Avanath Capital Management has held a second close on its second real estate fund, Avanath Affordable Housing II. So far, the fund has attracted $110 million in commitments, of which 85 percent is from existing investors, against a targeted fund size of $200 million. Limited partners in the vehicle include the Church Pension Group, which also invested in the firm’s first fund, as well as two banks, two insurance companies and a pension plan. Avanath officials declined to comment.
The Irvine, California-based firm launched Fund II in November 2013, but it has not made any subsequent filings on fund closings, according to the US Securities and Exchange Commission. PERE, however, understands that Avanath held an initial close on the vehicle in December 2013, raising $42.5 million and is anticipated to hold a final close during the fourth quarter.
Avanath currently invests in the affordable multifamily housing sector and urban real estate. With affordable housing, the firm focuses particularly on apartment communities that either were developed under the US Low Income Housing Tax Credit program, using tax-exempt bonds, or that are subject to project-based Section 8 Housing Assistance Program. Avanath also is seeking real estate debt opportunities, including workouts and recapitalizations, in the affordable housing space.
Deals can range from direct acquisitions and joint ventures to debt investment structures. To date, the firm has committed 30 percent of the capital for Fund II towards five acquisitions in Los Angeles; Long Island, New York; Germantown, Maryland; Sacramento, California; and Naples, Florida. The properties each ranged from 101 to 212 units in size.
Avanath, which was founded in 2008 by Daryl Carter, raised $120 million for Avanath Affordable Housing I, with a first close of $51.53 million in October 2010 and a final close in mid-2011. Over the past three years, the firm has acquired 23 properties with an aggregate value of more than $320 million in affordable and workforce apartment communities in US markets where there is a large gap between market rents and affordable rents.