Legwork is not always glamorous, but Bettina Oslanski, Vice President, U.S. Acquisitions for Avenue Living, believes it is vital in order to ensure success.
“I truly believe that prudent deal sourcing makes all the difference in finding opportunities to generate better returns,” says Oslanski from Houston, where she is helping establish the Avenue Living U.S. Real Estate Fund. “It took time to build a network of professionals and create relationships that will help us meet our goals and source deals with great potential. A lot of time and consideration went into determining which markets we want to enter.”
There are about 120 cities with populations of over 200,000 citizens in the U.S., which have the potential to provide ample deal flow on an ongoing basis. As in Canada, Avenue Living is focusing on secondary markets with diversified economies that score high in its proprietary market model. The U.S. has an unmatched volume of commercial real estate (CRE) data available, which has allowed Avenue Living to build a market risk model that weighs the potential for quick economic recovery of those cities.
“All this data has helped us refine our strategy and focus our effort on markets that have excellent fundamentals but are not the typical target of many other funds, which means healthy cap rates and reduced competition,” says Oslanski.
Oslanski, who holds a Bachelor of Commerce degree with a focus on finance, has been part of the Avenue Living team for two and a half years and stationed in Houston for 14 months. Her current role brings together a decade of real estate experience with her education and her deep understanding of the Avenue Living philosophy. “I’m excited to be part of translating Avenue Living’s strategy into the U.S. market,” says Oslanski.
The COVID-19 pandemic has brought with it challenges to every aspect of doing business, including the acquisition process. With our head office in Calgary and the border closure, Oslanski’s presence in the U.S. has become even more important.
She facilitates required due diligence visits and ensures we can execute our asset level strategy by working closely with our third-party property management partners and the Avenue Living team. Working with these third-party property management firms across the U.S. removes some of the risk of investing in new markets. “We’ve chosen the best in class within the markets we plan to operate in, and they bring local insight, expertise, and connections to every deal. Having a member of the Avenue Living team visit these markets too, is a vital part of our due diligence in order to ensure alignment,” adds Oslanski.
“We’re nimble and structured in a way that allows us to successfully navigate the faceted and complex market the COVID-19 pandemic has created,” says Oslanski. “I’m optimistic about the current environment and the opportunity that lies within.”
The economic fall-out from COVID-19 has also brought into focus how important a holistic, data-driven strategy can be, as secondary markets in the U.S. that once held promise are feeling the economic effects. “The type of recession we’re seeing now is unique in regard to the magnitude of effects on local economies,” says Oslanski. “The pandemic has reshuffled the cards and left behind a complex map of markets to navigate. However, the Avenue Living strategy has served us so well in Canada, and serves us well in this market, too. We adjust our sails and turn headwinds into tailwinds to benefit all stakeholders in the company.”
In spite of this pandemic-driven recession, the Avenue Living core strategy of investing in class B and C multi-family properties has remained sound. This asset class continues to prove its stability. An investment into privately held Real Estate Investment Trusts (REITs) has the potential to reduce the overall volatility of a portfolio due to the low correlation of real estate assets to other asset classes.
“Some secondary markets we look at seem to be overlooked by other investors, but there’s a lot of growth happening and we see opportunity within these markets,” says Oslanski, who notes that companies are moving their headquarters from larger centres to smaller cities.
“We have our eyes on secondary markets that are turning into knowledge economies, a trend that we believe will gain in velocity as a result of the pandemic and subsequent change in how people work. Our market model gives us insight into which markets have the potential to turn into the next Austin or Nashville, once less active cities that transformed into powerhouse economies. We believe our strategy will keep us on the forefront of what’s about to happen.”