Post $252M Trade, Bay Area Asset Will Turn Affordable
This is set to be one of California's largest market rate-to-affordable housing conversions.
Ethos Real Estate has acquired Hillsdale Garden Apartments, a 697-unit community in San Mateo, Calif., for $252.4 million. Essex Property Trust sold the property, according to San Mateo County public records. KeyBank issued a Freddie Mac acquisition loan.
Ethos Real Estate will partner with The Vistria Group to begin a renovation effort at the property, converting it to affordable housing in the process. The project, slated to begin work next month, is set to be one of California’s largest market-rate to affordable housing conversions.
The overhaul on the property, which opened in 1948, will include interior and exterior upgrades. Upon completion of the capital improvements, the community will be reserved for households earning at or below 80 percent Area Median Income.
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Additionally, Pacific Housing—a California Non-Profit Public Benefit Corporation—will provide resident services. These include adult education programs focused on skill building as well as after-school arrangements such as homework assistance and outdoor recreation.
Across 52 two- and three-story buildings, the community features studio, one-, two- and three-bedroom units ranging between 567 and 2,100 square feet. Amenities consist of a swimming pool and basketball court, among others.
Situated at 3500 Edison St., the property is about 23 miles southeast of Downtown San Francisco. Hillsdale Garden Apartments is within walking distance of several transit stops, parks and a 1.1 million-square-foot shopping center.
The conversion to affordable housing will involve a private-public partnership, according to prepared remarks by Margaret Anadu, senior partner and head of real estate at The Vistria Group.
At the end of April, San Mateo County District 2 presented a plan to combat the affordable housing shortage. The proposal included a partnership with the Department of Emergency Management to finish the soft-story retrofitting of its inventory.
San Francisco’s multifamily transaction volume goes up
Investors traded 28 properties bearing 50 or more units in single-asset transactions throughout Greater San Francisco year-to-date through September, according to Yardi Matrix data. The multifamily transaction volume landed at $1.2 million, which was on par with the figure registered throughout the entirety of last year.
Yardi Matrix’s first report on affordable housing compared the advertised maximum allowable rent average with the average rates of fully affordable communities. The fully affordable maximum rent was reached through a per-unit calculation taking into account HUD’s income limits and family-size adjustments as well as utility allowances and the specific breakdown of AMI restrictions for each property.
The study found that the competitiveness between the advertised market rate and fully affordable rents varies greatly by market. For instance, in several smaller markets such as Huntsville, Ala., and Amarillo, Texas, 90 percent of the market-rate stock was competitive with the affordable inventory in terms of rental pricing.
However, on the opposite spectrum, large metros such as Miami, Los Angeles, San Francisco and Boston presented a greater divide between the advertised rental rates. The market-rate average for San Francisco clocked in at $3,028 while the fully affordable average was $1,982.
