Avanath Capital Management acquired Baldwin Village, a 669-unit married quarters community in Los Angeles. In partnership with the City of Los Angeles Housing Authority and Permanent Kaiser of Investments on the rise for $230 million in a deal that will eventually convert most units to affordable housing.
The sale represents the largest single asset sale in Los Angeles County this year, according to Northmark, which arranged the sale and secured $121 million in acquisition financing from Fannie Mae. Vince Norris, Jim Fisher, Mike Smith, Bryan Schellinger and Shane Shafer worked together to complete the sale. Joe Giordani, Scott Botsford and Brendan Golding of Northmarq’s debt and equity team in Newport Beach, Calif., were awarded the Fannie Mae funding. Giordani said in prepared remarks that the team secured interest-only variable-rate floating-rate debt with an aggressive spread and proceeds of 55% of the loan at the purchase price. Giordani added that they were able to push their affordable Fannie Mae group to aggressively underwrite collections and maximize loan proceeds for Avanath.
Daryl Carter, founder, president and CEO of Avanath Capital Management, said in a prepared statement that the plan calls for making 70% of the property’s units available to residents earning between 60% and 80% of the income. median in the region to create budget homes in the least affordable rental market in the country. Carter noted that market-priced apartments in Los Angeles increased their rents 17.3% year over year in the second quarter.
Avanath plans to add other institutional investors to the joint venture in the coming months. Carter said Avanath, an Irvine, Calif.-based private real estate investment manager focused on providing accessible residences in multiple markets across the United States, worked with HACLA after the association solicited partners in 2021 for a program to address affordable housing. shortage in the city of Los Angeles. Carter said the collaboration will make the community eligible for a California tax exemption for properties serving residents at 80% AMI or less.
According to John Williams, president and chief information officer of Avanath Capital Management, the transaction marks the company’s fifth acquisition in Los Angeles and the second conversion from the market rate to an affordable rate without the use of tax credits. In March, the company secured $536 million for its open-ended affordable housing fund. Earlier this month, Avanath purchased a portfolio of six affordable and senior housing units totaling 1,032 units in Sacramento, Calif., in an off-market recapitalization for a total of $181.6 million.
Baldwin Village, which includes Santa Rosalia Apartment Homes with 326 units and Santo Tomas Apartment Homes with 343 units, will be managed by Avanath’s property management group, Avanath Communities Inc.
Keith Harris, executive vice president of acquisitions at Avanath, said in prepared remarks that working with HACLA will allow Avanath to keep rents affordable for low- and middle-income residents while making meaningful improvements to the property. Planned renovations include updating interiors, flooring and electrical infrastructure to support the addition of dishwashers and microwaves. Furnaces and roofs will be replaced. Improvements will also be made to public infrastructure, including transformers and pipes owned by the utility company of the Los Angeles Department of Water and Electricity.
Avanath will provide social programs for residents, including community engagement programs, financial literacy classes and health-focused services.
The apartment community is 98.5% occupancy and consists of 61 two-story walk-up structures totaling 324 one-bedroom units, 296 two-bedroom units, 31 three-bedroom units, and 13 studio apartments. The property’s common amenities include 358 surface parking spaces and 452 garage spaces, electric gates in some garages and a central laundry. Apartment features include stainless steel appliances, high-speed internet access, and ceiling fans.
The community has a total of over 1 million square feet of space, according to Northmarq. Built in the 1940s and 1950s, Santa Rosalia Apartment Homes are located at 4220 Santa Rosalia Drive and Santo Tomas Apartment Homes are located at 4318 Santo Tomas Drive. Baldwin Village is part of the Los Angeles-Long Beach-Glendale market. The transit-oriented property is located close to shopping and public transportation. It is a 20-minute drive southwest of downtown Los Angeles and 24 minutes northeast of Los Angeles International Airport.