Southland investor reenters real estate market with apartment deal
Southern California real estate investor John Long has jumped back into the residential market by taking over a foreclosed portfolio of affordable apartments valued at $3.4 billion.
Long, a well-known contrarian investor, has entered a partnership with a division of Citigroup Inc. and affordable housing specialist Michael Costa to own and operate the 275 complexes with 80,000 residents in 34 states.
Their new company is called Highridge Costa Housing Partners. Nearly half of their complexes in the formerly troubled portfolio are in California.
Citigroup foreclosed on the portfolio, which was developed using federal low-income tax credits. Costa was president of the previous owner, MacFarlane Costa Housing Partners. Before that he was president of Simpson Housing Solutions, which developed most of the portfolio.
Long, who started his career at Kaufman & Broad in the 1970s, has been a prominent investor and developer of commercial property in Southern California for decades. In 2004, he and his partners at Highridge Partners in El Segundo began selling their commercial properties. By 2007, as the property market began to peak, they had sold nearly everything — about $1.5 billion worth.
“I have been in hibernation,” Long said, but he believes the time is right to reemerge. In the last 12 months Long has quietly bought two upscale office buildings in San Francisco and Orange County, and California land zoned for housing development.
“I can see the light at the end of the tunnel,” Long said. “The question is, how long is the tunnel?”
Long declined to say how much he invested in the apartment portfolio, but said he avoids taking on debt because he doesn’t know how long the real estate market will remain depressed. Affordable housing is an attractive investment because demand for it is intense, he said.
“We have 96% occupancy all the time, and there is a waiting list,” he said.
Tenants in the buildings must have incomes that are 60% or less of their region’s median income. The apartments are intended to be competitive in quality with full-priced units but rent for 25% to 30% less.
roger.vincent@latimes.com
