NEW YORK CITY-Working together to preserve affordable units, Citi Community Capital and Rose Investments, a division of New York City-based development firm Jonathan Rose Cos., is launching a $75 million fund aimed at affordable housing investments along the Eastern seaboard, GlobeSt.com has learned. The fund—targeting urban areas of Connecticut, New Jersey and metro-Washington, DC—will acquire and renovate existing multifamily properties with new green features, as well as evaluate select investments for the development of energy-efficient apartment buildings.
“We are focusing on existing affordable housing projects that do have mass transit accessibility, whether its trains, bus lines or walkability,” Wendy Rowden, managing director of Rose Investments, tells GlobeSt.com. “They happen to be terrific investments looking at it from an investment perspective, but they are also important for low-income families because transportation costs are a big part of people’s disposable income, so providing quality, affordable housing that is transit-accessible is really critical.”
The fund represents the latest in a series of transactions through which Citi has brought capital to the affordable housing space. In the last two years, the investment bank has committed nearly $9.4 billion in community development activities including the creation and rehabilitation of 57,000 units of housings, all of which that have an affordable component in the apartment complex.
Andrew Ditton, co-head and managing director of Citi Community Capital, tells GlobeSt.com that the firm worked through their geographic needs and interests with Rose Investments, and saw the opportunity to develop unique relationships on the ground.
"My view is that they are extremely enlightened developer, who have tried new kinds of development activity over the years," he says. "They have been very focused on a green space over the last five years or so, and we were very interested in a way to combine energy efficiency investing with our affordable housing and CRA mandate."
The time frame to invest the money will be spread out over the next 24 months—and the team is already eyeing several sites. “We are looking at a number of projects now that our deal is signed up and announced, it will be going into high-gear,” Rowden says. “It is a little too early to announce anything, but it is definitely a great pipeline.”
Ditton says because of the size of the affordable housing stock along the East Coast, there are now millions of affordable housing units that have been developed over the last 20 to 25 years--many of which that warrant upgrades and repairs.
"Because of the size of that stock and the age of some of it, it needs attention at this point," he says. "We think there is a real opportunity there. We think it is really important in the communities we do business in that we respond to the needs those communities have, and certainly in the older Northeastern cities, there’s a tremendous amount of older, affordable housing stock that needs to be renovated or rebuilt, and certainly made greener."
In addition to the existing projects, Nathan D. Taft, director of acquisitions for Rose Investments, tells GlobeSt.com that the team is also looking for select opportunities to do new developments. "Obviously, given our time frame and focus, we are targeting projects that are a little further along, potentially ones where we have a strong operating partner,” he says.
But the main objective of the fund is about making buildings more energy efficient and more healthful for generations to come, which Rowden says is not only a “good real estate practice, but “good for the bottom line.”
“In the existing housing context, we are looking at making targeted investments that will make the buildings more efficiently and provide better air quality for the tenants, but the investments have to have an economic payback,” she says. “With affordable housing, the rents are regulated, and part of the goal of this fund to invest in preserving the affordability for the tenants. We can help make the buildings lower their expense in the near term and provide a hedge against increases in energy prices for the longer-term.”
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