Jonathan Rose Expands in California with $85M Affordable Housing Buy

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Jonathan Rose Companies is expanding in California with its commitment to preserving affordability, which aims to create value for both residents and investors.

The developer's Affordable Housing Preservation Fund VI has acquired La Posada Apartments in Santa Cruz for $85 million.

The property consists of a mixed-income community with 150 total units and 122 of them qualify for the Project-Based Section 8 Housing Assistance Payment. The move by Jonathan Rose extends the federal support contract, which was originally set to expire in 2028.

Also, the New York-based firm has struck a deal with the California Municipal Finance Authority to implement further income restrictions, limiting 40 percent of the units to those making 80 percent of the area's median income. This will be in effect for 55 years.

Expanding in California

The acquisition takes Jonathan Rose's property count in the Golden State to 19.

The company's current portfolio includes Belage Manor Apartments in Anaheim and Pasatiempo Apartments in Fremont; it acquired both of them in 2022. Both fit Jonathan Rose's affordable preservation strategy and benefit from Section 8 benefits as well.

Pasatiempo has 94 units, while Belage is home to 180.

Renovation Plans And Improving Investor Value

Next up, Jonathan Rose plans to renovate La Posada Apartments in an effort to improve the appeal for residents. This includes enhancing building systems, unit interiors, community spaces, while adding energy efficiency and fitness space. Plus, a resident services plan will be implemented for the property.

"Located in a constrained market, the property has significant potential to create lasting value for both residents and investors," Max Jawer, managing director of acquisitions at Jonathan Rose, said in a statement.

"This acquisition builds on our proven track record of revitalizing properties across the country, and we're excited to put that experience to work once again to create a more sustainable, thriving community for the people who call La Posada home."

For the purchase, Newmark provided an acquisition loan, with the firm's Tyler Martin and Mason Campau arranging the deal. Winn Residential will take over as property manager.