Hedge against inflation with alternative real estate investments

Avenue Living Asset Management, which operates as part of the Avenue Living Group, is a leading Canadian alternative asset manager with more than $3.5-billion in assets under management and four alternative investment products.Supplied

By “investing in the everyday,” Avenue Living Asset Management always strives to drive solid returns and long-term value.

But what exactly does it mean to “invest in the everyday” and how do those investments draw out value?

Multifamily real estate has long been recognized as one of the best ways to hedge an investment portfolio against inflation. Property classes reflect an A, B, or C grade based on a combination of factors such as amenities, management styles, location, and tenant income levels. However, the best bets aren’t always shiny new Class A properties in hot housing markets with high rents. Avenue Living Asset Management holds B and C multifamily real estate assets and has a tried-and-true track record of providing A-class institutional quality management through customer-centric operations and services, capital improvements and a vertical integration model.

The private Calgary-based organization, which operates as part of the broader Avenue Living Group, has created a unique offering within the traditional definition of real estate categories to deliver a proven and defensible strategy. They have quickly become a leading Canadian alternative asset manager worth looking at, with more than $3.5-billion in assets under management.

With its unique approach to the business, Avenue Living derives returns for investors in how it owns and operates its assets. Its alternative investment products allow investors the ability to invest in real, tangible, high-performing assets that are part of the fabric of everyday living and often overlooked by others. This includes assets in multifamily or workforce housing, commercial real estate, agricultural land and self-storage properties.

“Avenue Living represents investing in the everyday,” says founder and chief executive officer Anthony Giuffre. “When it comes to workforce housing, for example, we’re not trying to get higher rents by building fancier buildings. We’re repurposing and retrofitting existing inventory and making it more sustainable over the long run, for both investors and residents as demand for affordable housing grows.”

Jason Jogia, chief investment officer at Avenue Living, adds that there is great opportunity in the real estate that people see or drive past every day, namely Class B and C assets. “What differentiates Avenue Living is that investors can tap these opportunities without having to own or operate the assets directly, or deal with the volatility experienced when investing in the public markets,” Jogia says.

Avenue Living yesterday and today

Avenue Living’s modest beginnings trace back to Alberta’s boom of 2006, when high real estate prices kept many investors out of the market. With a background in real estate, Giuffre spotted an opportunity in multifamily housing in secondary markets. He purchased a 24-unit, low-rise residential building in Brooks, Alberta, a small city known for its food production industry. The property and its occupants benefitted from a full renovation and improved management, while the rents and enhanced income allowed Giuffre to recirculate the initial capital and look for other assets.

Today, Avenue Living continues to focus on the growing demand for housing affordability from essential workers. Its flagship alternative investment product, the Avenue Living Real Estate Core Trust, now comprises more than 420 multifamily and mixed-use buildings, totalling over 14,000 units in Canada and the United States. The assets are in 22 markets in what Avenue Living calls “the North American Heartland,” which consists of Canada’s Prairie provinces as well as states south of the border such as Kansas, Wisconsin, Colorado and Ohio.

“We began a beta test two years ago and quickly found that we had an opportunity to capture a very similar asset class and customer in the heartland regions of the United States,” Giuffre says. “Considering the size of the apartment market in the U.S., a successful footprint both north and south of the border is what will allow us to continue to deliver best-in-class servicing to our customers, investors, and regional partners.”

Investment vehicles

Three other investment products round out Avenue Living’s portfolio. The Avenue Living Real Estate Opportunity Trust targets underperforming residential assets the company enhances through renovations and capital improvements. It also buys what it believes to be stable commercial assets and is currently responding to a market need by creatively retrofitting an office building into a storage facility in downtown Calgary.

Also responding to a market need, the Avenue Living Agricultural Land Trust invests in prized Canadian farmland and leases it back to farm operators. This allows farmers the ability to scale their operations without having to deal with the intense capital requirements required for land ownership. “The model is simplistic in its approach but provides cash to those who need it and investors with potentially long-term value appreciation and good defensibility,” Jogia says.

In 2020, Avenue Living established the Mini Mall Storage Properties Trust, which focuses on consolidating self-storage assets in the fragmented self-storage market across Canada and the United States. Giuffre’s father, Joe, established the first Mini Mall Self-Storage location more than 40 years ago and the fund now has more than $500-million in assets under management.

A defensible strategy

Avenue Living’s robust diversification strategy is just one of many business practices that sets the firm apart, both for customers and investors. As a vertically integrated company, Avenue Living manages all aspects of deal sourcing, underwriting, financing and strategic operations for real estate acquisitions and dispositions. This allows the company to manage the customer experience from end to end, from call centre inquiries to lease renewals.

“We also continue to focus on technology and tools that optimize our operations,” Jogia says. “We’ve always been front and centre with property technology and we are making significant investments so we can continue to scale effectively.”

For example, Avenue Living adopts digital tools that allow it to effectively communicate and service customers, including fintech solutions that provide customized payments.

Meanwhile, Avenue Living’s capital improvement program ensures residents get best-in-class service, which in turn improves resident satisfaction and retention. Avenue Living prides itself on raising the standard of living for residents, giving lower-to-moderate income North Americans access to institutional-level servicing.

“We constantly ask, ‘how can we do things better?’” Giuffre says. “We focus on the needs, wants and desires of our customer base without ‘over amenitizing’ or charging them something outside of their income bracket.”

Individual investors looking for new opportunities should reach out to their financial advisor for help with how to add Avenue Living products to their portfolios. Looking ahead, Jogia says Avenue Living strongly believes that alternative investments will increasingly become a larger part of investor portfolios.

“We’re seeing a huge influx of investment dollars as people seek real, tangible returns to hedge against inflationary pressures,” he says. “At that very same time, as we see that influx of capital, we are also seeing a changing of the guard. Many smaller landlords are looking to exit the business. This presents a massive opportunity for Avenue Living to continue to grow its presence across Canada and the U.S. for decades to come.”

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy any securities or related financial instruments. This may contain forward-looking statements. Readers should refer to information contained on our website at avenuelivingam.com for additional information regarding forward-looking statements and certain risks associated with them.

Advertising feature produced by Globe Content Studio and Avenue Living Asset Management. The Globe’s editorial department was not involved.