Step Up Housing Pays $47M For San Fran-Area Affordable Asset
Sack Capital Partners alongside Align Finance Partners assembled the purchase’s financing.
Step Up Housing has acquired Vue at 3600, a 240-unit affordable asset in Richmond, Calif. TruAmerica Multifamily sold the property for $47.3 million, according to public records. Institutional Property Advisors represented the seller.
Sack Capital Partners and Align Finance Partners structured the financing for the purchase. According to a report by the California Municipal Finance Authority, this totaled $65 million, including $50 million for the acquisition and $3.1 million for future capital expenditures. Additionally, $2.1 million was earmarked for legal services and $9 million was set aside as reserves.
Upon closing, a regulatory 40-year agreement dictated that 75 percent of the units—180 apartments—would be income-restricted. Of these, 48 and 132 units will cater to individuals earning at or below 50 percent and 80 percent Area Median Income, respectively.
LISTEN ALSO: The Future of Affordable Housing
Vue at 3600 encompasses one- and two-bedroom floorplans ranging between 570 and 950 square feet. Planned renovations include the addition of amenities to common areas, as well as an overhaul of the units, according to prepared statements by David Feinberg, managing partner at Sack Capital. Apartments will receive new appliances, countertops, cabinets, as well as fresh plumbing, fixtures and vinyl flooring.
Completed in 1990, the 12-acre community is at 3600 Sierra Ridge Road. Interstate 80, as well as several parks and lakes, are less than 1 mile away. Downtown San Francisco can be found some 19 miles southwest.
Step Up Housing tapped Sack Capital Partners as the community’s administrator and manager. Sack’s portfolio encompasses roughly 3,000 apartments and condos throughout 15 Western market cities.
The Institutional Property Advisors team that marketed Vue at 3600 included Executive Managing Directors Philip A. Saglimbeni, Stanford W. Jones and Salvatore S. Saglimbeni.
Delivering affordable housing outside of new construction
A recent Yardi Matrix bulletin on affordable housing revealed that the number of households deemed as cost-burdened—paying more than 30 percent of income on rent—has steadily increased. This applies to 80 percent of households earning up to 60 percent AMI, according to a Harvard study.
Yardi Matrix forecasts deliveries of affordable housing to reach a multi-year peak of 70,500 units next year. However, construction starts have diminished due to a multifaceted issue pertaining but not limited to the cost of capital, materials and land.
Outside of ground-up affordable developments, another solution to increase the affordable stock may include market-rate-to-affordable conversions. Such endeavors could involve private-public partnerships.
One example is Ethos Real Estate’s acquisition of Hillsdale Garden Apartments, a 697-unit community in San Mateo, Calif., for $252.4 million. Following the purchase, Ethos teamed up with The Vistria Group to kick off a renovation effort, which, once complete, will result in units being restricted to residents earning at or below 80 percent AMI.
