Magic still seems to have his touch.
At a time when many sources of financing for real estate projects are drying up, a fund co-founded by former Lakers guard Earvin "Magic" Johnson has banked $1 billion for commercial developments in urban neighborhoods.
Canyon-Johnson Urban Fund is expected to announce today that its third round of financing, which eclipses the combined $900 million total of its two predecessor funds, will make possible more than $4 billion in new development and upgrades of property in the country's largest metropolitan markets.
"The potential for continued revitalization in ethnically diverse communities is nearly limitless," Johnson said.
The fund is a partnership between Johnson and Beverly Hills-based Canyon Capital Realty Advisors. Among the projects Canyon-Johnson has completed: the construction of a retail and apartment complex in Hollywood and the replacement of Chicago's old police headquarters with condos and shops.
The need to upgrade urban centers is growing fast, said Bobby Turner, managing partner of the fund. The country's population is rising at a rate of 3 million annually, 90% of whom will be immigrants or people of color. Many of them head to urban centers with large minority populations.
"Demand for affordable housing and community-serving retail is only going to increase," Turner said. The continuing global credit crunch will limit the ability of some developers to get financing and further aggravate the gap between supply and demand, he predicted.
Investors in the Canyon-Johnson fund aren't deterred by the national real estate slump, Turner said. "We were able to impress on our investors that we are not investing for the next two or three years; we are investing for the next decade."
Investors in Canyon-Johnson -- including the California Public Employees' Retirement System, the University of Michigan and Verizon Communications Inc. -- can profit when projects that the fund undertakes are sold. For example, Canyon-Johnson and a partner, New Pacific Realty, paid about $100 million for the AT&T Center, formerly Transamerica Center, in downtown Los Angeles in 2003, upgraded the property and sold it for more than $200 million.
New York's pension fund has invested in all three Canyon-Johnson funds, city Comptroller William C. Thompson Jr. said.
