Avanath Expands Affordable Housing Footprint in Bay Area

Avanath Capital Management has acquired the Novato Portfolio, two LIHTC (low-income housing tax credit) rental apartment properties encompassing 297 units in the Bay Area submarket of Novato.

The acquisition, made with equity from the firm’s Renaissance Fund and debt financing through CBRE and Fannie Mae, expands Avanath’s affordable housing footprint in the Bay Area, where it has now acquired 18 properties.

“There’s a significant need for affordable housing in the greater San Francisco market,” said Daryl Carter, Avanath CEO, in a statement.

“Currently, 26% of the total units in the market are designated as affordable housing. While planning to develop new properties exists within the market, only 16% of newly completed units would be affordable. There is a genuine affordable housing crisis, and we are determined in our mission to contribute to its resolution,” he said.

The two acquisitions, Bay Vista at Meadow Park and Creekside at Meadow Park, were built in 2005 and 2003, respectively, using LIHTC. Both properties are 98% occupied.

The acquisitions bring Avanath’s total number of affordable units in the Bay Area to more than 800; the company now manages more than 3,000 affordable units in Northern California. According to Carter, the two properties strengthen the firm’s economies of scale in the region allow for more efficient operations across the portfolio.

“Based on the lack of development plans in the pipeline in the immediate area, both properties will remain as some of the highest-quality affordable communities in fast-growing Marin County, serving an incredibly strong demand for years to come,” Carter said.

The Bay Vista and Creekside campuses offer rents between 30% and 60% of the area’s median income.

Asking market rents in the San Francisco metro have increased by nearly 9% in the past 12 months, reaching an average of more than $3,100 per month. The average median income—now about $55K—has increased by an average of 8.79% each of the past five years and now is the third highest in the US, according to Conor Mortland, Avanath’s VP of acquisitions.

Avanath said it is planning to make upgrades at the two properties, including the installation of washers and dryers. The company also said it will assess the amount of greenhouse gases emitted by the properties and reduce their energy consumption.

The firm plans to install LED lighting, electric appliances and electric water heaters at the Novato properties and says it is considering adding EV charging stations. Avanath has set a portfolio-wide goal of reducing greenhouse gas emissions by 2030.