REAL ESTATE NEWS

Management companies and capital groups are working to keep rents affordable for Californians who make at or below the area median income (AMI).

This allows these residents to stay in place, often in cities and neighborhoods where they have lived and worked for years, sometimes where their families have lived for generations.

Namely, Avanath Capital Management has secured affordability restrictions at one of its owned and managed multifamily communities in Long Beach, California.

The Irvine-based multifamily owner and operator, which primarily focuses on affordable and workforce housing, executed an affordable conversion of units that were previously market-rate at Seaport Village on 5601 Paramount Blvd.

The California Municipal Finance Authority’s Charitable Housing Program was used to transform at least 40% of Seaport Village’s unregulated 358 units to affordable housing by restricting rents to those who earn up to 80% of the AMI.

“We’re focused on providing affordable and workforce housing in some of the highest cost-of-living markets throughout the United States,” Ken McMackin, executive vice president of investments at Avanath, told GlobeSt.com.

“California metros, including Los Angeles, San Francisco, San Jose, and San Diego, rank among the most expensive housing markets not only in the state, but in the country. Housing costs, both rental rates and home prices, have outpaced wage growth in the state over the past five years alone. Preserving housing affordability also preserves local communities, and cities benefit from thriving, satisfied, deeply connected residents.

Thousands of Units to Lose Income Restrictions

Meanwhile, more than 50,000 affordable housing units on the West Coast are on track to lose their income restrictions and become eligible for market-rate rents in the next five years, according to BRIDGE Housing.

The West Coast-based nonprofit owner, developer and manager recently announced its formation of the BRIDGE Housing Impact Fund I, where it aims to raise $350 million of equity, enabling about $1 billion in investment potential to acquire, preserve and create affordable and workforce housing in major metropolitan areas. This includes in states like California, Oregon and Washington.

BMO and KeyBank are investing $25 million to anchor the fund. PGIM Real Estate is also a launch investor. More stakeholders could be added soon, BRIDGE said in a release.

“I applaud BRIDGE Housing for taking the initiative to future-proof (to the extent anyone can) its development pipeline by creating a private fund free of the red tape and inefficiencies that plague public finance dollars,” Rochelle Mills, president and CEO of Innovative Housing Opportunities, told GlobeSt.com.

“Most affordable housing can’t replicate something similar at this scale, but many of us are working on it. Hopefully, BRIDGE’s success will open the door for other nonprofit and mission-driven development companies.”

With Private Equity, BRIDGE Avoids Subsidies

The BRIDGE Impact Fund will leverage private equity and avoid subsidies, allowing it to facilitate faster, more cost-effective financing and potentially higher returns for financial institutions, pension funds, family offices and foundations seeking investment opportunities in affordable housing.

During the past year, BRIDGE has completed four acquisitions to preserve more than 600 units, in which their affordability covenants would have expired. This created 257 affordable homes by converting market-rate units.

The developer said its new fund could create as many as 3,500 units during the three-year investment period. There are currently more than 10,000 units in BRIDGE’s development and acquisition pipelines.

California’s Housing Legislative Priorities

Included among California’s legislative priorities for 2025 is the Affordable Housing Bond, which provides $500 million for the Community Anti-Displacement & Preservation Program (CAPP).

AB 736, Wicks & SB 417’s co-sponsors, PICO CA, Enterprise Community Partners, CA Housing Partnership, CA Housing Consortium, CA Coalition for Rural Housing, would authorize $10 billion in general obligation bond funds to support the construction, rehabilitation and preservation of affordable housing.

The bond will preserve or rehabilitate tens of thousands of homes, assist more than 13,000 families in their efforts to become property owners, and create over 35,000 new homes that individuals with low and extremely low incomes can afford.

The bills include $500 million for the Community Anti-Displacement and Preservation Program (CAPP) to acquire and ensure long-term affordability of existing unsubsidized housing.

Source: GlobeSt/ALM