UPDATED, June 14, 2022, 12:38 p.m.: Standard Communities has 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 firm, an unnamed institutional partner 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 Livermore in the East Bay, Anaheim in Orange County, and Escondido in San Diego County.
All three complexes are currently marketed as affordable housing for seniors. As part of Standard’s “essential housing” program, Standard will keep rents capped for tenants — what it calls “affordable housing preservation.”
The buyers did not provide individual values for the three properties. The property in the East, called Heritage Park, has 167 units on 8 acres at 1089 Bluebell Drive in Livermore.
“In the city of Livermore for example, almost 20 percent of the population are seniors and 24 percent are renters,” said Joon Lee, Standard’s managing director of strategic capital. “The average price of a home is over $1 million, which has increased nearly 30 percent year over year. It’s important to Standard to provide affordable housing options for seniors.
Rents at Heritage Park Livermore currently range from about $2,000 per month for a one-bedroom unit to $2,500 per month for two bedrooms, according to the complex’s website.
The average monthly rent in the Livermore market is about $2,500 for a 779-square-foot apartment, according to RentCafe, about the size of a two-bedroom unit at Heritage Park.
It’s unclear whether the Standard venture will lower rents at the three properties they acquired or keep them as is. The partners 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 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 buys.
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.
A previous version of this story incorrectly said Standard paired up with Faring on the deals. Faring was not involved in these acquisitions.