LWK, Cypress, Sabal Buy Workforce Housing Portfolio

Cypress Equity Investments, LWK Partners and Sabal Investment Holdings have made their first purchase under a new joint venture.

The firms bought a 75-unit workforce housing portfolio in Los Angeles for $30 million, Commercial Observer reported. The JV plans to develop 52 additional units at the unnamed properties utilizing a line of credit provided by lender Ascent Developer Solutions.

The partnership between the companies is looking to take advantage of recent California legislation to add workforce housing throughout the Los Angeles region. Senate Bill 1211 increased the number of accessory dwelling units allowed on a property to eight from two, opening an opportunity for developers to increase density in supply-constrained markets.

“SB 1211 presents what we like to call opportunity window 3.0 for ADUs,” Matt Carney, co-founder and partner of LWK, told Commercial Observer. He explained that the so-called “ADU 1.0” setup has been “basically granny flats behind single-family homes, which was a non-institutional endeavor,” while “ADU 2.0 from 2016 to 2024… was focused on garage conversions, which presented some challenges in terms of desirability to the renter — from natural light, unit layouts, and so on and so forth.”

SB1211 gives developers “carte blanche” to “create new apartment buildings on the excess land of existing assets,” Carney said. To take advantage of that freedom, LWK is buying assets and joining forces with designers and architects to “create a meticulous and repeatable approach to deliver new units that are desirable, efficient and well priced.”

The partnership between Cypress, LWK and Sabal boasts $150 million of buying power, according to CO.

ADUs are increasingly filling gaps in housing across Los Angeles County, whether it’s homeowners who were affected by the Palisades and Eaton fires erecting ADUs on their lots for shelter or developers themselves plotting to build such units on multifamily parcels. The City of Los Angeles itself is searching for developers to build ADUs and other dense forms of housing under its Small Lots, Big Impacts initiative.

— Chris Malone Méndez

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