Lee & Associates, the largest broker-owned commercial real estate firm in North America, announced that its LA North/Ventura office has brokered the acquisition of Rumble Road Apartments, a newly constructed 50-unit multifamily community located at 2531 West Rumble Road in Modesto, California to Aspen Real Estate Financial LLC (AREF) in partnership with Stanislaus Regional Housing Authority and CalAHA for $17 million ($340,000 per unit).
Stanislaus Regional Housing Authority, on a 35-year lease to own the property, will begin implementing this workforce housing platform at the property where the rent levels are structured to fall within moderate income housing as defined by HUD at 80% – 120% of AMI. One-bedroom rents are structured at 83% of comps ($2,150 / month with a savings of $364 /month). Two bedroom rents are structured at 87% of comps ($2,380 / month with a savings of $310 / month). Housing Authorities along with their city or school district partners do not have to provide funds for this program. AREF handles 100% of the total capitalization of the acquisition, along with significant reserves to cover lease payments and operating expenses. This program is a long-term lease to own, where AREF donates all the equity and upside value to the Housing Authority. Additionally, the housing authority gets 100% of the cash flow from the property.
Matt Benwitt of Lee & Associates LA North/Ventura represented the buyer in the transaction and is the exclusive broker for AREF. The seller on the sale of Rumble Road Apartments was represented by Marcus & Millichap. Nick Benjamin and Tom Lewis of CalAHA CEO and legal counsel participated in the lease to own structure for their Stanislaus Regional Housing Authority Member. Jim Kruse CEO of Stanislaus Regional Housing Authority and their employees undertook the due diligence for the formation of the lease.
“We continue to see a huge shortage of workforce housing across the United States as many people are struggling to afford market rents,” said Matt Benwitt, Associate, Lee & Associates LA North/Ventura. “Unlike the typical rent restricted development projects which can take years to provide, AREF’s program focuses on existing Class A or B properties where the benefits are immediate. AREF is focused on acquiring new or nearly new Class A and B multifamily properties in California where it can implement its program.”
Aspen Real Estate Financial LLC (AREF) has developed a mission driven workforce housing (moderate income) platform for the creation of Class A & B quality affordable housing nationwide. AREF will act in partnership with Municipalities for the acquisition, new construction or rehabilitation to preserve units of affordable housing. The workforce housing transaction structure is a long-term lease to a (City, Housing Authority, etc.) The structure program allows AREF to present work force housing at 15-20% below comparable market rents to achieve the moderate-income rents (80%–120% of AMI). AREF’s overall mission is to remove the stress to tenants facing historically massive rental increases with rent increases programed at a fixed moderate rate based on historical HUD increases.
Lee & Associates offers an array of real estate services tailored to meet the needs of the company’s clients, including commercial real estate brokerage, integrated services, and construction services. Established in 1979, Lee & Associates is now an international firm with offices throughout North America. Our professionals regularly collaborate to make sure they are providing their clients with the most advanced, up-to-date market technology and information.
