Caruana: Overall, we like to invest in markets that have a high cost of living, are supply constrained, have high barriers to entry, have a big gap between market rents and affordable rents and where affordable rents are 60% or less of AMI. Depot Square in Boulder fits that, offering rents of $1,200 versus the market rents of more than $2,000. There's a definitive need for affordable housing to support teachers, firemen and the service sector, and we focus on those types of fundamentals in a market.

GlobeSt.com: Why is your firm targeting Boulder?

Caruana: Boulder has had explosive job growth, population gains and pretty big rent increases as well. The city is known for the University of Colorado Boulder, a top-tier research institution, and a very highly educated workforce. There are a ton of IT jobs coming into the area, a plethora of great jobs, so we like the fundamentals of the job market for affordable housing in this market. There's a strong need for it because of its location within the Boulder market.

GlobeSt.com: What other trends are you noticing in affordable housing?

Caruana: The biggest thing I've noticed is how much capital has come into the sector from investment funds. When we started in this sector, we were the only one, and now there are more than a dozen funds doing this. Investors are paying attention to it because of the sheer definitive need. Residents need affordable housing; the average resident makes 35,000, but in most markets, there is hardly any affordable housing being built today. These people can't afford $2,000 to $3,000 a month in rent.

GlobeSt.com: What else should our readers know about the affordable-housing sector in non-primary markets?

Caruana: Non-primary markets are seeing increased rent as well. Look at the Bay Area in Sacramento—not everybody considers Sacramento primary. There are pushed-up rents on all levels, and this is a top market for rent growth. We're seeing that across the board, in terms of second-tier markets people are fleeing to; we're seeing more need for affordable housing in those markets.

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IRVINE, CA—With explosive jobs growth, population gains and large rent increases, as well as proximity to a top-tier research institution, Boulder, CO, has caught the eye of Orange County-based investor, Avanath Capital Management, the firm's VP acquisitions Ann Caruana tells GlobeSt.com. As we recently reported, Avanath has acquired Depot Square, a 71-unit, class-A, LEED-Gold-Certified, transit-oriented, affordable-housing property located directly across the street from the 330,000-square-foot office campus that Google is developing in Boulder.

This is the firm's first acquisition in Colorado. As an institutional fund manager with more than $1 billion in affordable and workforce-housing assets, Avanath is actively acquiring and preserving affordable housing in supply-constrained markets with long-term growth fundamentals such as Boulder. This acquisition exemplifies the firm's value-add, long-term investment strategy.

According to the company, the affordable-housing crisis is moving inland; Boulder is one of the most cost-burdened markets in Colorado and has emerged as a very tech-centric market. We spoke with Caruana about the Boulder market, the firm's affordable-housing strategy and other trends she is noticing in affordable housing.