Toll Brothers, EJF Capital Form JV for California OZ Project

Construction of the property is slated for completion in 2024.

Rafferty. Image courtesy of EJF Capital LLC and Toll Brothers Inc. 

Toll Brothers Inc., through its Toll Brothers Apartment Living subsidiary, has formed a joint venture with EJF Capital LLC to develop a multifamily community called Rafferty in a Qualified Opportunity Zone in Santa Ana, Calif.

Berkadia’s Chinmay Bhatt, Noam Franklin and Cody Kirkpatrick arranged the joint venture partner for Toll Brothers, in which EJF is contributing $31.7 million in equity to the project. This will add to the $66 million loan facility from Santander Bank.

The two-building, 218-unit mixed-use apartment community, including 12,350 square feet of ground floor retail, is to be built on two land parcels totaling approximately 1.4 acres.

Rafferty is expected to break ground next month, with construction slated for completion in 2024. A portion of the units will be set aside as affordable housing for households earning 50 percent of area median income.

Market trends

Located in the middle of Orange County, Santa Ana suffers a lack of new multifamily housing, particularly in the downtown area. That district has seen considerable office and retail development, which has made the area a dynamic restaurant, entertainment and shopping hub. Most of Santa Ana’s residents commute to jobs outside the area. In a prepared statement, EJF officials expressed confidence Rafferty will be able to capture unmet demand for multifamily living in downtown Santa Ana.

The development should also benefit from other market trends. From 2014 to 2020, the average delivery of 3,361 multifamily units in Orange County was outpaced by annual net absorption of 3,601 units. During this period, despite 23,600 new multifamily units coming online, occupancy rates increased from 95.2 to 97.6 percent, as of the second quarter of this year.

In addition, downtown Santa Ana, enjoying proximity to major transportation networks and anchored by the Orange County Civic Center employing 15,000, is a significant job hub. Other major employers include the Ronald Reagan Federal Building, United States Courthouse and other state and federal offices.

In August, Toll Brothers teamed up with Equity Residential to develop $1.9 billion in multifamily communities over the next three years.

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