Waterford Strikes Another Multifamily Deal With Equity Residential

Waterford and CSCDA paid $280M for the 480-unit Westgate Apartments in Pasadena

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Waterford Property Company is capping 2021 by buying yet another big multifamily property with plans to immediately lower rents. 

Waterford and the California Statewide Community Development Authority (CSCDA) acquired the 480-unit Westgate Apartments in Pasadena, Calif., for $280 million. Sam Zell’s Equity Residential (EQR) owned the property at 231 South De Lacey Avenue.

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Waterford and CSCDA have bought and lowered rents at three other properties in Pasadena, including The Residences at Westgate, which was also owned by Equity Residential and traded earlier this year for $237 million. 

“This property provides a valuable opportunity to further expand the amount of affordable housing available in Pasadena,” Sean Rawson, Waterford’s co-founder, said. “We appreciate the city’s willingness to incorporate this program into their existing housing stock to provide much-needed affordability to existing and future residents.”

Equity Residential declined to comment.

Waterford and CSCDA will immediately lower rents at Westgate Apartments for qualified new residents who earn between 60 to 120 percent of the area median income (AMI). Forty-five percent, or 216 of the units, will be rented to tenants earning 80 percent of AMI or lower, and 96 of the units will be designated for very low-income tenants earning 50 percent of AMI. Existing tenants who do not meet the income restrictions can remain in place until they elect to leave.

The average market rent is currently $3,241 a month in the immediate area, according to Waterford. Monthly rents at Westgate Apartments will average $2,354 in the first year, or about 38 percent less than market rate.

“Demand for multifamily apartments remains strong, which also means rents continue to escalate,” John Drachman, another Waterford founder, said. “This essential housing program helps those residents, essential workers and families who struggle to make ends meet. It also demonstrates how we are able to create even more affordability by mixing middle-income housing with very low-income restrictions.”

Blake Rogers, Hunter Combs, Alexandra Caniglia, and Javier Rivera of Walker & Dunlop represented Waterford in the transaction.

Waterford now administers 12 communities in Southern California that have been converted from market rate to essential housing, bringing its portfolio to 3,700 units and over $2.2 billion of tax-exempt bond issuances. The firm also made four other nine-figure purchases this year in Glendale, Long Beach, Carson and Anaheim.

Meanwhile, Equity Residential has been more seller than buyer this year. In August, the company sold two adjacent properties with 454 units in Hermosa Beach in Los Angeles’s South Bay for a combined $275 million.

Gregory Cornfield can be reached at gcornfield@commercialobserver.com