Angelides leads fund that will fix up 10,000 units

California New Urbanism pioneer Phil Angelides announced in February that he will head the newly established Canyon-Johnson Urban Communities Fund, which will buy and improve more than $2 billion of urban apartment complexes throughout the US.
Angelides, California state treasurer from 1999 to 2007 and developer of Laguna West in Sacramento in the 1990s, will be a principal and chairman of the fund, based in Los Angeles. The fund intends to purchase 10,000 to 15,000 apartments, mostly in complexes containing 200 units or more, and then upgrade their mechanical systems, landscaping, furnishings, recreation and community spaces, and other components.
“We want to take undervalued, underperforming properties” and make them attractive “workforce housing,” Angelides told New Urban News. “There’s going to be a huge surge of demand for rental housing in urban centers” in the next several years, Angelides said.
The aim of the fund — formed under the auspices of Canyon Capital Realty Advisors and Earvin “Magic” Johnson — will be to serve people of moderate means while at the same time achieving a healthy return on investment. “We are not doing luxury lofts,” Angelides emphasized to the Los Angeles Times. “We are talking about secure housing for firefighters, police officers, clerks — people who are the backbone of our communities.”
The fund expects to raise about $1 billion from pension funds, endowments, and other institutional investors and use the money to leverage the purchase of more than $2 billion of apartments. Some of the buildings will be entirely residential, but others will be mixed-use, in some cases containing ground-floor retail or some offices.
The purchases, which will probably begin around mid-year, will be in cities and first-ring suburbs, on transit lines, and where there is access to job centers, Angelides explained. He noted that urban living is increasingly popular, and said, “I believe the movement will expand exponentially,” thanks to population growth, high gas prices, concern about global warming, and other factors.
    The fund expects to install more efficient boilers and water heaters, add solar collectors, improve building envelope systems, reduce waste and water use, and use sustainable materials or techniques ranging from recycled materials to pervious paving, Angelides said. It’s realistic to expect energy savings of 25 percent, he said.
    “A lot has been done in the office sector and in new construction” to make properties “greener,” Angelides observed. The greening of existing apartment complexes, however, is “very much new ground” — and is essential, Angelides asserted. “If we’re going to reduce our carbon footprint, we have got to begin a retrofit of the American built environment.”
    The fund will establish after-school tutoring programs and public safety programs in its properties as part of the upgrading. “We anticipate setting aside 3 to 5 percent of the units at subsidized rates for teachers and retired teachers who will be active participants in after-school programs and for police officers (and their families) who participate in public safety programs,” he pointed out.
Angelides’s new venture is an outgrowth of an initiative he launched as state treasurer in 2000, using state investment money to push capital toward urban development. “One of the first groups that came forward was Canyon,” he said. “They established the first Canyon-Johnson Urban Fund.” In all, there have been three Canyon-Johnson Urban Funds — the first raising about $300 million, the second $600 million, and the third nearly $2 billion, according to Angelides. They have provided what he described as equity for “locally-based developers doing urban mixed-use projects across the country, both ground-up development and adaptive reuse.”