Jonathan Rose Cos. has closed with more than $233 million for its impact fund, which acquires and preserves affordable multifamily housing.
The fund will implement practical green strategies to reduce environmental impacts and operating costs and to fund social, educational and other services for residents.
Institutional investors, investment advisers, and leading impact-investment managers, contributed to the high success of the fund, as did family offices and high-net-worth investors. The fund was particularly successful in attracting impact investors seeking strong risk-adjusted returns generated by a strategy that inherently also produces significant environmental and social returns. Rose’s leadership in delivering results in all three components of impact investing helped drive investor interest.
A key component of the fund’s strategy is to develop “communities of opportunity,” adding programs and facilities to properties that, where possible, include on-site community centers, computer filled classrooms, health and wellness rooms, social service rooms, exercise facilities, and community gardens when possible to develop initiatives to connect residents with a range of health, educational and social services.
The fund has deployed more than $64 million in equity investments as of July 2017.
Among the fund’s initial investments is a portfolio of more than 3,300 apartment units across 18 assets from Forest City’s federally assisted housing program located in eight states and the District of Columbia.
Across the three primary categories of subsidized, regulated and naturally occurring affordable housing, there are 7 million units of affordable multifamily housing in the U.S. representing an investment opportunity with increasing demand and restricted supply. With nearly 19 million U.S. households currently paying more than 50 percent of their income for housing, Section 8 new construction phased out since 1983, and an average of 240,000 units of affordable housing supply permanently lost each year from 1999 to 2009, the need for investment in this market has never been clearer.
“Building upon stable income stream, affordable housing leverages low cost of capital, grants and incentives, and regulatory and financial restructuring to drive strong current returns, and greater resiliency during economic downturns,” said Michael Arman, CFO of Jonathan Rose Cos.
