 multiresidential units.
The company said it continues to see strong tailwinds in the workforce housing rental market. It has a 97.5 per cent occupancy rate and higher-than-average retention rates.
“We use a rigorous research and analysis process to select each and every one of our multifamily properties,” added Jason Jogia, chief investment officer at Avenue Living.
“We understand local market conditions, industry and employment opportunities in the region, level of demand, and of course the potential of each property we acquire.”
Avenue Living and Mini Mall Storage
The company has seen similar significant growth with its Mini Mall Storage Properties which it started just under three years ago.
Today, it includes 139 facilities in both Canada and the U.S., split 50/50, comprising just over 35,000 units in seven provinces and 13 states.
In 2022, the self-storage division of the business has made acquisitions of more than 16,400 units and over 2.23 million square feet.
“These markets are very fragmented in both Canada and the United States and that’s what’s really created that acquisitional opportunity,” said Giuffre.
“We try and aggregate and consolidate a lot of the one-off operators. We have a significant and robust management platform. So as a result whether we’re operating in Canada or the United States, it allows us to absorb the one-off locations, roll it into our infrastructure and really continue to grow,” he said, adding the company does look at secondary and tertiary markets.
He said the demand for storage remains robust.
“We see massive growth opportunities in both Canada and the United States,” added Giuffre.
Avenue Living also owns close to 500,000 square feet of commercial real estate space and close to 83,000 acres of farmland. The company has acquired more than 33,700 acres this year in Saskatchewan.