UPDATED, 2:40 p.m., April 27: A Waterford Property Company partnership has closed on its fourth deal this year to convert a rental building to middle-income housing.
The Waterford venture paid $300 million for the 507-unit Altana, a luxury complex in Glendale. The partnership was with California Statewide Communities Development Authority, which issued the Newport Beach-based firm $339 million in tax-exempt bonds for the purchase.
The seller was not disclosed, but sources confirmed to The Real Deal that it was Carmel Partners. In January, Carmel paid a $1 million fine to the federal government for its role in an infamous pay-to-play scandal involving former Los Angeles City Councilman Jose Huizar.
Carmel Partners CEO Ron Zeff
The Altana conversion will not take place overnight, but will lower rents for new tenants who earn between 80 and 120 percent of the area median income, according to a joint press release from Waterford and CSCDA. Though the complex has been a luxury property, existing residents could qualify if they meet the AMI requirements. They could opt in at the lower rents when they renew. Rents at the building — at 633 N. Central Ave. — cannot increase by more than 4 percent a year.
The Altana is the fifth and largest deal this year in which the CSCDA teamed with a buyer to target middle-income tenants, according to its website. The authority has partnered with Waterford on four of those purchases, including the $120 million acquisition of a 200-unit complex in Long Beach.
Last week, CSCDA teamed with Opportunity Housing Group to buy a 261-unit complex in Monrovia for $100 million, which will also be converted.
Workforce housing developments usually don’t qualify for state subsidies, said CSCDA managing director Jon Penkower. Historically low interest rates have helped the authority take part in the program, he added.
According to its website, the CSCDA is a joint powers authority created in 1988 to enable local government and eligible private entities access to low-cost, tax-exempt financing for projects that provide a tangible public benefit.
The Altana acquisition was first reported in Commercial Observer, but the publication did not disclose the seller.
This story has been updated to reflect that CSCDA is a joint powers authority.