The big boys are coming out to play as prices become more reasonable.
Canyon Capital Realty Partners are teaming with former basketball star Magic Johnson and former California State Treasurer Phil Angelides to put together a 2 billion dollar housing fund. The target is not fancy office buildings but instead a much more mundane group, workforce housing.
They plan on refurbishing lower to middle class housing and market it to the middle class workers who right now are facing long commutes to get affordable housing. The goal is to buy 10,000 apartments over the next few years.
“In high-cost areas like Los Angeles and Southern California, workforce housing is critically needed,” said Con Howe, managing director for CityView Los Angeles Fund, which finances construction of such housing and is not connected to Angelides.
Canyon-Johnson’s plan “adds the rental piece to what others are doing in for-sale product,” Howe said.
The fund expects to raise about $1 billion from pension funds, endowments and other institutional investors, said Bobby Turner, managing partner of Canyon Capital Realty Advisors, the Beverly Hills investment firm. That money will be used to leverage purchase of more than $2 billion worth of apartments with about 10,000 units starting this spring. via Los Angeles Times.
I think this will be a great nationwide program. In the past the funds from their previous projects have invested in 30 major urban projects representing more than $4 billion in value in diverse and underserved communities throughout the country. Furthermore, the fund is also looking at making some 3% to 5% of the units available on a subsidized basis to teachers and police officers who are willing to participate in those after-school education and safety programs. I bet with the way the real estate market is right now Magic and his partners are probably getting a pretty good deal on the properites they are buying!