Avenue Living Asset Management has ambitious plans to aggressively grow its commercial real estate portfolio.
The Calgary-based real estate company, whose core business is the multi-family residential real estate market across Western Canada, is planning to expand its current commercial portfolio from about 400,000 square feet to more than one million square feet in 2020.
Jordan Martens, the company’s Director of Commercial Asset Management, says Avenue Living intends to grow its assets in this real estate space through significant acquisitions.
“We’ve been looking at a number of different purchases, several in the $25 Million range,” says Martens.
“A lot of them have been retail, but we’ve also been looking at office product in Calgary too. There is a desire to grow and to improve our performance on this front. We’re out there right now looking for a commercial-specific property manager who will be a key person to add to the team.”
Avenue Living’s commercial real estate portfolio includes 14 properties, from Winnipeg in the East to Calgary and Edmonton in the West, including the recent acquisition of an 8,000 square feet retail/office building in downtown Calgary on Stephen Avenue – its first commercial property in Calgary.
The properties are owned and managed through its two investment offerings – the Core Trust and the Opportunity Trust.
The Core Trust is an open-ended mutual fund trust targeting stabilized assets with strong occupancy and stable current income.
The Opportunity Trust is a close-ended mutual fund trust targeting underperforming multi-residential assets, balanced with stable, well-tenanted commercial assets.
The properties are a mixture of commercial asset types, including retail, office and industrial uses. Retail alone comprises about 270,000 square feet. Industrial includes about 70,000 square feet and mixed-use retail/office attached to residential comprises just under 50,000 square feet.
“We want to build up these holdings that are held in the Opportunity Fund versus the Core Fund. Here we typically buy product that has some different maintenance issues, with low vacancy and high need for capital investment.
“The commercial properties help balance out cash flow for unit holder distributions,” says Martens. “We have also started to look at more opportunistic, capital-intensive plays on the commercial side too.”
Martens says the commercial real estate market is quite different depending on where properties are located.
“We have a lot of retail and that’s a fine asset class to hold. That kind of neighbourhood, commercial node is appealing stuff, especially in new areas,” he says. “The older product has value, but also comes with a challenge. We have to assess our ability to re-energize the market about the product, before we take it on.”
He says Avenue Living will also be looking at more office product to add to its portfolio if the potential is there for an acquisition.
Avenue Living, which began in 2006 with the purchase of 24 multi-residential units in Brooks, Alberta, has grown to a company with more than $1.3 Billion of assets under management, including more than 8,500 multi-residential units and 35,000 acres of agricultural land.