G4 Capital Partners parachuted into Los Angeles to found a beachhead for California residential lending.
The private investment firm opened its first office outside New York in L.A. The office will spearhead lending across the Golden State to fill a lending void left by banks, Bisnow reported.
“We see a real gap now between where borrowers need capital and where traditional lenders are willing to go,” Larry Grantham, the newly appointed senior managing director for G4 Capital in charge of the L.A. office, told the outlet.
He said banks are still pulling back, and that’s created a “meaningful opening for private lenders who have capital, the experience and the willingness to pick up the phone and walk through complexity with a borrower.”
To fill the void, G4 Capital wants to expand its investor pool and capitalize on the need for apartments across major cities. It also wants to be poised for an expected “pickup in transaction volume.”
To draw more investors, the firm is looking to institutional limited partners, pension funds and endowments, plus to growing registered investment advisers and family offices, Grantham said.
G4 Capital Partners, co-founded in 2005 by Louis Silverman, Robyn Sorid and Jason Behfarin in 2005, has completed more than $5.8 billion across nearly 300 in real estate deals. It’s been active in the New York residential market, lending $320 million in construction financing to build a 280,000 square foot condominium project in Manhattan and $320 million for a residential tower in Greenpoint.
G4’s expansion into California runs counter to contracting lending by some other large commercial real estate firms during growing complaints about the state’s political and tax climate.
Camden Property Trust, based in Houston, said in January that it would sell all 11 of its California multifamily assets and leave the state. Wood Partners, based in Atlanta, left in 2024.
But despite the very real structural complications to doing business in the state and city, California and L.A. still have advantages, Grantham said. “There’s a reason why, despite our challenges, capital keeps coming here,” he told the outlet.
Values have reset dramatically in general across greater Los Angeles, and at the same time, there are stacks of capital sitting on the sidelines. As in New York, G4 expects to focus on the residential market in L.A. and across the state
For many investors, that’s tough real estate. Regulations are constantly changing, especially around rental properties. But Grantham said the state’s lack of housing means opportunities for G4.
“We are grossly undersupplied in housing in California, and I don’t care which side of the political aisle you sit on,” Grantham told Bisnow. “It’s a fundamental issue we need to address, and we’re happy to play our part and finance those types of asset classes.
“We think the demand from sponsors to borrow our type of capital and from other capital lenders will remain robust over the next 10-plus years.”
— Dana Bartholomew