Avanti Residential began 2021 on a mission to expand its apartment portfolio and further position the firm as a prominent national investor and operator of lifestyle-forward multifamily communities. The company today announces the completion of its most active year of dealmaking yet, closing on $1.9 billion in new acquisitions, dispositions and asset recapitalizations in 26 separate transactions.
“We set out in the latter part of 2020 to put into motion a growth strategy and expand into new markets, utilize favorable interest rates to optimize our debt positions on existing assets, and reposition the asset quality of the entire portfolio by harvesting value-add investments and exchanging into core plus assets,” said Christian Garner, president and CEO of Avanti Residential. “It was an incredible year to be in the apartment business, and we expect this same transaction volume to carry through in 2022.”
“The high demand for value-add multifamily assets in certain markets drove capitalization rates to the point where it was very appealing to realize our investment gains through disposition or recapitalization,” added Garner. “At the same time, we were able to uncover investment opportunities on new apartment properties in growth markets with strong fundamentals and generate attractive yields without incurring renovation risk.”
Avanti expanded beyond its Southwestern U.S. and Rocky Mountain footprint in 2021 with three acquisitions in South Florida totaling more than $300 million, including 500 Ocean in Boynton Beach, Sanctuary Doral and Arte Apartment Homes in downtown St. Petersburg.
The firm’s Florida buys are core plus investments in newer, high-quality apartment communities offering condominium-quality design, amenities and finishes that appeal to a fast-growing, upwardly mobile tenant demographic. “We are seeing strong fundamentals play out in several South Florida multifamily markets, where impressive employment growth, notably in the tech sector, has been a good leading indicator for apartment demand,” added Garner.
Avanti was an active entrant in the greater Kansas City area last year as well, where it has now acquired four apartment communities, including the 306-unit Village West Apartments and the 311-unit Prairie View at Village West. Avanti has two additional properties under contract in Kansas City that it expects to close in the first quarter of 2022.
The firm was also the buyer on one of the largest apartment transactions in the Denver metropolitan area in 2021, purchasing the 397-unit Forum Fitzsimons for $159 million. Avanti owns and manages a portfolio of 8,500 units nationwide.
“For 2022, we see the continuation of a hyper-competitive market for renovation opportunities given the vast amount of capital pursuing higher yields in this segment,” added Garner. “We will pursue these investments on a case basis, though prefer to make longer-term investments on newer assets in areas experiencing population and employment growth. We like primary and secondary markets that are the recipient of migratory trends driven by housing affordability and more restrictive pandemic policy, most notably in California and New York.”
“We still favor long-term cash flow investments where we can mitigate interest rate risk with long-term fixed rate debt,” Garner continued. “It is our preference to eliminate the capital risk and functional obsolescence in rehab deals and acquire recently completed properties that are also more in line with resident lifestyle needs.”