This article was produced in partnership with Avenue Living
It’s that time of year when many organizations take stock of their annual milestones – and Avenue Living Asset Management is no different.
Late 2021 marks a particularly special anniversary for the organization. It will now be four years since the launch of Avenue Living’s Real Estate Core Trust (the “Core Trust”), which focuses on acquiring multi-family B and C class assets. Often referred to as ‘workforce housing,’ these properties are consistently occupied by essential workers, a demographic that covers nearly 40% of Canada’s population.
“Avenue Living celebrates 15 years in existence as an organization,” explains Jason Jogia, Chief Investment Officer, “and this year, our Core Trust alternative investment product has been in the market for four years.”
“The Core Trust consists of Prairie-based, diversified workforce housing in 18 different markets across Alberta, Saskatchewan and Manitoba. As the year closes out, we are reflecting on how extremely proud we are of achieving four successful years as an alternative product and how we’ve provided targeted returns to investors during that time.”
In the last four years, the Core Trust has grown from $800 million in assets under management to the north of $2.1 billion.
“Put differently,” Jogia continues, “we’ve gone from 6,100 doors to just over 11,200 doors and we view this as quite an exponential stream of growth.”
What makes this particularly remarkable is that the Core Trust continued to thrive against the backdrop of a global pandemic.
This, reflects Avenue Living’s Founder and CEO Anthony Giuffre, is thanks to the strength and reliability of the housing demographic covered by the Trust.
“These essential workers have been driving the economy over the last two years through COVID,” Giuffre says. “They have been keeping everything going – and it is these frontline workers that have typically remained gainfully employed throughout the pandemic. This makes them excellent residents and customers to work with.”
So far, so successful – but Avenue Living is determined not to rest on its laurels. They intend on creating a new milestone: to begin the expansion of the Core Trust into the US market.
But why now? And what’s the strategy?
“What’s interesting about workforce housing,” Giuffre explains, “is that it’s agnostic to geography. An essential worker in Alberta or Saskatchewan is the same essential worker in Colorado, Ohio, Kansas or Missouri.”
“And when we look at our opportunity to expand our geographical base, it’s necessary to understand that we need to go where we can achieve profitability, yield, and obviously efficiency. We always ask ourselves how can we provide the best and brightest use of capital? How can we continue to ensure that we provide a good return back to our investor base?”
The answer, Giuffre says, does not lie in coastal metropolitan hotbeds like New York or Los Angeles, but in the large expanse of continental North America many refer to as the ‘American Heartland.’
“We want to take our very unique value proposition,” he says, “and find the kinds of customers that we know well in other geographies. We’re not doing anything different. We’re doing more of the same but with expanded geography.”
“To further generate efficiencies,” Jogia adds, “our Core Trust is acquiring 100% ownership interest in our Avenue Living U.S. Real Estate Trust and its U.S. real estate assets, establishing one North American workforce housing investment vehicle. By the end of December, we will have 10% of our assets under management in the US, and 90% in Canada. This shift will not change the business strategy in any way. It’s the same residents, the same philosophy, the same building types. These are markets that have very similar macroeconomic variables.”
He adds that “the existing quality of management in our newly acquired properties isn’t necessarily akin to what workforce housing residents could be having – so there’s a lot of opportunities for us to provide an improved resident experience. And this is where the magic happens.”
It’s this clever fusion of expansion, service enhancement and acquisition consistency that is setting up the Core Trust for further growth. While Avenue Living is careful to avoid areas with oversaturation – “we would not want to go to Toronto, for example,” Jogia says – they are seeking out territories that sync nicely with their track record.
“The idea of having geographic diversification is just the next necessary element of our organization,” Jogia says. “So why wait? There’s no better time than now, given that we’ve just thrived through a global pandemic for a year and a half.”
Anthony Giuffre is the Founder and CEO of Avenue Living. Jason Jogia is Avenue Living’s, Chief Investment Officer.