Multifamily investors have pulled back dramatically during this year’s public health and economic crisis, but Jonathan Rose Cos. has bucked the trend with the recent closing of an oversubscribed, $525 million fund focused on preserving affordable multifamily housing.
Drawing commitments from a range of institutional and other investors including the Ford Foundation and the Sorenson Impact Foundation, the fund exceeded its $500 million top end target. Jonathan Rose Cos., one of the nation’s largest affordable housing owners and operators, began fundraising early last year and the vehicle reached its initial closing in August 2019.
The fund, which raised more than $285 million in the last six months, is the company’s fifth institutional fund dedicated to affordable housing preservation. Continuing the strategy from the company’s prior funds, the vehicle targets primary and secondary cities around the U.S. and adjacent counties.
“We have a lot of traction, a lot of deal flow,” said Nathan Taft, partner & managing director of acquisitions, in a conversation with Multi-Housing News. “We’re still seeing a high volume of good opportunities for this.”
Making an impact
Among the fund’s recent acquisitions is Riverside Towers, a 200-unit, Section 8 senior living high-rise in Medford, Mass., north of Boston. The fund also acquired a three-building, 100 percent affordable senior housing portfolio in downtown Denver and currently has a project under contract in the Bronx, N.Y., according to Taft.
The strategy involves preserving affordable housing communities, bringing green building and sustainability practices to every asset and introducing social services to help residents gain access to job training, language training and other opportunities, Taft noted. He added that the company managed to keep coronavirus infection rates at its properties below the general community incidence.
The model is financially attractive to the fund’s investors, a group that includes health care systems and pension funds, foundations, universities, high-net-worth investors and family offices. Annual distributions have topped 6 percent across the company’s preservation funds, which have a 15-year record of a 15.4 percent net internal rate of return.
Durable cash flow
Taft noted that affordable housing has benefitted from long-term revenue subsidies from the federal government, helping the asset class weather the pandemic and economic turbulence of recent months. “Our collections have been really strong,” he said, adding that the company switched from weekly to daily monitoring of collection levels during the crisis.
Led by Jonathan F.P. Rose, the company has a portfolio of about 15,000 units owned and managed across the U.S. Jonathan Rose Cos. acquired Tower West Apartments, a 28-story affordable housing community in Manhattan’s Upper West Side, this past April. The 217-unit property includes Section 8 and Mitchell-Lama residences.