Acquisitions Ramp Up at Avenue Living
Avenue Living Asset Management is on a steady acquisitions trajectory, targeting both residential and commercial properties, as well as agricultural land. The company continues to have a strong focus on its multi-family residential portfolio, with an expansion initiative that targets surpassing 10,000 units by the end of 2019.
“We’re focused on mid-market, workforce housing multi-family acquisitions,” says Dave Smith, Chief Operating Officer, Avenue Living Asset Management. “Our portfolio is diversified across 17 markets in the Prairies, between Winnipeg and Calgary/Edmonton, and we’ll continue to target multi-family properties that generate strong risk-adjusted returns supported by a proven property management platform and strategic capital improvements.”
Specifically, Avenue Living scouts out properties with strong in-place cash flows with an opportunity to benefit from future income growth.
“We select properties that have strong locational attributes within their markets and a favourable suite mix,” says Smith. “In Calgary, we’ve been successful acquiring well-located townhomes, and continue to focus on this asset type, but we’re also looking at all multi-family asset types across the Prairies that are in close proximity to community amenities, employment hubs and transit.”
For the Avenue Living Real Estate Core Trust, the company seeks out properties with high occupancy rates and strong in-place cash flow. For the Avenue Living Real Estate Opportunity Trust, the company acquires properties that present an opportunity to reposition and drive cash flow through a capital investment and leasing program.
Avenue Living Asset Management has ambitiously built a portfolio of more than 8,500 residential rental units across Western Canada in just 13 years.
The Calgary-based company’s journey began in 2006 with the purchase of 24 rental units in Brooks, Alberta for $3 million. Last year, in 2018, Avenue Living acquired more than 1,800 units.
“We’re targeting 3,000 for this year in total, with a focus in Calgary, Edmonton, Saskatoon and Regina,” says Smith. “We’ve acquired about 1,000 so far this year.
“We still see a lot of opportunity to grow our portfolios in the markets where we currently own and operate, especially in Calgary where we’ve recently entered.”
Traditionally, Avenue Living has acquired properties primarily from private investors, but today it is furthering relationships with its publicly-traded peers and institutional peers to facilitate transactions that provide value for both parties.
The Avenue Living business model includes taking properties that need to be renovated and conducting the necessary improvements, adding value to the asset by making it more attractive for both current residents and potential residents.
Smith says Avenue Living also has a strategy in place of expanding its commercial portfolio. It’s built a team for that initiative, intending to grow the portfolio from its current 400,000 square feet to more than one million square feet.
“I wouldn’t expect us to do that by the end of the year, but definitely in 2020,” he says.
Current commercial properties consist primarily of retail and industrial assets, but Avenue Living is now evaluating office opportunities as well.
Smith says the current commercial real estate portfolio exists in secondary markets in Alberta, but going forward expansion will include primary markets across Western Canada.