Affordable Housing Portfolio Sells for $24.8 Million
Sale Preserves 150 Much-Needed Apartment Units Near Hollywood Park
A Colliers International brokerage team has negotiated the $24.8 million sale of a three-building, multi-family investment portfolio that will preserve at least 150 affordable apartment units in one of most severely housing-constrained regions of the city, officials of Colliers International have reported.
Led by Senior Executive Vice President Kitty Wallace, who was joined on the team by Senior Associate Rob Shiels, the Colliers team, through a competitive bidding process, fielded more than 10 offers and achieved a closing price that exceeded the asking price by $700,000 for the three closely located but separate buildings in southwest Los Angeles. The buildings were purchased by a Southern California-based investment firm that plans to use government incentives to upgrade and renovate the buildings. The seller was a private investment firm based in Los Angeles.
“Competition for these properties was intense as demonstrated by the offers we received that were over and above the listing price,” said Wallace. “The buyer demonstrated strong financials, an ability to quickly close the transaction and experience in leveraging government incentives available on affordable housing developments.”
Built in the early 1980’s under the federal Housing & Urban Development Dept.’s HAP (Housing Assistance Payment) program for low-income residents, the three multi-family buildings total 151 units (all but one fall under the HAP guidelines) and are located on or near that part of 22-mile long Normandie Avenue that abuts the City of Inglewood.
“Since the HAP contracts were nearing their expiration dates, it was possible for the new investor to receive extensions of those contracts from the federal government and this was one of several key deal points,” said Wallace. “That and other incentives like tax credits and low-interest bonds were other components to closing the transaction and preserving these sorely needed affordable housing units in a city that has one of the lowest rates of such housing in the nation.”
According to Wallace, since these buildings are in such close proximity to one another, the new owner intends to manage the properties as a scattered-site portfolio. The buyer also will be completing a tax credit rehabilitation of the buildings using 4 percent bonds that are available on federally backed housing units.
“Since all three buildings were constructed in the early 1980’s, they are starting to show their age, but the new buyer will be taking steps to mitigate that by completing some deferred maintenance and by making other upgrades to improve the properties,” said Shiels. “Additionally, the buildings and their residents are also going to benefit from new development that is taking place all around them, both on the Los Angeles side of the city limits and in the adjacent City of Inglewood.”
Among those new developments is a massive, mixed-use project called the “City of Champions Revitalization Project” on the site of the former Hollywood Park Race Track in Inglewood. It calls for some 4 million square feet of commercial and residential space and the project’s developer has earmarked a portion of that land for a new professional football stadium, although a decision by the NFL on moving a team there has yet been made.
Another factor impacting the value of the portfolio and the region is the revitalized and renovated Inglewood Forum, now owned by the Madison Square Garden Company. Formerly home to the NBA’s Lakers and NHL’s Kings, and a top rock music venue throughout the 1970’s and 1980’s, the arena had fallen into disrepair and stood empty for years, a blight on the community. MSG’s efforts not only transformed the Forum into a Class A concert and special event venue, but it jump-started gentrification efforts now taking place throughout Inglewood.
“It’s an exciting time for residents of Inglewood and southwest Los Angeles,” added Shiels. “The entire area is benefitting from all this new development, land and home values are rising, and there’s a renewed feeling of community pride, all of which the buyer of this property had to take into consideration when making the winning bid. It was a smart bid by an experienced investor who knows the value of affordable housing and how to maximize that value.”
Located within the city limits of Los Angeles at 7850 S. Normandie Ave., 1742 West 84th St., and 1818 West 71st St., the three buildings sold for $154.96 per square foot.