A partnership is taking steps to preserve a naturally occurring affordable housing (NOAH) property in Azusa, California.
The transaction is led by a joint venture between Langdon Park Capital (LPC) and Standard Real Estate Investments, with equity from the Community Preservation Corp. (CPC) and debt financing arranged by Walker & Dunlop.
Plans call for the 84-unit development, which will be rebranded as Langdon Park on Arrow, to operate under a long-term affordability structure.
The acquisition is part of a broader strategy by LPC and Standard to preserve NOAH developments in high-cost urban markets.
NOAH properties are developments that do not have government subsidies but are still affordable to residents often because of their age or location. Because there are no government covenants in place, there’s a risk that the properties will be sold or the owners will raise rents.
The California Housing Partnership recently estimated that nearly 40,000 unsubsidized affordable homes are at “very high risk” of losing their affordability and an additional 268,693 to 333,819 homes in the state are at “high or moderate risk” in five years.
Langdon Park on Arrow was built in 1977, and, at the time of the acquisition, all rents were naturally below 80% of the area median income threshold in the supply-constrained San Gabriel Valley in Los Angeles County.
Without intervention, the property faced the risk of losing its affordability over time as market rents increased, potentially displacing long-term residents, according to the new owners.
CPC provided a $6.4 million equity investment to aid in the acquisition and preservation of the property. The joint venture secured acquisition financing from a Fannie Mae loan arranged by Walker & Dunlop totaling approximately $16 million.
“This transaction not only ensures the tenants will have safe, stable, and affordable homes, it also provides the resources to ensure the long-term financial and physical well-being of the property,” says Tell Metzger, senior vice president, equity investments, at CPC.
Another key element was a welfare tax exemption through the California Municipal Finance Authority, made possible by the active participation of Housing on Merit, a California-based nonprofit serving as the managing general partner.
The team is planning to make some improvements on the site but says the property has been well maintained over the years, “which reflects the stability of its tenant base in this submarket.”
“Our goal is to protect affordability while enhancing the resident experience. Langdon Park on Arrow preserves an entire community of working families and ensures that as the San Gabriel Valley grows, long-term residents won’t be left behind,” says Malcolm Johnson, CEO of LPC.
