S
tratford Partners Real Estate LLC sold the 126-unit NOVA Apartments in Rowland Heights to Community HousingWorks for $38.3 million, marking a significant step towards converting the property into an affordable housing community. The sale, facilitated by Northmarq, included a $24.9 million loan with a 10-year fixed term and a debt service coverage ratio of 1.2 times.

    The NOVA Apartments currently have rents in line with Los Angeles County's housing cost limits for those making 80% of the area median income (AMI). However, under the new ownership, 10% of the units will be restricted to 50% AMI, requiring a reduction in rent for those tenants. The remaining 90% of the units will continue to have rents at 80% AMI.

    The loan was provided through Freddie Mac's Targeted Affordable Housing program, which allowed Northmarq to underwrite the tax abatement at 50%. This agreement will be in place for 10 years and mandates that 90% of the property's rents stay at 80% AMI. The remaining 10% can be restricted to 50% AMI.

    Northmarq was able to secure the most aggressive pricing and highest leverage possible through Freddie Mac, surpassing Fannie Mae's offer. No tenants will be evicted as a result of the conversion, but new tenants will need to meet the 50% or 80% AMI requirements.

    The property's recent renovations mean that there are no immediate plans for further renovations under the new ownership. However, if long-term tenants voluntarily vacate their units, they may undergo renovations to match the others. Northmarq has identified itself as a "market leader" in market-rate to affordable conversion space, having converted over 1,200 units with $350 million in transaction volume in Southern California.

    The firm focuses on incorporating affordable housing in high-resource areas designated by the California Tax Credit Allocation Committee and the California Department of Housing and Community Development. By promoting integration of low-income residents into strong economic landscapes with quality schools, Northmarq aims to create a more inclusive community.