Jonathan Rose Cos. announced it has closed on a $525 million fund aimed at acquiring and preserving affordable housing and implementing green strategies to reduce environmental impacts and operating costs.
The firm’s latest effort is its fifth preservation fund and was closed during a time of investor caution, with more than $285 million raised in the last six months. The fund exceeded its initial target of $500 million, according to the firm.
Company leaders estimate that they will be able to acquire more than 40 properties and preserve between 5,000 and 7,000 units.Officials said their investment strategy across its preservation funds “bears a low correlation to the market and has produced annual distributions exceeding 6% and a 15-year record of a 15.4% net internal rate of return.” Thematically, investors also cited a renewed focus on climate change, poverty and income inequality, and health concerns due to the COVID pandemic as integral to their decision to invest.
“Our fundraising success was a testament to the rising interest of investors in impact and our team’s track record over the last decade and a half of delivering on that promise,” said Jonathan F.P. Rose, president of Jonathan Rose Cos., headquartered in New York City. “Every one of our investors underwrote our environmental and social track records as deeply as they did our financial track record.”
Nathan D. Taft, partner and managing director of acquisitions, continued, “COVID laid bare the fissures in our social safety net and underscored the need for safe, clean affordable housing. We have already committed Fund V to investments coast to coast in stand-alone properties and portfolios and continue to leverage our expertise and reputation for closing complex deals to find good opportunities.”
Health care systems, pension funds, foundations, universities, and impact investment advisors contributed to the closing of the fund, as did family offices and high net-worth investors.
“When we launched our $1 billion Mission Related Investment program in 2017, our first commitment was to Jonathan Rose Cos. We are excited to partner with Rose again on this fund in its efforts to address the severe affordable housing crisis in the U.S.,” said Christine Looney, deputy director of mission investments at the Ford Foundation. “Rose’s triple bottom line focus on delivering risk-adjusted returns to investors while preserving affordable housing and providing critical social services to low-income residents and energy-efficiency improvements to properties brings us one step closer to that goal.”
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 to develop initiatives to connect residents with a range of health, educational, and social services.
The fund will acquire properties directly and in joint venture with nonprofit and for-profit partners who are mission aligned.Jonathan Rose Cos. has developed or acquired more than $3.2 billion of real estate and has 15 years of fund management experience. The firm has 15,000 units owned and managed in 2020.