Exclusive: Rainbow Housing Pays $42M for LA Senior Community
The affordable property previously traded for $18 million.
Rainbow Housing has purchased Norwalk Tower Apartments, an 185-unit affordable and age-restricted community in Norwalk, Calif., according to Yardi Matrix information. Preservation Partners sold the asset for $41.9 million or $226.678 per unit.
Rainbow financed the acquisition with an undisclosed amount drawn from a $145.3 million Fannie Mae line of credit originated by Jones Lang LaSalle and maturing in 2041.
The community previously traded in 2013 for $18.5 million or $100 per unit. At the time, Preservation Partners purchased it from the First Baptist Church of Norwalk.
Norwalk Tower caters to residents earning at or below 50 percent of the area median income and who are aged 62 and over. Of the total, 183 units are affordable, including 144 apartments subject to Section 8 restrictions.
A closer look at the Los Angeles affordable community
Norwalk Tower Apartments opened in 1974 and underwent a $12 million renovation in 2014 through HUD’s Section 221(d)(4) program, under which Greystone issued a $13.7 million, 3.3 percent, fixed-interest loan, Yardi Matrix shows.
The project included sustainability upgrades and benefited from equity from Hudson Housing Capital, supported by 9 percent low-income housing tax credits allocated by the California Tax Credit Allocation Committee.
Norwalk Tower Preservation Limited Partnership served as developer. Icon Builders oversaw construction work, while Ground Floor Design provided architecture services.
READ ALSO: Thin Supply Heats Up Senior Housing Buyer Competition
Located at 14141 S. Clarkdale Ave., the community rises at the intersection of Rosecrans Avenue and San Antonio Drive, providing easy access to multiple dining and retail options. Coast Plaza Hospital and Norwalk Community Hospital are also nearby and downtown Los Angeles is roughly 16 miles away.
The 11-story community features 102 studios and 83 one-bedroom units with floorplans ranging from 375 to 550 square feet. Units have kitchens or kitchenettes, washers and driers and balconies or patios.
Shared amenities comprise a fitness center, a salon, a barbershop, common-area spaces, game and activity rooms, as well as laundry facilities. Asset Living manages the property.
Senior housing buyers face competition, California sees development
Amid the industry’s current challenges, the thin supply of senior housing has heated up the race for acquisitions across the U.S. and the cost of capital is becoming one of the differentiators, the latest Walker & Dunlop senior living outlook shows. Many notable public investors are at advantage, as they have significant liquidity and relatively little debt. This encourages the acceptance of tighter going-in cap rates when the net-operation-income outlooks backs up the investment long term.
However, some regions are still attracting selective development. Two of them are Northern and Southern California, Walker & Dunlop Managing Director Matt Kuronen shared with Multi-Housing News. Both developers and institutional capital partners are showing a willingness to pursue new construction in markets where rental rates can support the current elevated construction costs, he added.
One recent example is the groundbreaking of Covina Senior Apartments, a $51.5 million, 60-unit affordable property in Los Angeles. The project will offer one-bedroom units to adults 62 and older earning 30 to 70 percent of the area median income. Moreover, the community will prioritize older households displaced by the January 2025 Los Angeles County wildfires.
