Rare 800 Unit Value-Add Opportunity on Four Adjacent Parcels

THE ASSET

Sunset Ridge is an 800-unit, garden-style apartment community located in Lancaster, California. Built in four separate 200-unit phases, each on a separate parcel, between 1986 and 1988, Sunset Ridge sits approximately one mile from the city’s downtown. The property’s first two phases (western most parcels # 8 & 9), originally named Sunset Terrace and Sunset Downs, were completed in 1986. The last two phases (eastern most parcels # 6 & 7,) named Sunset Village and Sunset Creek, were completed in 1988. A fifth parcel (#5), is a privately dedicated street (16th St. W.) which bisects the property from North to South. Today, through the assemblage of all four phases, the property now totals 800 units and is singularly branded as Sunset Ridge.

THE OPPORTUNITY

Sunset Ridge offers an investor the immediate and proven rental upside of 7% over current market rent ($83/unit/month across all unit types and affordability) simply through continuing current ownership’s ongoing unit renovations to market rate and “lower income” (80% of MFI) units. Our financial analysis assumes renovation costs of $10,000/unit to 462 remaining unrenovated units.

The above referenced 7% rental premium over average market rent is achieved through continuing the upgrading and rehab:

  • To 101 unrenovated market-rate units ($234/u/mo over current in-place)
  • By capturing the current $124/u/mo discount on the 362 unrenovated Low Income Units (80% of MFI) not currently achieving max MTSP rents
  • And by capturing an additional $137/u/mo on the 29 (3.62% of all units) market rate units currently rented to Low Income Tenants, which is 29 fewer units than the 200 market rate units allowed per the regulatory agreement

Our analysis assumes the preservation and continuation of existing regulatory restriction and the continuation of California’s Real Estate Welfare Exemption (per Section 214 (g) of the CA Revenue and Taxation Code) through the continued abatement of 75% of General Tax Levy.

Our analysis does not assume the deployment of the Section 42 Low Income Housing Tax Credit, through which the property’s affordability could be expanded and extended, nor the expansion of or further utilization of any project or voucher-based subsidy. As previously stated there are only 13 Section 8 voucher tenants at Sunset Ridge.

CURRENT AFFORDABILITY

Sunset Ridge is currently encumbered by a Regulatory Agreement and Declaration of Restrictive Covenants through the City of Lancaster Redevelopment Agency, which was placed on the property August 1, 2003. This agreement calls for at least 75% of the property’s units to be rented by “Lower Income Tenants” (defined as those persons or families with incomes which do not exceed 80% of the Area Median Income) throughout the qualified project period. Within the 75% (600 units total) of Sunset Ridge’s units, the regulatory agreement calls for the renting of at least 20% of the property’s 160 units to be rented by “Very Low Income Tenants” (defined as those persons or families with incomes which do not exceed 50% of the Los Angeles MSA Median Family Income or “MFI”) throughout the qualified project period. Twenty five percent of the property is rented to market-rate tenants.

The Regulatory Agreement and Declaration of Restrictive Covenants encumbers Sunset Ridge as a requirement of two Multifamily Housing Revenue Bonds placed on the property on August 1, 2003. The bonds were issued through the City of Lancaster’s Redevelopment Agency as Series 2003A (Senior Bond) and, its subordinate partner, 2003B (Subordinate Bond).

The Qualified Project Period for Sunset Ridge is 55 years and cannot terminate before August 20, 2058. The property’s current ownership satisfies ten years of continuous, uninterrupted ownership, making the Sunset Ridge an ideal candidate to benefit from the issuance and use of the Low Income Housing Tax Credit (LIHTC).

PROPERTY SUMMARY

800 Unit, Garden-Style Value-Add Apartment Community

Floor Plans

Amenities

UNIT AMENITIES

  • Cable Ready
  • Ceiling Fans
  • Dishwasher
  • Pantry
  • Refrigerator
  • Fully- equipped Kitchen

COMMUNITY AMENITIES

  • Pest Control
  • Laundry Facility
  • On-Site Maintenance
  • Public Parks Nearby
  • Soothing Spa
  • Fitness Center
  • Swimming Pool
  • Copy and Fax Services

ASSET

Sunset Ridge is an 800-unit, garden-style apartment community located in Lancaster, California. Built in four, separate, 200-unit phases, between 1986 and 1988, Sunset Ridge sits approximately one mile from the city’s downtown. The property’s first two phases (western most parcels # 8 & 9), originally named Sunset Terrace and Sunset Downs, were completed in 1986. The last two phases (eastern most parcels # 6 & 7,) named Sunset Village and Sunset Creek, were completed in 1988. A fifth parcel (#5), is a privately dedicated street (16th St. W.) which bisects the property from North to South. Today, through the assemblage of all four phases, the property now totals 800 units and is singularly branded as Sunset Ridge.

LOCATION

Economic Snapshot

CONTACTS

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Los Angeles, CA 90025

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