Waterford Property Company Pays $206M for 356 Units in Southern California
Rents will be lowered immediately for the ‘missing middle-income’ demographic
By Greg Cornfield September 24, 2021 2:35 pm
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Waterford Property Company strikes again.
The Orange County-based development firm is again deploying its “middle-income” conversion strategy to lower rents in Southern California. The firm paid $206 million for two multifamily properties with a combined 356 units in the city of Orange, and will immediately lower rents for new households earning between 60 percent to 120 percent of the area median income, or between $56,000 and $134,000.
Waterford and Standard Communities — in partnership with California Statewide Community Development Authority (CSCDA) — have separately implemented this affordability scheme for thousands of luxury or high-end rentals in communities throughout Southern California over the past 18 months.
Waterford’s latest play includes $149 million for Toll Brothers’ 262-unit Cameo community at 1055 West Town and Country Road, and $57.05 million for 94-unit Garrison, owned by BMV Marble LLC, at 1725 West Katella Avenue. The firm anticipates average rental savings of 12 percent for qualified tenants.
“The ‘missing middle’ is the most difficult segment of the population to provide housing for because it is a high barrier to entry price point that makes the financial feasibility of producing new units extremely difficult,” John Drachman, Waterford co-founder, said in a statement. “To put this into context, in less than a year, we have converted nearly 2,500 units to workforce housing. In comparison, it typically takes three to four years to develop the same number of units.”
Sean Rawson, another Waterford co-founder, explained that people like nurses, teachers, librarians, first responders and civil servants earn “too much to qualify for traditional affordable housing” but “not enough to live in the communities they serve.”
Waterford’s Essential Housing portfolio now totals 2,378 units and over $1.45 billion of tax-exempt bond issuances. The Orange acquisitions mark Waterford’s seventh and eighth multifamily deals with CSCDA. At Oceanaire in Long Beach, the third property acquired by Waterford and CSCDA, the average tenant saves 18.7 percent on rent when compared to current market rentals.
Earlier this year, Waterford and CSCDA acquired the 507-unit Altana in Glendale for $300 million, and the Jefferson Platinum Triangle community in Anaheim for $160 million. In the summer, the team paid $335 for two communities in Pasadena.
Joseph Smolen, Geoff Boler, and Lee Redmond of Eastdil Secured represented the seller in the Cameo transaction. Tom Moran of Berkadia represented Waterford in the Garrison transaction.
Gregory Cornfield can be reached at gcornfield@commercialobserver.com.
