Spokane Journal of Business

Fourth Avenue Capital grows in Spokane

Principals say conditions set stage for company’s multifamily development

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-Fourth Avenue Capital
Fourth Avenue Capital’s managing partners, from left, Brian Betts, Davis Vaughn, and Chris Rossman say expanding into real estate developmment offers more opportunities.

A side business for three longtime coworkers has turned into a full-time real estate investment company, dubbed Fourth Avenue Capital, the company’s managing partners say.

The leaders of the Spokane-based company announced the launch of Fourth Avenue Management LLC, which does business as Fourth Avenue Capital, in August.

They say Eastern Washington’s real estate market has generated enough momentum and investment opportunities in the last three years to support the launch of a new development arm of the business as well.

Chris Rossman, head of development; Brian Betts, head of capital markets; and Davis Vaughn, head of acquisitions, have grown Fourth Avenue’s portfolio to 17 properties and over 1,000 units in Washington, Oregon, and Montana since the company was founded in the second quarter of 2020, they say.

“We started to identify that we were building beyond a personal portfolio. We were really starting to build a business,” Rossman says. “Our focus shifted to putting the infrastructure and strategy in place to where we could really grow this business to take over as our full-time focus.”

Adds Vaughn, “We’re definitely focused on growth.”

Fourth Avenue Capital has operated as a middle market real estate investment firm since incorporation, but the company has started developing properties now too. They define the middle market as transactions valued between $10 million and $50 million.

Betts says, “Sometimes acquisitions are more favorable and sometimes development is, but by having both capabilities, it offers us more opportunities to invest.”

As previously reported in the Journal, Spokane-based Baker Construction & Development Inc. is partnering with Fourth Avenue Capital to develop its first project, known as Fourth Avenue Liberty Lake on permit information, or as Meadowwood internally.

The plan is to construct a 240-unit apartment complex at the Meadowwood Technology Campus, at 24085 and 24091 E. Mission, in Liberty Lake. The project has received design-review approval, environmental approval, as well as land-use entitlements with the city of Liberty Lake.

Building permit applications are expected to be filed by the end of October, says Rossman.

The Meadowwood project involves 15 two-story buildings, each with 16 units that will take about 24 months to construct after permits are issued.

Betts explains the company’s strategy to invest in both acquisitions and developments will aid continued growth and offer long-term value to investors.

“You can be a better developer or better at acquisitions when you have both capabilities,” says Betts. “For example, if the returns were equal for an acquisition and a development, you’d rather do an acquisition because there’s less risk. Sometimes it’s harder to find good acquisition opportunities, and that might be the time for more development.”

Fourth Avenue Capital has accumulated over $225 million assets under management and has a development pipeline valued at $125 million, they say.

They decline to disclose the company’s annual revenue.

Rossman says a third of Fourth Avenue Capital’s portfolio is located in central Oregon, another third is in the Puget Sound area, and the remaining portion of the portfolio is in the Inland Northwest and Montana.

Betts says, “On the development side, we’ve got a couple more projects, but we’re not ready to announce them yet. On the acquisition side … those opportunities sort of present themselves in a less predictable way.”

The company’s portfolio here includes 940 North, a 213-unit student housing complex, at 940 N. Ruby, near Gonzaga University, in Spokane, that was acquired in 2022.

The three principals say they’re focused on development and acquisitions in the Pacific Northwest specifically because they’re familiar with the apartment, townhome, and student-housing community market and needs in their middle market.

Vaughn, 36, says, “We can find more interesting deals and better returns in that space.”

The company’s growth strategy also includes increasing management efficiencies at the properties it holds based on their institutional backgrounds.

Vaughn explains that traditionally their middle-market properties weren’t managed with those best practices.

Betts says, “We’re trying to bring an institutional flavor to the middle-market space,” which means adopting a data-driven approach to underwriting terms and the efficient management of their acquired properties.

Vaughn says, “The result is that we think we can operate the deals more efficiently and more profitably for our investors and provide a better experience for the residents.”

The group says investors are mostly from the Spokane area, with some located in Seattle and elsewhere in the U.S.

Vaughn says a large portion of Fourth Avenue Capital’s investors here want opportunities to invest locally.

“It resonates when we’re providing people in the Spokane area the opportunity to invest locally, because typically, they get more access to that (property),” says Vaughn.

Vaughn previously led an acquisitions team for a major multifamily institution and has acquired over $6 billion worth of apartment assets over his career. Rossman’s background includes the development of over 5,000 units in the Pacific Northwest, he says.

Betts, 42, says he has over a decade of investment experience and previously worked at a New York City hedge fund, investing in the public equity market.

Rossman, 39, says, when the three men partnered to create Fourth Avenue Capital around the start of the pandemic, they intended to combine their industry experience and investment resources to take advantage of a slowing economy and low interest rates.

Fourth Avenue Capital has a total of five employees. Aside from Betts, Vaughn, and Rossman, there are two directors, Jon Clift, director of operations, and McKenzie Murphy, director of asset management. The company operates from two offices: one in Spokane, at 9 S. Washington, and another in Seattle.

Betts says, “We’ve already made quite a bit of progress … in such a short period of time, because we are three partners with sort of distinct backgrounds and skill sets that fit pretty well together.

Erica Bullock
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Reporter Erica Bullock has worked at the Journal since 2019 and covers real estate and construction. She is a craft beer enthusiast, who loves to garden and go camping with friends.

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