Waterford Property pays $335M for 2 Pasadena rental complexes

Latest deal with state joint powers authority for workforce housing conversions

Residences at Westgate, The Hudson and Waterford co-founder John Drachman (Waterford Property Company, the CSCDA)
Residences at Westgate, The Hudson and Waterford co-founder John Drachman (Waterford Property Company, the CSCDA)

Waterford Property Company has been on a multifamily buying binge, and has partnered up with the California Statewide Communities Development Authority on several purchases this year.

For its latest acquisition, Waterford paid a combined $335 million for two Pasadena apartment complexes, which will both be converted into middle-income housing through a program meant to address the state’s unaffordability crisis.

The Waterford venture paid $237 million for a 340-unit complex at 231 S. De Lacey Avenue and $98 million for a 173-unit complex at 678 E. Walnut Street, according to a release on Tuesday. CSCDA funded the Pasadena purchase using tax-exempt bonds. Waterford will act as project administrator and manage the properties.

The two sellers are both among the largest apartment owners in the country. Equity Residential sold the 340-unit Residences at Westgate complex and Greystar sold the 173-unit The Hudson, according to records. Equity and Greystar did not immediately respond to requests for comment.

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The Pasadena purchases mark Waterford and CSCDA’s fifth and sixth multifamily deals this year in Southern California. All of those were made through the CSCDA’s middle-income housing program. In late April, the venture last purchased a 500-unit complex in Glendale for $300 million from Carmel Partners.

At the Pasadena complexes, rents will be lower for new tenants who earn between 80 and 120 percent of the median income. The properties will target tenants whose income is too high to qualify for most affordable housing, but too low to afford market-rate housing, Waterford co-founder John Drachman said in a statement.

About 500,000 low-income households in California lack access to affordable housing, according to a report from the California Housing Partnership. The CSCDA, a joint powers authority, works to address that by giving local government and private entities access to low-cost, tax-exempt project financing. In exchange, the private companies agree to lower rents for qualifying tenants.

In April, CSCDA also teamed up with workforce housing investor Opportunity Housing Group to buy a 261-unit complex in Monrovia.