Canyon-Johnson Urban Fund invests in Los Angeles development

The private equity real estate fund has provided capital to close a financing gap for a $160 million mixed-use project scheduled to break ground in the city’s downtown this month.

Canyon-Johnson Urban Fund (CJUF) III, the latest in a series of joint ventures between Canyon Capital Realty Advisors, a Los Angeles-based, value-added, real estate capital provider, and retired basketball star Earvin “Magic” Johnson, has made an undisclosed preferred equity capital investment in One Santa Fe, a $160 million mixed-use development in downtown Los Angeles.

The four-acre project, which will include 438 apartments and 78,620 square feet of office and retail space upon completion, is a partnership between The McGregor Company, a Beverly Hills, California-based real estate developer; Polis Builders; and Goldman Sachs Urban Investment Group (UIG), an initiative of investment bank The Goldman Sachs Group to invest in community development projects in underserved areas in the US. The developers have signed a 78-year ground lease with the city’s Metropolitan Transportation Authority, which owns the land and will sublease 35,000 square feet of the project’s commercial space.

CJUF’s investment closed the financing gap on One Santa Fe, which is scheduled to begin construction this month and be completed by December 2014. The project, which was conceived more than five years ago, was originally known as Santa Fe Yards and was renamed after UIG got involved in 2007.

The residential portion of One Santa Fe is being financed by tax-exempt bonds issued by the California Finance Agency; a loan from the City of Los Angeles Housing Department; and Low Income Housing Tax Credit equity provided by UIG. The commercial component will be funded by a loan from the City of Los Angeles; New Markets Tax Credit allocations provided by Clearinghouse CDFI; Genesis LA Economic Growth Corporation and the Los Angeles Development Fund; and New Markets Tax Credit equity from UIG.

Since 2001, Canyon Realty and Johnson’s Magic Johnson Enterprises have raised three real estate funds that focus on the development and redevelopment of real estate properties in urban communities in the US. The funds include CJUF I, a $262 million fund that has been fully committed; CJUFII, a fully-committed $600 million fund; and CJUF III, a fund with $1 billion available for investment.