Avenue Living Asset Management was founded in 2006 with the purchase of 24 rental units in Brooks, Alta., for just over $3 million.
With its latest acquisitions, the Calgary firm has surpassed $5 billion in assets under management, with continued growth on the horizon.
Avenue Living today has about 15,700 residential rental units (14,350 in Canada and 1,350 in the United States); about 6.7 million square feet of self-storage property (2.3 million square feet in Canada and 4.4 million square feet in the United States); about 86.500 acres of farmland in Saskatchewan; and about 496,000 square feet of commercial property.
Anthony Giuffre, founder, CEO and executive chairman of Avenue Living, said the multifamily real estate market is experiencing an interesting moment in time.
“Clearly when we hear all the headlines, multifamily is very newsworthy right now and that’s basically because we have a supply imbalance. We really do have a housing crisis in Canada,” Giuffre told RENX, “and we do need to bring more multifamily units online in Canada province by province.
“Frankly what we are seeing is just an inability to build fast enough for whether we talk about the net inbound in-migration coming interprovincially or also internationally.
"What’s happened is it’s created a supply imbalance. When we look at housing starts and housing completions, it’s tough because essentially that housing stock can’t necessarily keep up.
“So it’s a moment in time where we have to be very conscious about how we do things. Now at Avenue Living, because we’re not a developer, we do see those supply constraints maybe differently than most.”
Avenue Living seeks to elevate its portfolio
Giuffre said 10 interest rate hikes changed the affordability picture for developers in tandem with rising construction costs. As a result, getting a property onto the market becomes increasingly challenging.
For the consumer, it translates into higher costs – especially considering the supply imbalance.
“When you look at Avenue Living, we are not a builder or developer but what we’re doing is we’re doubling down on Alberta,” Giuffre said.
"We’re taking our own path and trying to help – trying to be responsible in terms of managing the quality of housing, so upscaling housing, providing an institutional service standard on assets typically that have been undermanaged and bringing that to the next level.
“So when we think of that growth and we think of what’s out there, what we’re really trying to be, to do is segment the housing space. We are the workforce housing. That segment is really ours. That $15 to $50 an hour. . . .
"What we have to be able to do, knowing that there’s housing pressures, we have to be able to provide a service standard, and an increasing service standard, that arguably hasn’t necessarily been seen in that particular space.”
Avenue Living's growth has been dramatic in recent years. In 2018, it held $1.27 billion in assets under management. That rose to $1.6 billion in 2019 and to $2 billion in 2020.
Throughout the pandemic, the company continued to grow, reaching $3.2 billion in 2021 and $4.6 billion in 2022.
Today, it manages more than 700 properties across North America.
Two recent Edmonton acquisitions
Recently, Avenue Living completed two multifamily transactions in Edmonton – The Level, a 171-unit property and Harmony, a 95-unit property. The purchase prices were not disclosed.
Giuffre said the company in the past year has been focusing on its operational standards to bring a better quality of existing housing to the marketplace. For example, it has partnered with the Canadian Infrastructure Bank for sustainable retrofit projects.
“There’s a lot of undermanaged assets. We see that there’s a market gap,” he said.
Giuffre said the current pipeline of housing supply in the U.S. is more significant than Canada.
Avenue Living continues to see growth in its future.
“Doubling down on Alberta. Really focusing on where we do have what we deem as best in class operations, being able to use that infrastructure that we put in place since 2006 and these initiatives, those value-add programs, to really provide a different service standard and be a responsible landlord,” Giuffre added.
He said Avenue Living will continue to focus on Alberta and Saskatchewan in its Canadian operations.
“We understand them. We’ve operated through many cycles and we’ve built relationships and infrastructure accordingly. So it’s kind of like, stick to what you know,” said Giuffre.
"We’re very comfortable with the economic momentum of the Prairies being Saskatchewan and Alberta and Manitoba we will look at that by occasion.
“The U.S., however, is a little bit different. We certainly still entertain and look at the one-off markets. We’re still trying to understand the U.S.
"Obviously they have a very similar situation in terms of spiralling costs, rising inflation . . . and making sure we understand the relationship between the value and the yield on assets within the United States because again based on debt markets, costs etc., cost of entry can be quite high and rents cannot necessarily be, I would say, correlated in some particular cases because obviously we’ve seen some compressed cap rates or hotter markets.”
Giuffre said Avenue Living will continue to look at the U.S. for expansion, though it will be cautious.
Mini Mall Storage subsidiary
The self-storage sector has long been another focus for Avenue Living.
“When we look at operations within Canada and the United States, it’s very similar. Storage hits a bunch of life markers whether it’s a life change, coming of age or aging, depending on how you want to look at it. It’s a utility product,” Giuffre explained.
“What we are doing, which is exciting for us, is we are standardizing an unconsolidated market or industry in that B and C class – something that we do know very well. And in doing that what we are doing is we are bringing technology, we are bringing just a better service standard to many of the locations that we are purchasing.”
Today, Avenue Living's Mini Mall Storage subsidiary has just over 200 locations in North America.
Giuffre said future growth for Avenue Living will be based on the same principals on which the company was built.
“We definitely will continue to grow and it’s going to be very much market-dependent and really focusing on the metrics of what drives a market, what drives that business. We don’t buy for the sake of buying," he concluded.
"Obviously we have a hard 'why' and functionally, want to assume if we are a consolidator that under our ownership, or the veil of our ownership within the Avenue Living family, is really making sure when we do take on an acquisition that we operate it . . . better than it’s operated today.
"That’s our goal.”