For private equity real estate fund managers, having a positive financial track record and an investment-ready pipeline are key levers to attracting capital from institutional investors. For its sixth housing preservation fund, Jonathan Rose Companies attracted pension funds, endowments, family offices, as well as banks and foundations, including Capital One and Ford Foundation.
Three quarters of the capital commitments were from return investors in the housing preservation fund series, which has raised over $1.5 billion to date. “They were all very serious about their analysis of our impact,” Jonathan F.P. Rose, founder of Jonathan Rose Companies, told ImpactAlpha. “The investors who really want additionality and really want impact are there.”
Jonathan Rose Companies will acquire and preserve affordable and mixed-income multifamily housing in New York, Boston, Chicago, San Francisco, Washington DC and other cities where the cost of rental housing continues to surge and affordable units remain scarce. Nearly half of renters in the US are cost burdened. “With America’s affordable housing crisis deepening, our investment in Fund VI couldn’t be more timely and critical,” said Ford Foundation’s Roy Swan.
Policy headwinds
The Trump administration’s cuts to green building and social safety net programs that supported renters have caused some developers to scale back their impact efforts. Jonathan Rose Companies, through Power Forward Communities and Climate United, had been vying for capital earmarked for green buildings in the Greenhouse Gas Reduction Fund.
“All the awards that we won have been rescinded,” Rose says. “Without that kind of support, it does not make economic sense for us to take existing buildings and to make them fossil fuel free.”
Despite the setbacks, Jonathan Rose Companies remains bullish on greener buildings. “We’ve always been serious about our impact intentions from the beginning, but we’re getting better and better at our executions and the reporting of our executions,” says Rose.
Communities of opportunity
About a third of the fund has already been invested in projects, such as an affordable housing community for seniors in the Los Angeles area. “On the north side of Chicago, we bought a mixed-income project called Webster House, which is half Section 8 and half market rate,” Rose shared.
Jonathan Rose Companies seeks to support low and middle-income renters with financial, health and education services (listen to the podcast, “Jonathan Rose on building green, affordable communities of opportunity”).
The firm will also make energy-efficiency improvements to the assets, adding high-efficiency HVAC systems, rooftop solar and water-saving fixtures. The goal is to reduce the whole portfolio’s energy consumption by 20% and water use by 15%. Over a decade, the firm wants to cut each project’s greenhouse gas emissions by 20%.
Amy Cortese contributed reporting to this article.