Calgary-based Avenue Living Asset Management’s most recent expansion into the U.S. market currently has approximately 3,000 residential rental units in its sights, with a total anticipated transaction value of about USD $350 million.
Avenue Living has identified a compelling, tax-efficient investment opportunity in the United States in the multi-family housing sector. It seeks to expand its geographic footprint into secondary markets, continuing its track record of acquiring and repositioning multi-family properties.
Michael Rossi, an Associate on Avenue Living’s Investment team, said the company’s U.S. seed portfolio consists of 1,000+ units spread across Colorado Springs, CO, Madison, WI, and Kansas City, KS, with a total anticipated transaction value of about $100 million. These target markets rank very highly based on Avenue Living’s internal data-driven market model.
“Avenue Living has seen success across the Canadian market over the past 15 years, expanding in Alberta, Saskatchewan and Manitoba. We have a very strong foothold in Canada’s Prairie provinces and as we look at future growth, we believe there’s a compelling investment opportunity to expand our business into new U.S. markets,” said Rossi. Leveraging its western Canadian success, the newest southward expansion makes sense for the company.
The Avenue Living U.S. Real Estate Trust is actively underwriting opportunities in various secondary U.S. markets. The company’s goal for this fiscal year is to acquire approximately 1,000 multi-family units in the U.S.
“Based on our research and our current strategic acquisition opportunities, we’re looking at achieving that goal by end of 2020. Then, we will likely continue to deploy capital through 2021 and as opportunities arise, through 2022,” he said. “We hope to continue with this momentum and expand our portfolio throughout Q4.”
Colorado Springs, CO
In mid-October of this year, the U.S. Real Estate Trust’s first acquisition closed in Colorado Springs, CO. It consists of 128 residential rental units, distributed across six adjacent buildings in an early 1970’s vintage apartment community and will be repositioned through a strategic capital improvement plan.
According to Avenue Living research, Colorado Springs is an ideal market for the company’s first foray into the U.S. with a metro population of about 750,000, with the population expected to grow at twice the rate of the US average.
At the end of the fourth quarter of 2019, jobs in the metropolitan area of Colorado Springs were also growing at nearly twice the rate of the national average, led by Professional & Business Services, Education & Health Services, and Mining & Construction.
Net migration accounted for nearly two-thirds of the metropolitan area’s population growth over the past four years, all of which has translated into robust demand for apartments. Household income in Colorado Springs was $72,047 at the end of 2019, exceeding the national average of $64,493 by 12%+.
With a strong sense of community, Colorado Springs offers a suburban feel with all the comforts of family-oriented neighbourhoods. The one-hour commute into Denver attracts working individuals and continues to influence the city’s migration and growth trends. The U.S. Real Estate Trust’s selected submarkets in this area enable attractive opportunities to participate in both stabilized and opportunistic transactions.
Looking Ahead
Avenue Living’s investment strategy in the U.S. will leverage the proven track record developed in Canada for over 15 years. The Avenue Living U.S. Real Estate Trust employs a data-driven, top-down analytical approach to identify attractive U.S. markets and in-depth submarket analyses before underwriting target properties. Investment strategies that include a value-add or asset repositioning plan will leverage Avenue Living’s internal Asset Management & Capital Projects teams to successfully execute renovations while utilizing esteemed local property management groups.
“We are excited to not only enter the U.S. in Colorado Springs but to establish a relationship with the excellent team at Griffis Blessing”, said David Smith, CEO of the U.S. Real Estate Trust. Griffis Blessing is a top tier regional property management firm with 8,000+ units under management, headquartered in Colorado Springs, and a 35-year track record managing multifamily properties across southern Colorado markets.
