Jonathan Rose Cos., TIAA-CREF Launch New Affordable Housing Preservation Fund

By Joshua Ayers, Contributing Editor

Nathan Taft, Jonathan Rose Cos.

TIAA-CREF and Jonathan Rose Cos. have unveiled the Rose Affordable Housing Preservation Fund L.L.C.—a $51.6 million fund seeded by the two organizations that will help with the acquisition and improvement of affordable and mixed-use housing in strategic major metros in the United States.

Jonathan Rose Cos. will manage the fund, which aims to renovate the existing rental housing stock and bring “green” infrastructure to those communities that will help enhance savings on operational costs while providing a greater quality of life to the renters.

“The TIAA is one of our prior investors and we were really pleased that they re-upped with us,” Jonathan Rose Cos. Director of Acquisitions Nathan Taft, told CPE. “The fund is focused on investing in existing affordable housing and mixed-income housing in select markets nationally … The green retrofit and repositioning of the assets is really what our company does and has been part of our history for a long time. We’re just pleased that we were able to get an investor aligned with the work that we do.”

The Fund will focus on major U.S. markets including the eastern cities between Washington, D.C., and Boston, as well as Chicago; Denver; Los Angeles; San Francisco; Portland, Ore.; and Seattle, though Taft noted that investing isn’t necessarily confined to those markets. Efforts hope to “combine solid, risk-adjusted return potential with an integrated social and environmental mission.”

“TIAA-CREF’s Social Impact Portfolio has a focus on affordable housing, and this investment with Jonathan Rose Cos. furthers the portfolio’s objective to preserve and recapitalize affordable properties while fostering vibrant, healthy and diverse communities,” said Rekha Unnithan, director within the TIAA’s Responsible Investment-Impact Investing team in a news release.

The Social Impact Portfolio mentioned by Unnithan included $700 million in commitments as of Dec. 31 2013 and is intended to be used toward high-quality investments in which a quantifiable social outcome can be achieved. Investments are typically made in areas facing “capital gaps,” but haven’t garnered the attention of mainstream investors.

“We are gratified that TIAA has chosen to reinvest with us,” Jonathan Rose, founder of Jonathan Rose Cos. said in the news release “In today’s heated apartment rental market, preservation of well-located affordable housing that is at risk of becoming market rate is critical to the health of our communities. At the same time, these investments can provide a great opportunity to generate attractive, low-risk returns.”

Taft added that The Fund is targeting projects and portfolios in the $25 million to $50 million range of total capitalization and particularly mixed-income, Low Income Housing Tax Credit (LIHTC) and Section 8 properties, as well as properties that have expiring affordability restrictions.

“We have a number of promising projects already in the pipeline, and we are actively seeking new opportunities,” Taft concluded.