Avanath Capital Management has acquired two affordable multifamily properties in the Chicago metro area, Hinsdale Lake Terrace and Drexel Court, for a combined $72.2 million for 668 units.
Both assets are mid-1900s vintage, family-oriented affordable properties in thriving submarkets, according to John Williams, president and CIO of Avanath Capital Management. Through its acquisition of affordable communities, Avanath’s Affordable Housing III institutional fund aims to perform capital improvement and amass economies of scale to drive down operating costs, keeping properties affordable and delivering returns for investors.
“The Chicago market is precisely aligned with our investment thesis, through which we preserve affordability in the nation’s most cost-burdened regions while simultaneously driving value for investors,” says Williams. “Chicago has emerged as a hub of growth, with rapid economic revitalization that's now spilling over into the city’s submarkets and South Side. With this sprawl comes rent increases, which put pressure on the local workforce and community, resulting in a dire need for more affordable housing options.”
Avanath acquired the 582-unit Hinsdale Lake Terrace in Willowbrook, Ill., for $63 million. According to Williams, its submarket is known for high-quality schools and a diverse employment base. Capital improvement plans include updating the community spaces and units and addressing deferred maintenance.
The community’s large floor plans include three-bedroom townhomes, which provide Avanath with the opportunity to meet the needs of families. Amenities include a business center, barbecue area, swimming pool, basketball courts, and a playground. The Community House, a nonprofit that provides tutoring and social support to at-risk youths, also operates a 3,400-square-foot recreation center on-site.
“The partnership with The Community House was another reason we found this property so attractive,” says Williams. “Beyond affordability, our investment criteria always include a holistic approach to the properties we acquire, through which we provide our residents with social programs that help them thrive. In this case, the existing partnership with The Community House allows us to provide these social services to residents without any added costs.”
Avanath acquired Drexel Court, a six-story, 86-unit affordable community on Chicago’s South Shore, for $9.15 million. It's located within walking distance to the CTA Cottage Grove Green Line Station and the 63rd Street Metro Station and provides access to the interstate.
The community features a large management office and meeting area, which Avanath plans to upgrade with a fitness center, media room, and health and wellness center. The community’s floor plans range from one to four bedrooms.
“Chicago’s revitalization is creating a significant need for quality affordable housing, especially for families,” says Williams. “In fact, Drexel is located just one block south of the University of Chicago and one mile from Jackson Park, home of the planned Obama Presidential Center and Library. This new library is projected to generate more than $31 million in food and retail development in the region, driving long-term value and demand for Drexel Court.”
