June 9, 2026 · 1 hr 21 min
With Larry Taylor — Founder & Chairman, Christina
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Taylor Avakian sits down with legendary West Side Los Angeles real estate syndicator Larry Taylor. With more than 50 years focused exclusively on LA’s most desirable submarkets, Larry shares…
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Taylor Avakian sits down with legendary West Side Los Angeles real estate syndicator Larry Taylor. With more than 50 years focused exclusively on LA’s most desirable submarkets, Larry shares perspective on current pricing and opportunities, the unique advantages of the West Side, and principles refined across every interest rate and economic cycle. From the lasting appeal of prime locations like Century City and Santa Monica to the evolution of syndication and portfolio strategies, this conversation covers hard-won lessons on navigating volatility, evaluating deals, and building lasting value in one of the world’s most competitive real estate markets. Sponsor - Loan Titan Upscale your experience with https://loantitan.com/ Sponsor - AI for CRE Collective AI for CRE Community: https://www.skool.com/ai-for-cre-collective/about?ref=3b3ff2c0ccce44ba8039fafd54bf291aChapters00:00 Introduction & Current LA Real Estate Opportunities 06:13 Larry Taylor: OG of Los Angeles Real Estate Syndication 07:37 Early Influences: Jerry Buss, Tax Strategies & Syndication Beginnings 08:55 Sam Freshman Book and Core Syndication Principles 11:40 Launching a Career: First Deals and 1970s Economic Upheaval 13:14 Interest Rate Cycles, Volcker Era & Historic Buying Windows 15:12 West Side LA vs Downtown: Performance Through Cycles 16:50 Why the West Side Endures: Climate, Location & Quality of Life 19:34 Raising Capital Today & Investor Sentiment on LA 23:27 Creating Value: The Montana Avenue Development Story 28:57 Location-First Approach Across All Asset Types 30:10 Evaluating Deals: Vision, Multiple Exits & Disciplined Analysis 34:34 Multifamily on the West Side: Pricing, Regulations & Opportunities 42:33 Modern Portfolio Syndication, Funds & Rigorous Due Diligence 53:18 Knowing When to Sell & Lessons from Standout Transactions 1:00:32 A Landmark Century City Transformation & Outcome 1:15:45 If Starting Today: Portfolio Strategies for New InvestorsReal estate syndication Los Angeles, West Side LA investing, multifamily real estate Los Angeles, commercial real estate cycles, Century City development, Santa Monica retail, interest rate impact on real estate, buying opportunities downturns, apartment investing West LA, Larry Taylor Christina, Taylor Avakian No Vacancy, historical real estate lessons, Los Angeles commercial real estate Subscribe and Stay Ahead! Stay informed and empowered in the multifamily real estate market. Subscribe to the channel for exclusive insights, rental updates, and expert analyses on the Los Angeles market. 🔔 Don’t miss out on the latest trends and tips to maximize your property's potential: https://www.youtube.com/c/TaylorAvakian 📈 Connect with me: Website: https://www.thegroupcre.com/ Email: taylor@thegroupcre.com X: https://x.com/TAYVAY_ LinkedIn: https://www.linkedin.com/in/tayloravakian/#LosAngelesRealEstate #MultifamilyBroker #LandlordTips #RealEstateInvesting #PropertyManagement #TenantScreening #RentalMarket #LosAngelesApartments #RealEstateStrategy #TaylorAvakian #ApartmentOwner
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The buyer comes to me, it's going to cost us at least $2.5 million. So, if you're willing to reduce the price by that amount, we'll go forward with the purchase. They had no idea I'm sitting there with an entitlement. The building got torn down and the land sold for $110.2 million.
Larry Taylor is the founder and chief executive officer of Christina and is a seasoned investor with over 40 years of real estate experience in the Westside region of Los Angeles.
When the opportunities are the best is usually when there's blood running in the water. When I sign a lease, I expect that person to honor that lease and pay it. Whether their business succeeds or fails, I'm still getting paid. We have buildings that we know are never going to have a vacancy until someone dies. Older buildings with long-term tenants present a real obstacle to growth in value. I have to dig as deep as possible to find out everything that could possibly exist that would make me not want to buy
the property. What would you do if you were in your 20s trying to start over from scratch? I would absolutely go back into This episode is sponsored by Loan Titan, a leading residential financing loan company specializing in both conforming and non-conforming mortgage solutions. Loan Titan offers Fanny May, Freddy Mack, nonQM, and private money, hard money loan programs, helping borrowers who need flexibility beyond traditional lending guidelines, or speeddriven financing solutions. Whether you're purchasing, refinancing, or investing, Loan Titan is known for smart structuring, clear communication, and reliable execution. Visit Loan Titan.com and mention Taylor Avakian to get started. Thanks for loan Titan for supporting the channel.
Welcome to the show.
My name is Taylor Avakian and I'm here with my esteemed guest Larry Taylor. Larry, welcome.
Thank you. And thank you for having me this morning.
What's going on? What what's what's been the latest of you? What's new?
Yeah, what's new is that prices are going down, opportunities are going up, and there couldn't be a better time to be a buyer in the city of Los Angeles, provided you had the capital to be able to perform.
Okay. What makes you say that? Like, I believe that. you believe that, but a bunch of people have no idea what we're talking about. So why what makes you say that's that's true?
52 years of experience and it's really 54. Let's just call it 52. 52 years of doing the same thing in the same place and being in every market imaginable for five decades. Mhm. I think I have a pretty good handle where we are and my ability to read the tea leaves, see through the fog.
Is it a function of where interest rates and pricing are? Is it a function of where the rents are? How are you looking at it from an actual statistics perspective? Or the tea leaves. What are the tea leaves telling you?
Well, the tea leaves tell me number one, there's no more desirable place in the United States or in the world to live than the west side of Los Angeles. We have the best year-round climate in the world and we have the highest concentration of wealth. We have the highest concentration of entertainment. We have technology. We have two of the busiest ports in the world. Mhm. There's nothing that you can find that's wrong with the westside region of Los Angeles. Mhm. And so in the last 50 plus years, I've seen interest rates at 24 and a.5% and I've seen them at 2 and a half%. So when I say I've got a little bit of a handle on where things are and why I see what I see, there was plenty of money to be made at 24 and a half%. That was three over prime, which was the borrowing rate
for real estate in 1988 during the Vulkar years. Yeah. And there was a lot of money to be made because as interest rates went up and deals went dead and prices went down, if you were buying a property, you know, for $10 million when rates were 12 and rates hit 24%, you just bought it for 5 million. It's the same difference. And this is what you have today. you every time rates go up and stay up and values go down. If you would have bought the property for say $100 million when interest rates were three and a half and now they're seven, you buy it for 47 million and you pay the 72 1/2. It's doesn't matter. Mhm. Really? But but but what happens is when when you have a sudden increase in rates like we did under Vulkar and also we
had the same thing under um Greenspan when he decided it was time to raise rates and he announced that rates would go up a quarter every time the Fed met. So it went up from 0.25 to 5.25 and it cratered the stock market and it also exposed subprime but it was the same thing. It's like, wow, people are in trouble. You have the crash of 2009. The best buying time was around 2011, 2012. Mhm. And if you were buying at that time, you were buying really, really right. And if you got out of some of your properties by 2021, you really did well. And now you go into the co an unexpected situation where it that was a very distorted time because we hadn't had a pandemic since 100 years earlier during the the the great
uh Spanish flu or whatever that was called.
That was a new one for you. Co co Yeah.
Um it it was harder it was harder to understand that because I hadn't I hadn't experienced a pandemic but in 1979 8081 I hadn't experienced interest rates going up from 9% to 21
a.5%.
Yeah.
Can you imagine today if that happened for people they like I think people would combust self-combust with that amount of volatility
but it has happened. Yeah. interest rates went up 11 times uh in 2020 starting in April 2022 and it basically did what it was supposed to do. It busted out anybody that was levered period. Mhm. And you're seeing the continuation of that fallout where, you know, most of the time when I read my real estate news, which is every morning, it's special servicesvicing, foreclosure, uh, bankruptcy, recapitalization, so on and so forth. Because when interest rates go up that fast in a leveraged business, which real estate is, it doesn't sustain. Yeah. It just doesn't sustain. And that's that. And so if you own a portfolio and you manage it effectively and you're able to sustain at the same time take advantage of the opportunities that
are presenting themselves, you only become more successful and and and wealthier and you grow your wealth for your clients if you have, you know, investors as we do. It's just, you know, it's two sides. One, you have to manage your portfolio. Like in in in our business, we were taking advantage of a strong market and selling assets when the selling was good. And right after April 22, we haven't sold a property because we don't believe we could yield what we could have before. But we know that they're great properties and we'll be able to get an even higher yield later. But real estate is to be bought and never sold if if you do it right. Okay,
that's the whole key is how do you do it right? Okay, I want to dig into that. But when when I think of you, Larry, and uh we've known each other for a long time. Uh cuz I called you cuz that was my job uh for a very long time and you were very kind to me and you kind of taught me these lessons on the phone which I think was very helpful and I appreciated that. I think of you as the OG of syndication in Los Angeles, the original gangster. Would you categorize that as a fair assumption? It's a pretty fair assumption since I started as a syndicator very early in the you were really like it felt like to me understanding your trajectory and knowing your story a little bit if like you were one of the first syndicators
in Los Angeles cuz everyone else was kind of doing you know the Iranians the Persians had brought over money from Persia and sort of buying stuff with that but I didn't I don't think there was a lot of
syndicators. Well Jerry Bus was a major syndicator. Oh, he was a syndicator. That that Jerry Bus, that was his side job until it became his full-time job.
Was he an attorney, though?
No, no, no. He's an engineer. Oh. And he and his two partners, Frank and Bob Mariani, uh, were engineers. And they started buying real estate in the '60s because engineers in the 50s or 60s mostly in the 60s and into the 70s were amongst the highest paid professionals in Los Angeles. And the tax rate between federal and state reached as high as 70% at one point. But the write-offs that were available in those days were enormous too. And one of the greatest write-offs was real estate. So you could buy apartment buildings, office buildings, retail buildings, depreciate them and use the losses against your ordinary
income. Oh, so what I can do as a real estate professional today, they could have done as anybody could have. Anyone could have done it, right?
Interesting. Yeah. And that that that charity ended in 1991. Got it. So what Jerry Bus and his partners were doing were putting all their engineer buddies into buying apartment buildings in only in Westwood, Brentwood, and Santa Monica. West End, West End. And when I met Jerry Bus and I was doing my own deals, which would buy a building, figure out a way to, you know, raise the money to buy the building, usually all debt, then buy it, raise the rents, fix it up, sell it. I do another one. Uh when I met Jerry Bus, he heard my story. He says, "I know you're successful, but how many deals do you do a year?" And I said, "In a year, takes me a year and a half to get a building purchased,
repositioned, and sold." And then he goes, "Well, well then what do you do?" And I said, "Then I do another one." But by then I've located something else. And he said, "That was too linear. Here's what we do." And basically handed me a five-page uh private place memorandum and showed me his deal. And it brought back the memory of 1972 when I was a college student at USC. Might have been 73, 72, 73. I don't remember exactly, but we had a visitor in one of our classes and it was Sam Freshman. No way. And Sam Freshman. Yes, that's the OG.
That's the OG. Sam and he had written the book in 1972. His book was in 72.
He gave me that book when I met him. Yeah. First edition was Principles of Real Estate Syndication. I completely forgot. I have an autographed book from 1972 and I've got all the other ones autographed as well, but it just triggered something. Yeah, I remember this. It's interesting. And it was Jerry Buzz that said to me, may rest in peace. He said, "People invest in real estate for a lot of reasons other than making a profit." Now, I'm making a profit. I don't understand it. Right? It's like, what are you talking about? And he goes, "Well, some people need the write off and they invest just so they can get the depreciation losses to offset their ordinary income. Some people invest in real estate because they want cash flow and some people invest in real estate because they want to hold the properties and make long-term, you
know, appreciation and profits." And all of them need a manager. And that's what we do, Larry. We're a manager. And we get a fee to manage it. We get a fee to buy it. We get a fee to sell it. We get a fee to develop it or redevelop it. And um we get 20% of the profits loss in cash flow. And I looked at him and I went, "Sounds pretty good. Maybe I should do that." And then he cautioned me. And I could go into this for a long time, but I won't. But he cautioned me and he said, "First of all, you're going to have to find a source of capital. We have hundreds of engineers that we've had for years that provide the capital and then sometimes we just roll a deal where we'll just resell it to a new group. Basically, it's a recap.
We buy it for X. They've gotten their benefits. We sell it for a profit to the next group. Same basic pile of engineers. So, he said, um, but you're going to have to find your own source of capital. and when you do, you have to remember that you can't lose their money. And I go, well, the thought of losing money never really entered my mind. I'm thinking only about making money. And he said, but if you lose their money, it's not good. That's why we buy only the West Side because if you make them money, they don't say thank you. If you break them even, they don't reinvest with you. And if you lose their money, they'll sue you. I go, I have to really think about that deal.
I don't know that that that's a different proposition right there.
That's a But but I did it. Yeah. And without regret.
Right after school.
Right when you graduated. Well, when I graduated, I was doing my own stuff. I mean, I bought an apartment building while I was still in college.
Um, how did you know you wanted to get into real estate? Was your family in real estate?
No, no, no, no, no, no. I just had a natural feel for it. And uh in 1973, we had the Arab-Israeli war, we had the oil embargo. Mhm. And we were also in the middle of Richard Nixon's wage and price level freeze, phase two or phase three. And most people who weren't born by that time or old enough to remember it don't remember it, but everything was frozen. wages, rents, eggs, butter, cheese, tires, clothes, there everything was frozen. And uh I took a course called executive decisionmaking while I was at USC. And we studied price controls and uh our professor uh Bill Brock House I think was his name, Dr. Brock House. He he drew on the chalkboard these
three cylinders and then connected them with a tube and he had vents at the top of each one and a furnace at the bottom. And he'd take his chalkboard, he would his chalk stick and he would mark off one of the vents and he says, "What happens when you close that vent? It blows heavier through the other two.
What happens when you close the second one?
Everything is blowing like crazy out of the third one.
And what happens when you close the third one?
It explodes. That's the history of price controls. Wow. So ultimately they always fail. It did fail. And after price controls failed, we had inflation that was incredible. I mean the rate of inflation between 75 and 79 80 was so huge. Which is why Vulkar, our Fed governor at the time, just said, "I I'll cure this. Price controls didn't work. I'm just going to raise a rate so high. I'm going to break the back of everybody that's levered and that's going to that that is going to give us we're going to break a recession. We're going to we want this. This is how you do it. And same thing as price controls. Raising the cost of money to levels that nobody could afford busted out the economy. We went into one of the worst recessions since the Great Depression.
That's what brought Reagan into office.
Wow.
when Reagan got into office, rates were still over 20%. And, you know, rates came down to 12%, you know, by 1982, as I recall. So, it's it's interesting. It's like I said, it's I've I've lived this for over 50 years. To a certain extent, it makes me smarter because of experience, but because it always comes in a different form, and you may not always be ready for it. Yeah. And I can tell you that I wasn't ready for the Fed's actions recently. I was not ready for it. I would have unloaded a lot more real estate and I would have been in a better position to be buying more real estate. But on the other hand, you just tough it out. Yeah. And you just tough it out and you just tough it out. But if you have good real estate, now people that owned
highrises at downtown LA, high-rise office, they would have thought they had good real estate.
Yeah.
But downtown has never achieved full full occupancy in its life. It's generally always hovered in the teens to 20 in the 20s even when things were great. Wow. So when the pandemic hit and people stopped going to offices, I mean there not a lot of art there there has never been a lot of reasons for people to be downtown. Certainly we have, you know, maybe 50 60,000 people living downtown now, which is extraordinary compared to where it was 50 years ago. Yeah. When I think we only had Bunker Hill Towers and maybe uh one or two other projects, but there was no real life downtown. So, you know, things really started to pick up. But when I moved to LA in the early 60s, uh we already had started the community redevelopment agency. We've been redeveloping downtown since I got
here. I was 10 years old. I'm 72. I mean, we're still we're still redeveloping. Yeah. So, the fact that those buildings have all basically maybe there's an exception to that, but most of them have gone down in value significantly. Most of them have gone back to their lenders. Yeah. Some have been sold at ridiculously low prices, far below replacement cost. But replacement cost doesn't matter if there's no demand. M now you take the west side. Mhm. Let's look at Century City. Yeah. 96% occupancy. Highest rents ever in the history of Century City since it was, you know, conceived in the 50s. Y uh why is that? Cuz it's the west side, stupid.
Right. Okay. You got to dig into the west side.
So it's the west side.
What? Yeah. But what does that mean for people who don't know LA or haven't been to LA? Like why is the west side so coveted? Why is the west side the west side?
I really think it has a lot to do with the water. I think the closer you are to the water, the better the air, the better the feeling. It's a higher quality of life. You have generally less density and uh you have more exclusive neighborhoods. And let's face it, people like to live close to where they work. And I can assure you that many of the people who occupy offices of Century City live in Beverly Hills or Bair or Hills or Westwood or Brentwood. So, you know, it goes hand in hand. Mhm. It's just the most desirable part of geographically it's the most desirable place and it has the best climate because if you go over the hill into the valley, it's always 10° or 15° warmer or
colder depending on what time of the year it is. And then I'm going back to the 60s and 70s when we were the smog capital of the world. The closer you were to the water, the better the air. So you simply couldn't live in Los Felas, Silver Lake, Pasadena, Altadena, whatever the smog really in the 60s. You couldn't see in front of you in the middle of the day. Wow. You were like, "Oh my gosh." You were trying to find your way through because you know we're the city of automobiles and we didn't have catalytic converters and we're spewing forth all of this uh dirty dirty stuff into the air.
I mean, it used to be a joke for these tourist shops on Hollywood Boulevard that they would sell these cans as take home some LA smog. Oh my gosh. But if you lived on the west side, you had a much better climate. So climate is a key driver for Los Angeles. And whenever people ask me, "Is it ever going to come back?" I always say, "Well, it hasn't left and it'll always come back because of the climate."
Yeah.
And the climate drives it.
What so you um obviously syndicate and have 450 investors. You told me that you want to get to 4,500 investors at one point. What do you say to the investors? Cuz what I've been hearing from speaking to a lot of owners, mostly from more of the institutional bigger stuff, right? Less the mom and pop LPs, they're like redlinining LA. Like they're putting X's. We don't want to invest our money. The the politics are too tough. We can't you don't own your building. The city owns your building. yada yada yada. No one's denying the weather is fantastic. But are you feeling like investors are saying, "Uh, I don't know. I don't know if I want to put my money in in buildings. Is it harder to raise capital?" Like, what are you seeing from someone who does that?
Well, there's there's several answers to that. Okay. You know, it's like when the opportunities are the best is usually when there's blood running in the water. And as Warren Buffett once said, I may be paraphrasing correctly, be greedy when others are needy. The reason that people are here will not change. Now, there's different product types, you know, so you know, you can't easily compare a multif family to a strip retail center or or street retail or high-end retail, service retail, high-rise office, garden office. I mean there's a lot of different types of of properties and so a lot of these negative things you know having to do primarily with housing multif family and also office. Mhm. Because why go to office? I mean you can FaceTime from anywhere you can
compute in. So there have been material changes in how people live and how people work and there's an adaptability process to that. But in terms of Oh my god, LA got more homeless people than anywhere in the world. Look, if you had to be homeless, where do you want to be homeless? In Minneapolis in the winter or in LA in the winter? Yeah. Okay. I once asked Governor Nuome uh at a fundraiser that I attended at uh somebody's house that you would know. Mhm. Um, before I give you this check for $10,000, uh, I want to talk to you about Prop 10 and Prop 10. Prop 10 was one of the early attempts to have, uh, the Costa Hawkins bill basically neutered. Prop 13. Prop 13. No, no, not Prop 13. 19. Well, Costa Hawkins.
Got it. Right.
I don't remember what prop it was or what what which is the property taxes. Keeping the the property tax. Oh, I'm sorry. the rent control. Rent control. Yes.
Okay. It was it was mandated that you have vacancy de control. Yes. Uh and then I said, "Let's talk about the homeless because that seems to be the big talk." This was his first term. Oh, wow. Not the second term. And I said, "Has anybody in the state of California done an analysis of the homeless population to determine how many of our homeless in California are Californians?
what percentage?
And he said, 'Well, to be honest, I don't know if there's been any studies, but I know just from my own independent analysis, a large portion of that population come to Los Angeles because of its climate. And I said, well, what about San Francisco? It's the same thing. He says, it's a very opportunistic kind of a place to be, and people aren't necessarily Californians. So, think about that. People are coming to Los Angeles without a job, without a place to live, but they can live on the street or in a tent or in some kind of other facility because the weather is very very receptive. I mean, I have met homeless people in Santa Monica when I used to use the stairs at fourth fourth in Santa Monica Canyon. And I used to use the stairs and there were homeless that used to live in Palisades Park
and they used to bathe in the ocean and they would get food from restaurants that had excess food or they'd go through trash cans and find things and you know or they would wash windows or whatever. Uh but they could live outside which was extraordinary. Um the city of West City of Santa Monica used to feed the homeless once a week on the lawn in front of city hall. Wow. This is in the years of very progressive Santa Monica when Pat Pat Hayden uh Tom Hayden.
Tom Hayden. What do you think of Santa Monica?
Well, from a location perspective, it couldn't be better. Uh I personally was very involved in the development of Montana Avenue, Santa Monica, which you know, I started investing and buying and developing that in 1986. Oh, I didn't know you had a bunch of retail there. Yes. 14th, 15th, and 16th. Those were all buildings that I either owned or built or renovated or repositioned.
Did you exit them?
I did all in 2003, I believe.
Are you happy you exited them?
Yes, I exited them to John Anderson at a two cap and $1,400 a foot when rents were $7 a square foot per month.
I don't think they are there today. Yeah.
Wow. I don't really think they're there today. And that was in 2002. Three.
Oh my gosh.
But I mean, when I started investing on Montana, rents were a dollar a foot gross. Whoa. And when I left, our portfolio was $7 a square foot net. But, you know, everything from that whole block where Peach Coffee is. That's a and uh Whole Foods Market and the Fireside Liquors, that was ours. We built the souththeast corner Montana and 14th. the southeast corner of 15th of Montana, the southwest corner of 16th in Montana, and brought all of these new really, really cool tenants that, you know, were were very, very, very much a part of making Montana Avenue pedestrianoriented retail street.
How did you identify Montana Avenue? Did you see something like as an opportunity? because I've always wondered there's a couple people who I admire very much where they're willing to be Cowboys and see potential and say I'm going to change this area. Was there something that you saw on Montana that made you say we're going to be able to take this from a dollar to I don't know but hopefully you maybe even thought it was four bucks and it went to seven. Did you have the perception or what was that you were looking at?
I was looking at the quality of the Santa Monica public schools.
Okay.
And I was looking at people paying extraordinarily increasing prices on houses north of Montana. My proposition was when I saw a housing housing double $175,000 house in 2 years was selling for 350 and I know they sell for 6 10 12 14 million today.
Under 4 million bucks if you're north of Montana.
Yeah. But it's 40 years later.
Yeah.
Yeah. Okay.
Yeah.
So, I saw that and there was uh one or two others that saw that as well. Uh but they weren't as proactive as I was in terms of really recognizing that if you gave the retailer a better product, you would achieve a better tenant with a higher rent at a longer term. Mhm. So, as the street was maturing, cuz there were others, but basically they weren't doing much. They would rent something for $2 a foot or $3 a foot in an older building. And like, you know, the tenants started to be very interesting. as the gas stations started to disappear and you know some of the service businesses started to disappear like a hardware store would go out and a clothing store could go in.
So there there was already things happening.
It was it was already happening. So you weren't the first. You just noticed the trend right when it was like the first
I'm not a pioneer. Got it. I I saw the housing prices going up. I started to see the baby strollers going down Montana, but I reckoned at that time that it would have an end at some point if there wasn't investment in the infrastructure. And when [clears throat] I talk about the infrastructure, I don't mean the lighting and the roads and the sidewalks, although part of that because when I'd build a new building, I'd have to build a new sidewalk. I'd create lighting. And so to sustain the high rent, I wanted $4 a foot triple net, not $1, not $2, not $3. And I didn't want mom and pops. I didn't want tenants that didn't have sustainability because I look at leasing the way a bank looks at lending. When I sign a lease, I expect that person to honor that lease and
pay it.
Whether their business succeeds or fails, I'm still getting paid. Mhm. So, but that's always been our policy. So, I didn't want the tenants to say, "Oh, yeah, yeah, I'll pay you the $4 a foot." And then you look at their financials and they're only going to pay it as long as the store is
successful.
Yeah. So, you know, we we built buildings. We built new buildings. We completely renovated buildings. We used the best architects. We used the best
materials. We really created something out of nothing.
Most people specialize, right? So, I would say most people are multif family focused, they're industrial focused, they're retail focused. They only do one thing. It sounds like you've done a ton of different asset types, quote unquote, retail, multif family. I'm not sure if you've done industrial or office. Was that your thesis from the beginning of I'm going to figure it out opportunistically or did you stumble into those because they were a good deal and you recognized I could figure it out? Like, how did you think about the diversification of different asset types?
I didn't I was specific about location and non-specific about product type because to be perfectly honest collecting rent is not brain
surgery.
But developing is hard. It is. But if you have a vision and you understand the marketplace, you have a pretty good chance of being successful. But there's no guarantee. There's risk to it, but there's risk to anything you invest in. But to me, rent is rent and space is space. And as long as you have a great location, you know, I bought office in Century City. I bought office in Santa Monica. I did high street retail in Santa Monica. I did office in Beverly Hills. I did retail in Beverly Hills. Uh retail in West Hollywood, residential in West Hollywood. Uh I was a big investor in West Hollywood before it became a
city. Wow. How many deals do you think you've done? Do you know?
Uh hundreds. Wow. Yeah.
Full cycle.
Yeah, mostly full cycle.
Jeez. Yeah. So, you've seen it everywhere. Do you feel like the way that you would approach a deal? I guess actually walk them through that. Like, how do you determine if you're going to buy something?
It's always location. First thing is tell me where it is, what street, what that's all I need to know because I know I know the market. I don't have to go out and look at it.
Yeah.
And you know the beauty of today with computers and you know Map Quest or Google Maps or Google Earth, you know, I can zero in on anything. But uh it always is the location. You know, like if you called me up and said, "Hey, I've got a great building on Wilshire Boulevard in Beverly Hills for sale. It's a retail building." I'd say, "What side of the street?" If it's on the north side, no interest. On the south side, interest. Because with the department stores, we had Sachs, we had Neman's, we had Barneys, and that's retail that side. The north had all these office buildings. There's nobody walking on the north side of the street. Yeah. But they would start in Neimann's and get to Sags and ultimately get to Barney and anything in between was good. Got it. So, I mean, it's that it's that specific.
But as long as I heard about where it was, that would get me
going. What about the numbers? How do you look at the numbers?
It's a very big question. [Laughter] Hey, it just depends on the product type and it just depends on, you know, who's occupying it or whether it's vacant or what you can do with it. I mean, everyone is so every every deal is so specific. Yeah, I am a visionary and I don't look at property based on the IRR or the cap rate. I didn't even know what a cap rate was. I still don't really care for it unless it's the US government paying the rent and that way I can depend on it. I had a post office once and that one I could cap out because the rent came 10 days early.
Yeah.
By wire.
They weren't going to default.
Yeah. But um it it really is about what can I do with this property to make the most money with it. I need more than one way to make money. I can't just buy a building and look at it and say I can only use it for this purpose. I'm always looking for another exit. I believe you have to have a multiple exit strategy to be
successful. Dive into that. Can you give me some examples?
Yeah. It's like I'm looking at a property right now. Very very high profile area developed more than 50 years ago. Happens to be retail. It's just it's an old strip center that was working at the time. well, still does okay, but it's on a magnificent site. And when you look at the site, you realize that the retail center is in the wrong part of the site. But it's still very popular and you know, the rents are average. Mhm. And then my thinking is the retail needs to be in a different part of the site. And if you could add some residential, like some kind of multif family, you could create a much better project
by moving the retail to the rim. Okay. In other words, the retail is not visible from the street. Got it. Um, you could make it a nice lush, you know, uh, country style Yeah. thing. You could plant trees and add picnic tables and do some other things that haven't been done to it. But the way that it's cited is wrong. Interesting. Because nobody knows it's there. And yet it would benefit greatly because there's probably, I'm guessing, 50,000 cars a day that pass it.
Yeah.
Wow. But it's only known to the neighborhood that it's in. And part of the charm is that, you know, it doesn't have visibility from the street, but because it doesn't have visibility and because it's old infrastru it's old construction, you're just not going to get prime tenants. And if you could increase the visibility and re resite it and add another component to it, the site would be very valuable.
We have a sponsor for today's episode and that is AI for Siri Collective. 25 listings at the moment. We're closing four or five deals a month. It's been incredible. So, if you want to learn if you're in commercial real estate, how to use AI in your business, whether you're a property manager, a broker, an investor, really anyone, we have a huge group, over 400 people in this community. And the website, if you want to go check it out, is a forcollective.com. So, appreciate you guys. Now, back to the episode. What do you think about multif family? Cuz I I know you own quite a bit of multif family. Some, right? You have some retail, too. Are you bullish on multif family? Are you bearish on multif family?
Well, I'm very bullish on multifamily in the west side. Okay. Because I'm seeing prices so attractive. They haven't been this attractive since the early 90s. Yeah. Uh that having been said, it's a much more challenging environment to operate multif family because of, you know, regulatory stuff. Um it's just everything is coming down on multifamily uh owners and a lot of these owners are very most of them are individuals. They might own two, three, four buildings in their entire life. Mhm. And these buildings are aging and the capital improvements that are required are expensive and rent control has locked in people in their apartments for long periods of time. I have I have apartment buildings where tenants have been there 40
years.
Wow.
Oh, yeah. 30 years, 40 years. Now, when when the market's bad, you know, at least they're getting that money because they'll never miss a payment. Yeah. And I mean, really, we have buildings that we know were never going to have
a vacancy until someone dies. Yeah.
Jeez. So, you know, older buildings with long-term tenants present a real obstacle to growth in value. So, they have plummeted in value, but they're so cheap now that Yeah, that's fine. You can make money again because you can't replace anything for what the prices are on these buildings. You can't build new. Yeah. And under SB8, you can't tear down a rent controlled building and put in a a new building without having to bring back the tenants that you basically had to evict to build the building.
Yeah.
and you have to bring them back at or near the rents they were at when you tore the building down. So all of the older stock of what I call dingbats.
Yeah.
Cuz the west side, you know, building apartments in the 50s and 60s into the 70s they got a little more sophisticated. But most of these buildings were not built to last. These are flat roof woodframe stucco buildings. A lot of them with takun parking, some with outdoor parking. These buildings were not built like buildings were built in cities like San Francisco, you know, Chicago and New York that are built to withstand time. These buildings basically would need to be maintained significantly to be productive. Rent control became a disincentive for landlords to reinvest in their properties. So when you think about it because they can't be removed ultimately they are going to become more
valuable because while you can build a new building on any property that was zoned commercial but if you try to build a new building on a property that is already an apartment building that's under rent control you can't do it.
Doesn't make sense.
And people don't necessarily want to live in a high-rise building on Wilshire Boulevard. There's a small portion of the population that will because they
want new and safe and secure. So you're seeing these new buildings built on Pico on Olympic on uh Sulova Boulevard. I mean, but these are very busy commercial boulevards and our city was not developed with that in mind. Interesting. But, you know, some of the things that have been built, you know, more luxury things that have all of the amenities like Douglas Emtt's recent new high-rise in the west side, Mr. Bundy, I think, excuse me. I mean, some of these are really nice buildings and the rents are very, very high. Um, so my own belief is I'd rather buy all the low price stuff cuz I know that's going to double because at the end of the day, it's still where people want to live. Yeah. And people don't come to LA
to live their whole lives in a vacuum tube. That's not why you want to live in LA. I mean, you come to LA and the vision is ultimately you're going to have a house with a front yard and a backyard and a swimming pool um and at least a twocar garage and you're going to have a nice beautiful neighborhood where there's houses and and you want to live outdoors. And if you think about, you know, these high-rise buildings that offer certain benefits, but um and there are a certain segment of the population, but um you see buildings selling for half of what they sold 5 years ago. And yes, you got to put up with uh a lot of regulatory stuff. But when you buy them that cheap, it's worth making the capital improvements. And you have to just go in and make those buildings better buildings.
And you will ultimately get higher rent because the west side supply demand ratio has never changed. There's a greater demand than there is the supply. Mhm. Even even though in some situations you do have higher vacancy and those are buildings where landlords just haven't put any money in. And when people walk in and they see cottage cheese ceilings and a window air conditioner and you know some old aluminum sliding door and a a for micica countertop and a tub enclosure that's plastic and uh counters that are made for midgets. I have no offense to midgets, but I'm just saying is, you know, there's just and then you talk about what you have to invest to turn these units around. Then you can't really recover, you know, very quickly your capex. So, it's a it's a it's a great time to
buy because it's now getting cheap enough to buy these buildings and improve them. I love to hear that. Yeah, it's great. It helps me. Yeah. And I'm not an apartment guy. I like apartments, but um you know I'm resisting certain areas because of the regulatory stuff because I don't trust the state legislature with Costa Hawkins. Uh then if we get vacancy control, then I think the world goes to [bleep] Yeah. And I also think that uh even the state rent control is another bad sign for multif family. Yes. [clears throat] So, you know, yes, it's I think it's uh five over the CPI. Mhm. Who's to say the legislature won't make it two over the CPI? I mean, the state of California now regulates rents in the entire state.
Yeah. And the latest law that came along was you can't charge more than one month security deposit, which is insane because it takes six months to evict a tenant doesn't pay rent.
Yeah.
So, you know, there's a lot of disincentives to be in the multifamily business in California, but the west side is the best side. So, you're going to get a higher rent, you're going to get a better quality tenant, and if you put in the money to improve properties, you're going to see the benefits. Yeah. And that's the way I'm looking at it right now, which is these things are now starting to be very economically attractive, even though interest rates are higher, but the price of the property is lower. So, it's the same thing I said earlier. You know, it just all balances out. You know, if you want to charge me 20% interest, reduce the price by 70% and I'll do it.
when you uh when you find a deal you want to invest in, is the path for you to go and get money, is it the same that it once was or do you do most of the deals yourself now? How are you doing the money raising, partnership, syndication stuff?
About 10 years ago, we came to the realization that the fund business was a real business. I mean, I didn't believe in it. I did not believe based on my historical experience that you could raise capital for real estate without the investor knowing what you were buying. Cuz at my first deals, I would go to a seller and say, "I really want to buy your building for $500,000." And the seller would say, "Where's your money?" I'd say, "Well, I need to get under contract. Then I can go get the money." And the seller would say, "When you get the money, call me." Yeah. Then I would go to the money and the money would say, "What are you buying?" I said, "I want to buy this building for 500,000." "Well, do you have it under contract?" "No." "Well, when you get it under contract, come see me."
This was a challenge. Y but once I built the rapport and the reputation, I was able to comfortably cuz I had a track record and I could tell a seller, look, you know, this is my track record. This is who I am. Fine, I'll go under contract with you. They know I was a syndicator and I would raise the capital from variety of different sources, typically in the entertainment business. And that worked. I mean, by and large, but but with brokers, there was always an issue because the brokers that knew me would say, "Hey, we like Larry. He's a good guy. Uh, but he's going to keep that property in escrow as long as possible until he raises money because he's a syndicator." So, brokers would not keep me at the top of their list because they wanted the ones that could pull the trigger.
Oh, wow.
was very difficult. Wow. Because if you're and you're a broker, right? You don't want to know that a guy is going to keep a property in escrow until he figures out a way to raise the money. Even though I had the sources Yeah. You know, I got the I was one of those guys, right, that would find a way to stay in escrow as long as possible until they could raise the capital.
Yeah.
Truth of the matter is I'm still that way to a certain extent because of what Jerry Bus had taught me, which is you don't want to lose money. I have to dig as deep as possible into anything that we ever buy to find out everything that could possibly exist that would make me not want to buy the property. I've never used due diligence to support why I'm purchasing it. I use due diligence to find every reason not to buy
it.
So the inversion almost it's inversion. It's it's a different it's completely unlike the way the industry typically works. You tie a property up, you run the numbers, you like the tenant structure, you know, the IR looks good, you think you can raise rents, and you go in and then you do your standard due diligence checklist, leases, estles, uh, environmental, uh, zoning, all of the things, you know, physical inspection, termite, earthquake, all of the things that you would do. We do the opposite. We look at something and buy it and during the due diligence period we look for every reason not to buy it because if we find if you go the other way you will not make a mistake. Interesting, right? Just it's just, you know, you're going to throw as much effort at
finding everything out that you can possibly find out as to why this property is a problem.
Do you have an example or a story of when uh when that was the case or what you found?
It's just so typical. I mean, you know, we we we look at more deals than we buy. We we go into contract and more things than we close. Very frustrating for us, but we're more concerned about making sure that we don't make a mistake. And there's no perfection.
Yeah.
You know, but it's like you look at a building and you have a roof inspection and roof inspector, say, "Oh, the roof is only 8 years old. You're fine." Then then you do a cing of the roof and you get down to the first layer and it's got asbestos. All right? So, you got to core the roof to find out what's underneath it. Or, you know, vinyl floor tile, you know, a lot of the mastic still had asbestous, right? Mhm. Yes, technically it's okay unless it's removed, but you're going to remove it someday. So, you're going to have to deal with that.
How do you deal with it then? Do you deal with it as a credit? Do you back away from it completely?
Or do you say, "Hey, it's never going to be touched. What the heck?" But if you're in retail and your space is turned and then you a tenant that's been there for 30 years moves, the new tenant comes in, they're going to redo the whole place, then it's an issue. And it's issue for them, it's an issue for us. And you and then there's the handicap issue with every building, you know, that you have to look at very carefully and say, well, this is an issue. If it's too big of an issue, you don't buy it. I mean, there's just so many things that you look at uh beyond the tenant quality, uh the creditworthiness, uh just so many. the tenor reputation today. It's just so easy. But by AI, I can just ask my friend Claude and
uh I'll say, "Claude, tell me everything that you can about Taylor." And Claude will research public records and it'll the more questions you ask, the deeper it goes. But I mean, we were doing this in a in a more, you know, hand-to-mouth kind of a way that we do now. But we still it's like you know we look up that you have a long record of litigation. We're not going to lease to you.
Um just things like that. What do you think about the investors? Because I've done many transactions and you start to get a feel for the type of investors. So back in the day you got put in a box, Larry the syndicator, right? So brokers start to have this opinion of what the deals look like. I've had experience with there's certain investors where, you know, that they're going to go under contract at one price and they're going to go and tour the building and do their due diligence. They come back and say, "Hey, I need $250,000 off the price because of X, Y, and Z." You know that going into the the the likelihood of that happening as a broker, you're very aware of that, right? And so you can try to manage expectations with an owner and and
have these conversations and look on the front end and say, "Okay, here's how much it's going to cost. Here's a real expense line item. Here's not." When you were buying a building, were you was your approach to get it under contract when you knew that there was a price that you actually needed to to be purchased at versus you would go in at the price that you thought you could pay for it and if something big huge came up, you know, fine. But if it was a small something that was manageable that even though you didn't understand it, you wouldn't go and ask for the credit because you thought overall it was a good deal. How do you think about that?
I think more so than existed 40 years ago. 40 years ago you could land in LA with a suitcase full of money and but go buy a building. Mhm. Today, when you have a potential buyer for your property, you have this extensive ability to do due diligence and you decide whether or not that's somebody you want to transact with. That's what we do. Somebody can offer us a lot of money for a property, but if it's somebody that we don't want to transact with, we just don't. When I buy a property, I never have an in interest in renegotiating. If the deal doesn't work, we cancel. We don't retrade. And when we're selling and the seller comes to us or the buyer comes to us after the due at usually a day before the end of the due diligence period and says, "I'm willing to
go forward but for the following. I need this, this, that, and that. So, you know, give me a half a million dollars and I'll close." But we just say, "Go buy another building." Yeah. Because at the end of the day, Yes. During the due diligence periods period, you're going to find certain things. You're going to find that you need to replace a water heater or you need to redo the roof or you've got to put in new electrical panels in some of these older apartment buildings because of insurance requirements. Yes. Then that's when you simply say, "I didn't anticipate all of these things. Therefore, it doesn't meet my metrics. I'm out." Mhm. If the seller then says, "Why are you out?" I say, "I'm out for the following reasons." And the seller says, "If you'll stay in, I'll make these adjustments." That's good business. All right.
But to simply say, "I will only go forward if you give me a discount." I say, "Good luck. God bless. Was nice to me. You go find something else." Yeah. I'm not in a hurry to sell anything ever. Yeah. Now, keep in mind, the government rewards you to hold real estate. Yeah. And the government penalizes you to sell real estate. it. Longer you hold it, the more depreciation you have, the more ways you have, more what? Financing, refinancing, componentized depreciation. You can recomponentize. I mean, there's a lot of ways that you can make money in real estate by holding it. But when you exit, you have a capital gains tax to pay. And that's from your depreciated basis to the selling price. So all the goodness that you got, the god that the good gods
gave you, you now have to pay the tax, which then says, "Oh my god, I sold my property. Now I got to go find an upleg to shelter the gain because I don't want to pay tax." So you've had a property for 25 or 30 years that you've absolutely done great with. Now, you've sold it at a market price and you've got this gain that you have to shelter, but you have a very short period of time to go find something and you're going to pay retail for something probably to avoid paying tax. Mhm. Aren't you really better off paying the tax? Most of the time you are. Interesting. Most of the time you are. We've never been a fan of 1031 unless we were buying and selling at the same time. And it made sense to basically do a trade
and avoid tax, which has happened twice in the last 50 years. Wow. Twice. Only done two.
Yeah. Wow. Yeah. So then I guess that that brings up a question for me. How do you know when it's the right time to sell?
When someone offers you a price that you believe based on all of your knowledge because you're in that marketplace that is beyond what you could achieve in the foreseeable future, you sell. And it brings back a memory of a building that I owned that was not in my perfect location. It was an an out of area deal that I did for strategic reasons with with a strategic investor. Okay. uh who happened to be the president of a bank. Wow. A local bank.
Yeah. A large bank. Uhhuh.
Um and so he had invested in this deal with some co-executives and had developed the property with a bank client. And every mistake they could make they did. Everything was bad. And I stepped in to fix it. Mhm. I had to fix the debt. I had to fix the teny. I had to fix the project itself
physically. Did they hire you or was it you bought the building from them?
I stepped in.
Okay. Fire. Fired the GPS.
Got it. Stepped in as the GP. Fixed everything and it took like two years to get the stability.
Wow.
Two years. very hard work to get it finally get at least performing at a much higher level of rent rent level. Still had to deal with some very very bad debt, but it was like an enormous effort to turn it around. It finally is 100% leased and stabilized in a market that's not my standard market. Mhm. And I get a phone call from an individual who says, "Do you want to sell your building?" And I went, "Not really. I mean, I finally got to a point where I think it's worth, you know, keeping." Yeah. Well, what would you sell it for if you did sell it? So, I just throw out a ridiculous number that's twice market. Yeah. And the guy says, "Yeah, I I'd buy it." So, I said, "Oh, okay. Well, um, I'll send you a
contract. And I sent him a contract. And he said, "Well, why don't we just meet at escrow? You know, this is the long time ago where you weren't emailing. You you wouldn't have email." Yeah. Right. So, I say, "Sure." You know, I only deal with Cobell Banker Escrow. Meet me uh on uh I guess that was Camden or Canon. It was Canon. It's where Funky restaurant. Oh, yeah. Yeah. That corner was Calwell Banker Escrow. All all Calwell Banker deals when this is when Sears Robach owned Calwell
Banker. Oh wow.
It wasn't CBRE yet. It wasn't Cowwell Banker. It was just Cwell Banker was a very prominent firm. Yeah. And Sears owned it and owned Etna, the insurance company and I and I forget what I mean they owned everything. So they own the escrow business. And so the guy shows up driving an old Volvo and brings the contract with him and the escrow officer types up the escrow instructions and he signs and we sign and and uh he says uh what are my costs?
How much you know what are my costs going to be?
And she says, "Well, you know, tile this money." No, no.
What's the total cost?
Like, how much is it, you know, including what my closing cost will be? And she calculated out. And he reaches into his sport jacket and he just writes a check for the full
amount.
Full amount of the purchase price. The full amount of the purchase price and whatever the costs are. And she pads it a little bit, you know, for what his closing costs are going to be. No broker involved. I'm looking out the window of the office. I see him get in this car and I say, "Surely call the bank right now. I want to know if that check is good." [Laughter] She calls bank check is good. And it's like a 10 or 12 day close. And like who is this guy? Yeah.
What do you remember how much the sale was price? I don't.
I don't. It's a long long time ago, but it was a lot worth a lot more Yeah. than what it for what it
was. Got it. He paid a lot more.
So, it turns out the guy lived in Hancock Park or Pasadena. He had bought the Jurgensson's Market chain, which was a private market that was very popular. And he was accumulating
all of the properties on the block to build a regional mall. Wow. And I was one of the last two pieces. Damn. and he needed those two pieces to be able to build them all. And what happened was by the time he pulled it all together, the market conditions changed and he lost it. Oh. All of it, including the property he bought from us. Wow. Years later, I get a call from I think it was Tom Bareric. And now this is 9192 and Tom is now buying up from the RTC, you know, for 10 cents on the dollar. Massive portfolios. These are big chunks he's taking down.
And he says, "Uh, do you want to buy a building located here, here, and there?" He did this twice. And I went, "No, I already owned it." He goes, "Do you want to own it for X?" Which was less than I paid for it. Oh my gosh. Yeah, this happened twice. Oh gosh. One of the other buildings is the building right next door to the building we're sitting in. Really?
No way. You owned that?
I didn't own that. I was buying it from the developer who I knew and a very important person in the real estate business said, "You don't want to buy that building because we built the building down the street where the Tokaloma Uhhuh. pool place was, and that building has been tough for us. You don't want to buy that building." So I passed on it and it sold to the family that OD's one of the banks. Can't remember which bank it is now, but it was a Canadian wealthy family. And it came back to me at half price. Jeez. Half price. So it was less than I would have paid for it. And um it was Bellsburg that bought it actually. So Bellsburg was Far West Savings. Far West Savings went under.
Bellsburg owned Far West Savings. This was part of the portfolio. The RTC got it. Bareric calls me, wants to sell it to me now for half of of what it sold for to Bellsburg and about what I was looking at it. And it now is owned by the very guy that told me not to buy it. No way. Yeah. It's a public REIT.
Wow. Yeah.
Jeez. Right next door here. This is 103 90. That's 10350.
That's crazy. So, you know, again, what does it mean?
It's just like it's a cyclical business. And, you know, I don't I I'm not sad now because I think it's probably back down. Yeah. To where it was. But if you're a long-term owner and you're earning on it, you know, the fluctuations in value are not really terribly relevant. And people like to walk around and say, "Well, I'm not overleveraged." And then the value drops 50%. And all of a sudden, you're overlevered. You weren't overlevered when you got the loan. Yeah. But you're overlevered today, not because you're, you know, stupid. Mhm. It's just because market conditions changed. And I wake up in the morning and I see, you know, I looking at all the real estate news, right? And it's like every single bad deal on the country, like the smartest guys in the room, Blackstone, Brookfield, PIMCO, they're all giving buildings back. And I'm I'm I'm Larry
of Malibu and I'm thinking if the big guys are falling, whoa. Yeah.
What about me?
Yeah. I mean, the big guys are taking it in the shorts and how does how does the little guys survive? You know, we're not I mean, we're not little. Sure. But we're certainly not an institutional company. Now, we've had institutional partners. uh and through all throughout the 90s we had institutional partners. Our capital wasn't coming from individual investors anymore because they weren't coming back without tax benefits. And so we had institutional partners and we had partners with partnerships with Payne Weber was a partner. Donaldson Lufkin Jenret was a partner. Warberg Pink Pinkis was a partner and we had pretty big allocations. We bought and we sold and we bought and we sold. We were in and we were out and it was a lot of fun. It wasn't my typical Mhm. buy and hold. I wish we had held but down the street 10,000 Santa
Monica Boulevard which I actually tied up when we were partners with Payne Weber and they elected not to do the deal. And if they elected not to do the deal then I was able to go out and do it myself. So I said I'll I'll just syndicate it. And I hadn't syndicated in a long time. very hard to raise the capital. But um that building was a building that I always wanted to buy. Uhhuh. My offices were at 10100 Santa Monica Boulevard in the
70s.
Wow. From 1977 to 1979, my office was at 10,100 Santa Monica Boulevard. And I was the youngest member of the Friars Club at the time, which was on Charlieville in Little Santa Monica. And every day for lunch, I would walk past this building at 10,000 Santa Monica Boulevard. And I'd always say,"I love this building. I love this property." And I knew the owner was Welton Beckett. Or maybe Welton Beckett was not the owner by then. I think he was. And cuz he was cuz I remember meeting him in his office and talking to him about the building. And so I was always enamored with the site. And when it came up for sale, I tried to buy it and it sold to someone else. And then when it came up for sale again, I tried to buy it.
It sold to someone else. And I knew both buyers each time. And then finally, I was able to buy the building. And Payton Weber was my partner. They didn't want to buy it. Syndicated it myself. It's very hard to raise the capital. weren't a lot of, you know, I didn't have those sources anymore. So, it was very, very hard. But at the end of the day, I never intended to keep that building. That building was tired. It was built, it was the first building built in Century City. Wow. First building. And Welton Beckett designed the first buildings in Century City. Century Park. Uh, uh, 1801 Avenue Stars and No, 1800 and 1900 Avenue Stars.
Yeah.
The two corner buildings.
Yeah.
In any event, one thing Welton Beckett always said was he had built the foundation to support a 20story building because it was really should have been a high-rise, but he didn't need that much space. So, he built the five-story building of 130,000 square feet with a massive parking structure above ground. And I always just liked the site, but I never liked it for what it was. And by the time I got under contract, it was very dilapidated. and the seller really didn't want to stay in the deal. And and while I was under contract, I brought Richard Meyer to the site, who was one of my favorite architects. And I said, "What do you think?" He says, "It's a great site." And we started designing a new office building. It would have doubled the square footage and it would have been a stunning office building.
But when I looked at the numbers, to tear down 140,000 feet to build 300,000 feet made no sense. I'd already gone down the road. I hired the architect, the engineer, everything, right? And I couldn't make money. I could only renovate that building. And the only space in that building that was any good was the fifth floor was a penthouse that Ron Burkel was a tenant. And it had an outdoor deck. and he used to do a lot of char charitable functions up there and political things and and he had a really nice base. But I had a tenant in that building that was called Prime Ticket and Prime Ticket sold half of its interest to 20th Century Fox and renamed itself Fox Sports. Then Fox Sports bought out the rest of it and incorporated into the
overall News Corp family. And as that firm was growing in that building, it's where it started in a small suite. By the time I'm under contract, they have like nine small suites throughout the building. They were just picking up space as they needed it. And it was so mismanaged. None of the spaces were signed. They had unsigned subleasases or unsigned additional leases.
It was a mess.
So, when I spoke to the people at Fox Sports, they said, "Look, we need uh we need we need 100,000 square ft. We're we're at 60,000. We need a hundred. So, we're moving." Well, Freeman Cosmetics had already moved out of the third floor, but their lease was the dollar a foot, and it had gone for probably had another 10 years to go. Burkel was on the top floor paying whatever he was paying. So they went and they rented a space on Bundy North of Olympic next to KTV. Well, KTTV was union and Fox Sports was non-union. And so the non-union, the union folks said to Fox, "If you think you're going to put your tenency in this building, you better have second thoughts.
That's not going to work."
Whoa. So to avoid that, they came back to me and said, "Well, we'll stay in the building. We just need that
100,000 square ft." So I met with them and I said, "All right, here's the deal. I'll buy out every single tenant in the building and whatever that cost is, I'll put that into your 10-year lease, amortize it, and you'll just pay me that number." And we made that deal. And the importance of that deal was that and this is the very early days of broadcast. Mhm. They needed to broadcast soccer in Latin America and they couldn't put this on the lot because the lot's union. So they needed an extra 15,000 square ft to build out this satellite thing. And they had to put these massive satellite dishes on the roof deck or on the parking deck.
Uhhuh. And it had to be done by like June of that year. Oh wow. And uh it got done. We got and I wrote a lease that ultimately was 6 million a year triple net.
Oh my gosh.
And when I bought the building, I don't think there was there was hardly any income. You had to renovate the building or or demolish it. My plan was to demolish it, buy the tenants out, and get rid of it. and build a new office building. But at 6 million a year, right, the building became worth what on a 10 cap. It's six 60 million. Yeah. Um I actually went under contract with a large institutional buyer at 55 million. I was only in 35 million all in. Whoa. 20 million up. Great deal. Yeah. Right. Yeah, sell. Yeah, no problem. I'm out. I'm going to make two and a half times my money in less than two years. And I went from being like the stupidest guy in the world,
I mean, one of my colleagues, very well-known colleague, called me and said, "How could you pay $300 a foot for this building when you could have bought Fox Plaza for 400 a foot?" It's another long story. I don't want to talk about that one right now. So I said, "Look, I don't know. I sometimes I just see things and do things and maybe I'm stupid. I don't know. What he doesn't know is that I'm about to sign this lease with Fox that's going to be and Fox does all the TI. I put no money up. They do everything. I do nothing as long as that thing is open in June." And it got opened in June and they were broadcasting and Rupert Murdoch invited me to his box at Staple Center Staples now as a thank you for having been able to make it happen.
Wow. And I'm like thank you. I just I just made another 20 some odd million dollars. And then but what what nobody understood was that I had a meeting with my land use lawyers at lewkins and Richard Meyer and I raised a question and the question was why can't I build a residential project here? I can't make money tearing this building down and building a new office building because the way the Century City development works, it's all about trips. And trips are calculated in a way having to do with traffic. Certain buildings have more allocations. They did a whole study and basically you accumulated enough trips to be able that's determining the height of
your building, the density of your building. It's all on the trip count and every single parcel had an allocation and conceptually you could buy trips from one property and transfer to another and it's kind of like New York. Yeah, it's very popular. It's a trip thing. I raised with the land use lawyer, great guy and uh Richard Meyer and his partner. I said um I've read the Century City North Pacific plan. There is absolutely no mention of residential and the reason is the north century city specific plan never anticipated residential. They residential was all south of constellation. So my land use lawyer said you know Larry if it's not excluded
it's included. I said are you sure? I said, "Yeah, I" So he set up a meeting with Councilman Weiss at the time, whose district, Century City, was part of his district. And he said, "You know, I just love this idea of this live, work, play, build a residential piece in North Century City that people can walk to work and they can walk to the shopping center." I love it. I support it. So, while all this sale business is going on to one of these large institutional buyers, because I want to make money, but I'm also planning a new building, I get ultimately I get approved to build the Richard Meyer project, fully designed, gorgeous project, 352 units, I think 37 stories if I'm not mistaken. I have the entitlement. I I'm sitting there with an entitlement.
Wow.
The sale process because it's like I'm not telling anybody what I'm doing over here. I have I have an entitlement. I hasn't perfected it yet, but I have it. I just have to do certain things to lock it in. The buyer comes to me a day before the uh contingency period and says, "Whoa, bad news."
What bad news?
Well, we x-rayed the x-rayed the steel in the parking structure. it really got damaged in the 94 quake. We're going to have to retrofit that entire structure. It's going to cost us at least $2.5 million. So, if you're willing to, you know, reduce the price by that amount, we'll go forward with the purchase.
What' you say?
Don't let the door hit you in the ass on the way out. Holy [bleep] They had no idea I'm sitting there with an entitlement.
Yeah.
And the long the long and the short of it is the building got torn down, the entitlements vested, and the land sold for $110.2
million. You sold the land for $110.2 million. Yes. Which is where the 10,000 is today. Correct. Holy [bleep] 35 to 110 in two
years. But the building existed. Yeah. And then it became dirt. And dirt became worth almost four times what the building was worth.
Oh my gosh. Was that the best deal you ever did?
Best single deal. Yeah.
A lot of drama. What was the time period? Do you remember how long it took from you getting under contract
to Probably six years. Six years. Six or seven years. You owned it though for a period. Yeah. Okay. Yeah. I know it took a while. Okay. Yeah. But I was getting 500,000 a month rent.
Got What's wrong with that?
Yeah.
No, nothing wrong with that.
Nothing wrong with that.
Triple net.
[bleep] That's crazy. But I'm just saying that's that's a just an example of the way these eyes look at deals. Yeah. You know, it's like what is it and what could it be? And if this doesn't work, will that work? And so far, knock on wood, it's
been successful. Incredible. Um, the last the last question I have cuz we could probably talk for hours and I we might have to do a round two, Larry. If you were in your 20s, young or new, new into syndication, whatever you want wanted to call it, you wanted to get into real estate investing, where would you be looking? What would you be focusing on? What would you be doing? What would you do if you were in your 20s trying to start over from scratch?
I would absolutely go back into, you know, manager investor program and I would do exactly what we're doing now, which is we're building portfolios for investors, but I would be buying every single good apartment building on the west side that I could get my hands
on and then package them up and then go and sell them
like No, but build a portfolio because only in a portfolio structure can the individual investor benefit. benefit from the losses. See, if you have 10 buildings, you raise 100 million, you have 10 buildings, they're all on the west side. Mhm. In the early years, they're all throwing off depreciation. So, you build up 10, 20, 30, $40 million worth of losses. Then you exit a building and you have a 10,000 10 $10 million gain, right? But you've got 40 million in accumulated losses.
You pay no tax. Got it. And this would be in a fund structure or individual syndicated deals.
It doesn't really matter whether it's an LLC or an LP, but it's a portfolio. See, here's the thing is that you could go to a wealth manager today and that wealth manager will build you a stock portfolio. That wealth manager will build you a bond portfolio. You're not going to get a real estate portfolio cuz it doesn't exist. There's not much out there for people to invest in. So, somebody's got to put the portfolios together and that's what we do. And we've been doing it for the last 10 years and and as we're doing it, we're getting better at it in terms of as balance of assets and structure. But I think ultimately for all the accredited investors in the United States that would love to own real estate but not have to manage it but know
that they own something. Mhm. Because you know whether it's a REIT or a fund uh you really don't know what you own. I mean I get my I'm in some funds myself and I get the reports but I don't know what they mean. I mean yeah they own stuff in Europe and they buy a hotel portfolio in Panama.
I don't know.
It's just crazy stuff. So, I think that uh that's that's what I would do if I was starting today. We're doing it now, but it it takes time to develop it and you know, we're still basically getting
there. Yeah, man. That is one hell. We could go forever. Larry, thank you very much for uh for coming on here. This was uh so much knowledge, so much experience. And I think when people start to unpack the the nuances of that, right, there's so many lessons in there.
So, thank you very much for sharing those. Well, listen, thank you for the opportunity. And I could talk forever and I do talk a lot and uh but I enjoy it.
This is the fun part.
Mhm. You know, the hard part is actually making it happen and going and doing it and dealing with all the daily stress. But uh uh like I said, if the big guys are losing money right now and you don't have a friendly government right now, the government is not doing anything to make real estate more attractive at the moment, even though the big beautiful bill had some benefits with bonus depreciation, but that bonus depreciation really worked for other other assets as well. So, uh our favorite real estate president no longer focused on real estate. So, uh
we'll see we'll see how it goes.
It's a It's a tough game.
It is. But thank you very much.