A recently-finished apartment building near the Pasadena Playhouse District is the latest Southern California development to transformed into "middle income" housing through California's Workforce Housing Program.

Aerial view of Theo showing roof decks and poolJohn Bare

In partnership with the California Statewide Development Authority, the Newport Beach-based Waterford Property Company has paid $67 million to acquire THEO, a 105-unit residential building located at 289 N. El Molino Avenue. Under terms of the agreement, Waterford will immediately begin offering lower rents for households earning between 60 and 120 percent of the area median income level, with annual increases capped at 4 percent. Existing tenants who do not meet the qualifications are permitted to remain in place, with vacant units gradually filled by middle-income renters.

Current average rent at THEO is $3,562, according to a news release by Waterford. With the new restrictions in place, that figured would be reduced to $2,860 - representing a 20 percent discount relative to the current rate.

The transaction to purchase THEO was approved by the Pasadena City Council by a unanimous vote in August.

“The San Gabriel Valley multifamily market is experiencing record low vacancy rates at 1.7 percent," said Waterford co-founder John Drachman in a statement. "This allows landlords to dramatically increase their market rents.  By reducing rents for essential workers, we are providing a solution to the challenges many renters are and will be facing.  We are thankful that the city of Pasadena has recognized this issue and is working with our team to do something to help."

Aerial view of Theo looking northwest toward the 210 FreewayJohn Bare

THEO was developed by Summerhill Apartment Communities, a subsidiary of brokerage firm Marcus & Millichap.

The property is one of 10 residential buildings in Southern California which Waterford has converted to middle-income housing through the state program, totaling 2,748 residential units.