HACLA multifamily bonds affirmed at A- with stable outlook

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HACLA multifamily bonds affirmed

Highlights

Fitch Ratings affirmed the Housing Authority of the City of Los Angeles Multifamily Revenue Bonds, Clarendon Apartments Senior Series 2024A at 'A-' with a Stable Outlook.
Debt service coverage ratio is 1.77x for fiscal 2025, with stress-case averages of 1.58x over 10 years and 1.86x over the debt's life supporting cash flow stability.
Clarendon Apartments occupancy improved from 81% in fiscal 2025 to 88% by September 2026, with management projecting 93% by year-end as leasing demand grows.

Rating rationale and operating profile

As reported by Fitch Ratings, the agency has affirmed the 'A-' rating on the Housing Authority of the City of Los Angeles Multifamily Revenue Bonds, Clarendon Apartments Senior Series 2024A, with a Stable Outlook.

Fitch says the rating is supported by strong demand for affordable housing in the Los Angeles market, competitive pricing for units under rent restrictions and revenue that comes mainly from rental income, with limited contributions from parking and other project-related sources. The agency also cites HACLA's oversight, its experience in federally subsidized housing and the property manager's affordable housing track record.

In Fitch's analysis, the debt service coverage ratio stands at 1.77x as of fiscal 2025. The agency says the minimum post-stabilization stressed DSCR of 1.50x supports the rating, while its stress case shows an average DSCR of 1.58x over the first 10 years and 1.86x over the life of the debt. Reserves and transition protections also support cash flow stability.

Occupancy recovery and Los Angeles housing demand

The bonds are secured by repayments of the loan used to purchase the project, funds and accounts held under the trust indenture, except for certain issuance-related funds, and the assignment of leases, rents, the Housing Assistance Payments contract and other operating agreements and permits. Bondholders also hold a mortgage on the land and improvements.

Fitch says the project's mix of Section 8 and area median income-restricted units strengthens revenue defensibility in a market where affordable housing supply remains limited. The agency adds that HACLA's large waitlist, the property's access to transit and schools, and its solid condition help sustain leasing demand.

Clarendon Apartments averages 81% occupancy during fiscal 2025, pressured by a property management change and units held offline for Section 8 and Americans with Disabilities Act conversions. Occupancy has improved steadily since December 2025 and reaches 88% as of September 2026, with management expecting 93% occupancy by year-end based on leases in progress.

Our earlier coverage of Fitch’s BBB- rating on Hainan Rubber’s proposed subordinated perpetual sustainable securities explained that the instruments were notched down due to their junior ranking and the issuer’s ability to defer coupons. We also highlighted Fitch’s view of the group’s leverage and liquidity profile, alongside the support framework stemming from its link to parent Hainan State Farms and expectations for continued funding access.

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