Standard Communities and Faring have teamed up with a Los Angeles-based nonprofit to buy three complexes ranging from San Diego to the Bay Area through its middle-income housing program.
The firms and Housing on Merit joined in the deal for the three complexes, getting 559 units for $195 million, according to an announcement last week. The properties are located in Anaheim in Orange County, Escondido in San Diego County and Livermore in Alameda County.
All three complexes are currently marketed as affordable housing for seniors. As part of Standard’s “essential housing” program with Faring, Standard will keep rents capped for tenants — what it calls “affordable housing preservation.”
In Anaheim, the venture purchased the 196-unit Heritage Village complex at 707 West Santa Ana Street. Rents at the complex currently range from $1,900 per month for a one-bedroom unit to $2,200 per month for a two-bedroom, according to online listings for the property.
The average monthly rent in Anaheim, as of February, was $2,143 for a roughly 850-square-foot apartment, according to RentCafe. It’s unclear whether the Standard venture will lower rents at the property, or keep them as is. The firms will spend more than $19 million on renovations at the complexes.
In other deals, Standard has specifically converted market-rate apartments into workforce housing, intended for those who make between 80 and 120 percent of area median income. Standard, and other housing developers including Waterford Property Company, have teamed up with a state joint powers authority — the California Statewide Communities Development Authority — on a number of these conversions.
Such deals call for the CSCDA to issue tax-exempt bonds to acquire the properties and then plans to hold the complexes for at least for the duration of the bonds issued for each property — usually 30 to 35 years.
Over the last year, Standard has partnered on the conversion of more than 1,750 units in California into workforce housing, the firm said in its announcement.
However, with rising interest rates, it’s become more difficult to underwrite and close workforce housing conversion deals, according to the CSCDA and other developers who work in the space.
Standard has not returned a request for comment on the latest deals.
The interest rate environment might have led Standard Communities to pivot to “preservation” deals, rather than conversions, on its most recent acquisitions. The CSDCA is not involved in any of the properties, and the plans to keep rents capped are voluntary on the part of the new owners.
Standard is also pushing ahead with market-rate acquisitions, most recently paying $532,000 per unit for a newly built, 244-unit complex in the L.A. city of South Gate.
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