Community Preservation Partners bought two complexes as buyers seek similar properties nationwide

A developer snapped up two affordable housing projects in Los Angeles and plans to spend millions renovating them at a time when investors and public officials are looking to increase and improve the stock of housing for lower-income renters throughout the country.

Community Preservation Partners has paid about $19 million for the 25-unit Normandie Villas and 20-unit MCA III Apartments in separate deals, with plans to invest an additional $16 million in upgrades for the properties.

The buyer plans on keeping the properties affordable; it renewed the Section 8 federal subsidy tax credit contracts on both properties for another 20 years, meaning rents will remain between 30% and 60% of the area median income. In Los Angeles, that figure is $98,200, nearly 50% above the national average wage index of $66,622, according to the Social Security Administration.

Both complexes have long waitlists, evidence that “demand for affordable housing in this region of Los Angeles is extremely high,” said Community Preservation Partners development manager Evan Cramer in a statement.

As housing costs climb across the country, public officials and apartment developers are working to meet demand for cheaper rents. The number of cost-burdened renters is at a record high, according to a 2024 report from the Harvard Joint Center for Housing Studies. California, for example, wants to develop 2.5 million housing units by 2030, with a large portion slated to be affordable.

However, some affordable housing projects are hard to make pencil without government incentives. Investors are more bullish in acquiring affordable projects than developing new ones, with about $1 billion worth of U.S. affordable housing projects trading hands in recent weeks as buyers try to capitalize on higher costs.

Deferred maintenance

Community Preservation Partners, based in Reston, Virginia, is a division of Irvine-based affordable housing investment firm WNC & Associates. It has been an active buyer of affordable housing and seniors housing in Los Angeles this year, with the two apartment complexes representing the company’s sixth and seventh such purchases in the area.

Community Preservation Partners owns 103 properties totaling 10 million square feet nationwide. It takes older properties and spruces them up “by investing in modern, energy-efficient upgrades and creating new spaces for connection and learning,” said John Fraser, the firm's vice president of development, in a statement.

Both recently acquired south Los Angeles properties are due for overhauls, the company notes, with renovations slated to finish by June 2025.

The 1983-era Normandie Villas, made up of 25 two- and three-bedroom units, has never been renovated. Community Preservation Partners acquired the property at 2633 S. Normandie Ave. for $11.5 million and will spend about $10 million, or $166,000 per unit, to add new roofing and energy-efficient infrastructure upgrades, along with more aesthetic unit renovations such as new flooring and countertops. The developer will also make units ADA-compliant.

MCA III Apartments is located nearby in Baldwin Hills. Originally built in 1958, the property at 3940 Gibraltar Ave. is aged and undermaintained, according to Fraser. The developer paid $7.3 million for the property and expects to spend another $6 million, or $163,000 per unit, to renovate the properties’ common spaces, add a playground, new fencing and exterior paint.

Community Preservation Partners will also work with local community groups to provide residents with on-site adult education, health and wellness, and skill-building classes and services.

Expiring contracts

More federal subsidies are expiring in the coming years under the federal tax credit program launched in the late 1980s that developers rely on to help make affordable housing purchases financially feasible.

The California Tax Credit Allocation Committee allocated a 9% low-income housing tax credit for Community Preservation Partners' recent LA deals.

Among the recent affordable housing dealmakers across the country are Hudson Valley Property Group and private equity firm Wheelock Street Capital; the duo bought 22 multifamily properties in Washington, Colorado, California and Idaho this month. Also in December, Sagard Real Estate acquired 158 units in the Inland Empire at 5800 Lockmoor Drive for nearly $50 million.

Housing advocates worry some investors buying such properties won't maintain those contracts and keep properties affordable, but Community Preservation Partners wants to preserve the properties' affordable status. It recently shelled out $80 million in a similar affordable housing deal in San Diego.

The deals close at a time when Los Angeles’ affordable housing crisis is casting a shadow on overall economic growth and discouraging new residents from moving to the city, according to local housing experts. Renters in Los Angeles County need to earn $48.04 per hour — nearly triple the minimum wage — to afford the average monthly asking rent of $2,498, according to the California Housing Partnership.