Transfer tax dries up multifamily financing in LA 

Transfer tax dries up multifamily financing in LA 

By Isabella Farr

Developers say “the capital spigot has largely shut off”

Lenders have pulled back from making construction loans on ground-up multifamily projects in the city of Los Angeles since voters passed Measure ULA last fall to add weighty transfer taxes on commercial and residential sales over $4 million,

Developers told TRD that securing construction financing for market-rate projects in the city has become extremely difficult in light of a confluence of factors: high interest rates, borrowers kicking existing multifamily loan obligations down the road — but most of all, the uncertainty that has come with the new transfer tax.

“Investors are concerned and weary of investing in L.A., because of the increased regulations, taxes and red tape,” said Chris Tourtellotte, who oversees acquisitions and construction for LaTerra Development.

A number of institutional lenders have not handed out a single construction loan for a multifamily — or commercial — project in the city since the measure passed last November, according to a review of L.A. city property records. 

Barclays, Citibank, Goldman Sachs, Bank OZK and Madison Realty Capital are among those lenders. 

“There’s a much more shallow pool of lenders,” said Damian Gancman, the COO of multifamily developer Cityview. “When you don’t have that competition, you can’t drive to better terms.”

Some large insurance and pension firms are still in the  market making loans. 

Take, for example, one of the largest construction loans to close in the last three months. Related Companies scored $385 million in construction financing for a mixed-use project in Santa Monica. About $175 million of that sum came from the State Teachers Retirement System of Ohio. Almost all of the rest relied on tax-exempt bonds.

But “the capital spigot has largely shut off,” Tourtellotte said. 

Safe bet turns sour

In the past, construction loans for ground-up multifamily have been considered “pretty safe,” according to Artem Tepler, who co-runs development firm Schon Tepler. “But now everyone is disagreeing on what that future value is.” 

The transfer tax makes it difficult to estimate what a property’s value will look like over the next three, five or 10 years — typical hold periods for a multifamily developer and owner. And for construction loans specifically, lenders may not want to convert the loan into a traditional commercial loan when construction is finished, given the uncertainty around how much the asset will be able to sell for once it’s finished. 

“A quick turnaround and quick sale — that’s going to be very hard to hit certain returns,” said Cityview’s Gancman. 

Two developers interviewed by TRD gave a similar hypothetical situation. 

Suppose a developer proposes a 300-unit, market-rate project in the city of L.A. Construction is estimated to cost $100 million. 

After completion, the project is then sold for $150 million. The new transfer taxes don’t apply to the profit, but the sale price as a whole. For $150 million, the city would slap on a 5.5 percent tax, which comes out to $8.25 million. That wipes out 16.5 percent of the profit on the development.

“That’s a huge hit to your value,” said Gancman.

That hypothetical assumes the project can be sold for $150 million. Brokers and owners are anticipating that prices for multifamily buildings will start to dip, given rising interest rates, lower rental demand and the transfer tax.

“Market-rate multifamily lenders are extremely conservative right now,” said John Drachman at development and investment firm Waterford Property Company. “Rents flatten, cap rates move up — it’s extremely difficult to be an owner of market-rate multifamily in the city of L.A.”

Tides turning

Borrowers looking for construction loans are going to have to give up some of the sweeter, more attractive terms they could obtain when interest rates were low. 

Construction loans are almost always floating rate, meaning the interest rate on the loan changes depending on a certain rate index, such as the federal funds rate. 

Alex Valente at High Street Residential, a unit of CBRE’s Trammell Crow Company, said the firm  just has to work in a higher budget level to make up for rate increases. And it has to give up other concessions and terms. 

While interest rates were low, rents were rising and capital was pouring into projects, construction loans were often given at 65 or 70 percent loan-to-cost ratio — or 65 or 70 percent of what it would cost to build. 

Now, developers say lenders — the few who are still handing out construction loans — aren’t willing to provide more than 55 percent. So for firms that rely on highly leveraged deals, many construction loans aren’t going to pencil out for them, the developers said. 

At the end of November, High Street Residential scored construction financing from Comerica Bank for a 137-unit complex at 511 South Harbor Boulevard in San Pedro, located in the city of L.A. However, the loan was for 55 percent of the cost to build.

“A year ago, we probably could have gotten 60 or 62 percent,” Valente said. 

Others aren’t able to accept the new terms. Tepler was looking to build a $13 million project in the city of L.A. late last year. His firm was offered a loan for about 55 percent of the total construction cost, but he needed to come up with another $2 or $3 million if he were to agree to the loan.

“We’re shelving the project,” he said. “It’s hard to make it pencil if you’re putting in more equity.” 

Because of the tax, returns for equity investors are likely to be lower, given it takes away from profit, so these investors are often unwilling to put any more money in. 

When asked what developers can do to help their chances at scoring a loan, Tourtellotte said consider moving over checking accounts.

“Many lenders are requiring depositary relationships,” he said. “They want cash deposits, they want you to move over your company’s treasury business. If you’re open to that, it helps.”

Also, lenders favor existing relationships and those with a track record of building out profitable projects. 

Valente said Trammell Crow has had no real issue obtaining construction financing, though they’ve had to concede to better terms. 

Future (lack of) supply

Ultimately, no construction money means no construction.

With more lenders on the sidelines, the supply of new apartments will be impacted — at a time when the city of L.A. and the state of California at large suffers from a housing shortage and affordability crisis. 

About 11,500 new housing units were set to be delivered in the city of L.A. last year, according to RentCafé. That’s about 1 percent of the city’s total housing stock. 

Compare that to Phoenix, a Sun Belt city that saw double-digit rent growth for almost a year. Nearly 13,000 units were delivered last year in Phoenix, according to brokerage Northmarq. Phoenix had a population of 1.63 million in 2021 — about 40 percent the size of the city of L.A. 

And that was before the transfer tax and before construction lenders were pulling back. 

“It’s going to limit supply and increase rents and increase the value of our portfolio,” said Tepler of the tax’s consequences. “It’s good for long-term holders.”

Gancman agreed: “Maybe it makes more sense to be a long-term holder,” he said. “Maybe that will become part of the pitch in L.A.”

Some, including Tepler, are becoming a trope of the California exodus.

“We’re looking at Texas,” he said. “These taxes make it infeasible.”

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Sarah Hunt

Senior Associate, Business Development & Capital Relations

Ms. Hunt joined Cityview in 2021 and is a Senior Associate on the Business Development & Capital Relations team.  She is primarily responsible for relationship management, investor communications, and marketing collateral.  Additionally, she works closely with internal functional teams on due diligence efforts and supports investor reporting and special projects.  She is also a member of Cityview’s Sustainability Committee focused on communication of ESG initiatives to investors.

Ms. Hunt has over six years of real estate investment, capital formation, and investor relations experience.  Prior to joining Cityview, she was an Associate with Chicago-based Magnolia Capital.  During her tenure, she worked on equity capital raises for numerous real estate investment vehicles.  Prior to Magnolia, Ms. Hunt was a Financial Analyst with LaSalle Investment Management where she oversaw the financial performance of assets with over $1 billion in value.

Ms. Hunt received her Bachelor of Business Administration degree in Finance, Investment, and Banking from the University of Wisconsin-Madison.

Ramtin Esfandiari

Director, Acquisitions

Ramtin Esfandiari joined Cityview in 2018 and is responsible for managing acquisitions, including sourcing, underwriting and closing multifamily development deals. Prior to joining Cityview, Ramtin was on the Acquisitions team at The Bascom Group where he underwrote over $9 billion in multifamily acquisitions across the U.S. and supported all aspects of the acquisition process. Ramtin holds a Bachelor’s Degree in Business Economics from the University of California, Irvine, and is an active member of Urban Land Institute.

Jonathan Anderson


Jonathan Anderson is the Controller of Cityview and provides leadership and oversight over the finance, accounting, and shared services departments.  Prior to joining the Cityview team, Jonathan worked at CIM Group where he held several finance and accounting roles during his tenure, most recently as head of private fund reporting and prior to that as director of SEC reporting for one of CIM Group’s publicly traded REITs.  Jonathan began his career in Ernst & Young’s assurance practice where he served both public and private clients in the real estate and asset management industries.  Jonathan graduated from the University of Southern California with both a bachelor’s degree in accounting and a bachelor’s degree in business administration with an emphasis in real estate finance.

Tina O’ Brien

HR Director

Tina O’Brien, HR Director, is a senior national and state-certified HR Professional (SPHR, SHRM-SCP, PHRca), managing the HR team overseeing all aspects of Human Resources for both Cityview and its affiliate, Westhome. Her experience spans the spectrum of the HR field, including recruitment, employee relations, performance management, benefits, compliance and employee development. She joined Cityview in summer 2021 from a telecom technology firm in Van Nuys, and previously worked for a private real estate investment and property management company in Beverly Hills. Tina is an LA native and she’s committed to helping grow our vibrant, healthy corporate culture here at Cityview.

Noah Watts-Russell

Director Asset Management
Noah Watts-Russell is Director, Asset Management of Cityview. As Director of Asset Management, he oversees Cityview’s value-add portfolio and is responsible for establishing and driving the portfolio business plans to maximize performance and value. Prior to joining Cityview, Noah was an Associate in the Real Estate division at The Blackstone Group where he oversaw over $15bn in multifamily real estate (>70,000 units, covering market rate, affordable and rent-controlled) and worked on over $2bn in total sales and $1bn in refinancing. Prior to Blackstone, Noah managed the FP&A team at LivCor, Blackstone’s multifamily asset management company. Noah holds a Bachelor’s degree in Finance and Economics from Washington University in St. Louis.

Denise Katz

Director Asset Management

Denise Katz manages Cityview’s core and development assets across multiple investment vehicles and is responsible for maximizing the operational and financial performance of the assets.  Denise has over twelve years of experience in real estate. Prior to joining Cityview, Denise was Regional Vice President at CIM Group of a $2.4 billion portfolio in the Western US and Latin American markets. During her time at CIM, she managed end-to-end transitions of development projects, acquisitions, and dispositions of office, multifamily, retail, parking, condominium, and mixed-use projects. She holds a double major Bachelor of Arts degree in International Studies and Psychology from Wilkes University in Wilkes-Barre, PA.

Steve Roberts

Director, Development and Construction
Steve Roberts is responsible for the development of several of Cityview’s ground-up multi-family assets, including due diligence, design, entitlement, permitting, construction, and market delivery. Prior to joining Cityview, Steve managed several nationally award-winning projects as Vice President of Development for Community Dynamics, a Santa Monica based developer of residential and mixed-use communities. Steve has built his career on creating exceptional communities that deliver high-quality housing to residents, first-rate design for neighbors and municipalities, as well as strong financial returns to investors. Steve holds a BA in Urban Studies and Planning from UCSD and earned an MBA and Master of Real Estate Development from the University of Southern California.

Anh Le

Director, Development

After 8 years in the construction industry managed complex multi-use development projects, Anh Le joined Cityview in 2018 as Director of Development. Le manages ground-up developments in Northern and Southern California and leads consultant teams through entitlement, design, permitting, budgeting, contracting, construction management and project turnover. She works closely with designers, neighborhood groups and Cityview’s in-house Asset Management team to deliver best-in-class multifamily projects. Prior to Cityview, Le worked as a project engineer and project manager at Cobalt Construction. Le holds a Bachelor’s of Science in Civil Engineering from the University of California, Irvine.

Kyle Naye

Senior Director, Acquisitions

Kyle Naye is Senior Director, Acquisitions of Cityview.  As Senior Director of Acquisitions, he is responsible for managing acquisitions, including sourcing, underwriting, closing and developing comprehensive business plans for investors.  Naye primarily focuses on non-California markets across the Western U.S., including Seattle, Portland, Denver, Phoenix, Salt Lake City, Dallas, and Austin.  In his role, Naye works closely with the Cityview team to manage and expand strategic acquisitions across the firm’s vertically integrated platform.

Prior to joining Cityview, Naye was a vice president of originations at PGIM Real Estate, where he provided transactions and underwriting oversight for core-plus and high-yield debt vehicles. He also held a prior role at PGIM managing the underwriting, investment committee preparation and closing of $992 million in multifamily, retail and office assets across the Bay Area and Pacific Northwest. At earlier stages of his career, Naye was a senior associate of acquisitions at Clarion Partners, senior real estate analyst at Northmarq and an officer in the United States Navy.

Zory Grigoryan

Director, Development

As Director of Development, Zory Grigoryan is responsible for the full cycle development of several of Cityview’s projects, which includes managing the due diligence, underwriting, entitlement, design engineering, construction processes and turnover to asset management. Prior to joining Cityview, Grigoryan worked for Oakmont Capital as a Project Manager overseeing the development and construction of several multifamily projects. Prior to that, he worked at Cobalt Construction as a Project Manager on the construction of numerous mixed use and multifamily projects. During his career, Grigoryan has been responsible for the development, preconstruction and construction of over 1,500 units.

Grigoryan holds a Bachelor’s of Science Degree in Construction Management from the California State University of Northridge, where he was the top ranked graduate of his year. During his time at Cobalt Construction, Grigoryan was also selected as distinguished alumni by the CSUN department faculty and appointed as ambassador for alumni recruitment by CSUN construction management department’s board of governors committee.

Chris Brown

Director, Capital Relations

Chris Brown is responsible for capital raising and investor relations at Cityview. Chris has over seven years of real estate investment and capital raising experience. Prior to joining Cityview, he was a member of the Fund Advisory team at JLL working on equity capital raises for private real estate investment vehicles. Prior to JLL, Chris worked on the Portfolio Management team at Clarion Partners and the Asset Management team at LaSalle Investment Management. Chris graduated from Florida State University with a Bachelor’s Degrees in Finance and Real Estate. He is a general securities representative.

Dana Gomez-Gayne

Vice President and Associate General Counsel

Dana Gomez-Gayne manages the legal aspects of all project-related matters, including acquisition, development, management and disposition, and advises Cityview on corporate formation and maintenance, insurance, risk management and other legal matters. She was previously an Associate at O’Melveny & Myers LLP and Manatt, Phelps & Phillips, LLP where she represented a variety of clients in real estate, project development and finance transactions. Gomez-Gayne also has a background in fundraising development and worked at Teach For America raising philanthropic funds from regional and national corporations and foundations. She is a graduate of Pomona College and Pepperdine University School of Law.

Chase Ballard

Vice President, Construction Management
Chase Ballard is Vice President of Construction Management at Cityview. He is responsible for overseeing the Construction Management team and their daily operations. Chase and his team are involved in every stage of our value add renovation opportunities, from pre-acquisition through project completion, executing projects that include interior renovations, common area improvements and deferred maintenance. Prior to joining Cityview, Chase was a Director of Capital Projects with Greystar Real Estate Partners.​

Rob Lester

Managing Director, Business Development & Capital Relations
Rob Lester is responsible for business development and capital formation efforts for the Firm’s investment platforms, developing strategic growth initiatives, and creating long-term relationships with investors and partners. He has nearly 25 years of investment banking and private capital formation experience. Prior to joining Cityview, he was Managing Director with Macquarie Capital, and a Managing Principal with Blackstone. ​

Con Howe

Managing Director

Con Howe leads Cityview’s partnerships to finance, assemble and entitle land for development in the greater Los Angeles area. With over 40 years of experience in planning, entitlements and development, he assists all Cityview funds with acquisitions and development strategies. Prior to coming to Cityview he was the Director of Planning for the City of Los Angeles responsible for the Adaptive Reuse Ordinance and zoning to encourage infill housing. Previously he was the Executive Director of the New York City Planning Department.

Shane Robinson


Shane Robinson is responsible for managing all aspects of Cityview’s stabilized, value add and new development assets. With more than 22 years of experience managing multifamily assets, he is a seasoned real estate professional experienced in a range of investment strategies that drive growth and efficiency for investors.

Prior to this role, Shane held pivotal positions at various organizations in the real estate industry. As Vice President of Property Management at Westhome, Robinson played a vital role in implementing the operational infrastructure that facilitated market expansion.

During his tenure at Sunrise Management, his leadership established and solidified the company’s operational foothold in new markets, contributing to the growth and success of the firm. His early asset management career was at GHP Management, where he specialized in lease-ups and effectively managed a substantial core portfolio of over 5,000 units.

Melissa B. Delgado

VP, Asset Management
Melissa Delgado is responsible for overseeing Cityview’s asset management and portfolio operations. Prior to joining Cityview, Melissa was a Senior Director at TruAmerica Multifamily LLC where she was responsible for achieving the investment objectives of an $800 million portfolio. Earlier in her career, Melissa was an asset manager for Kennedy Wilson’s Southern California portfolio. Prior to that, she was a Vice President and Head of Marketing at Kepler Capital Markets, an investment bank in New York. ​

Devang Shah

Managing Director, Acquisitions

Devang Shah is co-head of Cityview’s acquisitions activities on the West Coast. He has 25 years of experience in real estate investment, development, design, construction and asset management. Previously, Devang was the principal of Marketcents Inc., an independent project management firm, serving as an owner’s representative to investment firms, builders and developers. Prior to that, he worked was Vice-President at RCLCo, LLC, a national independent real estate consulting firm. ​

Adam Perry

Senior Vice President, Development and Construction
Adam Perry oversees all aspects of the commercial real estate development process from acquisition due diligence and entitlement processing through design budgeting, contracting, construction management, closeout and turnover. Prior to joining Cityview, Adam worked at CIM group as an Associate Vice President of Development overseeing ground up retail, office and mixed-use developments. ​ Adam holds a BA Degree in Political Science and History from UCLA and an MBA from the UCLA Anderson School of Management.

Matthew Falley

General Counsel & Chief Compliance Officer
Matt Falley oversees and directs the company’s legal affairs and is the firm’s Chief Compliance Officer. Matt was previously a partner at Greenberg Glusker Fields Claman & Machtinger LLP, where he represented numerous clients in the real estate industry, including Cityview. Matt holds a B.A. from the University of California, Santa Barbara and a JD from the University of California, Berkeley School of Law (Boalt Hall), where he was a member of “California Law Review” and Order of the Coif.​

Tony Cardoza

Managing Director, Acquisitions
Tony Cardoza is responsible for Cityview’s acquisition activities throughout the West Coast. He has 21 years of experience in real estate investment and management. Previously, Tony ran the investment group for Real Estate Capital Partners in the Western U.S., which developed and acquired over 5,000 multifamily units. Prior to that, he worked for Prometheus Real Estate Group in a land and multifamily acquisitions role on the West Coast. Tony holds a B.A. in Economics from Middlebury College and an MBA from the Haas School of Business at UC Berkeley.​

Jennifer Halvas

Managing Director, Investor Relations
Jennifer Halvas leads the firm’s investor relations team, where she is responsible for maintaining relationships with the investor community, bolstering infrastructure for new and existing investors and helping to develop investment strategies and initiatives. She has been instrumental in securing capital needs for several Cityview funds across a broad base of institutional investors, insurance companies, foundations and endowments, family offices and high-net-worth investors. A 12-year veteran of Cityview, she uses her deep institutional knowledge to create value for investors and the communities in which Cityview works.
She was previously at O’Melveny & Myers LLP, where she represented a variety of clients in real estate, project development and finance transactions. Jennifer holds a B.A. with honors from the University of Southern California and a JD from Vanderbilt Law School.

Damian Gancman

Chief Operating Officer and Chief Financial Officer

Damian Gancman oversees the operations of Cityview and its investments while supporting the strategic growth of its finance, acquisition, asset management and property management functions. An 18-year veteran of the firm, Damian is also a partner at Cityview and a member of its investment committee. As CFO, he helped build out Cityview’s best-in-class finance department, including the implementation of strategic process, accounting, reporting and technology improvements that enhance the investor experience.

In addition to his role at Cityview, Damian is a guest lecturer for the University of Southern California’s Master of Real Estate Development program and is a key contributor to the Cityview Leadership Academy. Damian earned a master’s degree in real estate development from the University of Southern California and a dual bachelor’s degree in business administration and psychology from the University of California, Berkeley.

Sean Burton

Chief Executive Officer
Sean Burton has been with Cityview since 2003. Prior to joining Cityview, Sean was vice president of corporate business development and strategy at Warner Bros. Before that, he was an attorney in the real estate and corporate groups at O’Melveny & Myers, LLP and also served in the White House during the Clinton Administration. From 2013 to 2021, Sean served as President of the Board of Airport Commissioners which oversees the LAX and Van Nuys airports. Sean holds a B.A. from the University of California, Irvine and a JD from New York University School of Law.