The Closing: Sean Burton

Sean Burton doesn’t fit in a neat box. 

He runs Los Angeles’ largest multifamily developer, Cityview, and believes in the flow of private money. He also worked for the Bill Clinton administration, is close to Los Angeles Mayor Karen Bass and is campaigning for the Democrats this election cycle. 

“I’m a moderate, and there’s like five of us left,” Burton said.

After stints at the Democratic National Committee, an international law firm and Warner Bros., Burton started Cityview in the early 2000s with the goal of building housing in infill areas. 

Instead of targeting suburban California, he wanted to develop apartments and condos in inner cities, including Los Angeles. This bucked the trend at a time when most homebuilders were finding land off highways for subdivisions of identical homes. 

“When you have a complicated, 2.2-acre rectangular site, and you have to deal with all these environmental issues, complaining neighbors, it’s just much harder,” Burton said. “People didn’t do it.”

The firm has now built 130 projects. 

These days, Burton sticks to his public service roots, trying to work with the mayor to encourage development of new housing. 

But he doesn’t forget about the flow of money. He is clear that Measure ULA, which adds a tax of 4 percent on sales over $5 million and 5.5 percent on sales over $10 million, hasn’t helped meet housing goals. 

“We’re doing one project now in L.A. when we used to be doing 10,” he said. “We can’t make the numbers work in L.A.”

TRD sat down with Burton at Cityview’s headquarters in Century City to talk about L.A.’s challenging regulatory environment, how the city needs more housing of all types and why he had been supporting President Biden in the upcoming presidential election.

This conversation has been condensed and edited for clarity.

Born: June 8, 1971
Hometown: Los Angeles, California
Lives: Los Angeles, California
Family: Wide, 2 Children

You started your career in politics, not real estate, working for Bill Clinton.

When I went to college, at the University of California, Irvine, I didn’t know what I wanted to do. I majored in social ecology. I ended up hearing Bill Clinton speak in Orange County when he was running for president. He was talking about how to bring America into the next generation, how the responsibility of the government was to level the playing field. I ended up working on the campaign in Orange County. That led to being hired into the White House. 

You were really focused on government.

At the DNC, I realized the kind of people who were really moving the needle were not necessarily career government people but people who had worked in business or law. I went to New York University [for law school], then wanted to work for a big law firm. I ended up picking O’Melveny & Myers. Warren Christopher, who had been secretary of state for Clinton, was a partner there. He built this incredible law practice, and at the same time he served a number of presidents and governors. I thought, “What a great model.”

What sort of law did you practice?

I started my career in San Francisco with the real estate team. What I liked about real estate was that you had to understand the business deal or you couldn’t draft the documents. You also had to understand the community, the politics and the city. I moved to L.A., where I did securities law. We did this big deal with Warner Bros. At the end of that, they asked me if I wanted to work there. A lot of the most interesting decisions are made before [the lawyer] gets in the room. I wanted to be involved earlier on. So I went over to Warner Bros. 

You’ve had three careers at this point, and we haven’t even gotten to your real estate work. You were one of the co-founders of Cityview. What was the strategy there?

We thought there was going to be a generation of people who needed housing and didn’t want to live in the suburbs. At the time, you built off the next freeway off-ramp. You’d run water, utilities, put up billboards and then everybody would move there and just commute to their job. There had to be people who wanted to live closer to their jobs, restaurants, nightlife and culture. What if we created a firm that invested money in building that kind of housing? We were an early mover in that. 

Where did you get money from?

We started raising public pension fund capital. We told them we were building housing, but not ultra-luxury high-rise and not something government-subsidized, either. We said: “What about if we take your pension money, and instead of you investing on Wall Street, what if we could get the same return, but we can actually build housing that teachers and nurses and firefighters and police officers need?” 

What was Cityview’s first project?

It was a 149-unit, for-sale project in Santa Maria, California. We couldn’t make the numbers work in L.A. with the first couple because everything was too expensive. Our second deal was in Inglewood. We built a bunch of homes near where SoFi Stadium is now.

What challenges have stayed the same since you started?

The uncertainty of regulation. It’s harder in places like L.A. and California than it is in other jurisdictions. Land is expensive; that hasn’t gotten any cheaper. Construction costs have continued to rise significantly. Your input costs are constantly rising. 

You’ve done a lot of work with Mayor Karen Bass. What do you think the city could be doing more of, or more often?

I’m a big fan of the mayor. She’s a doer. I think the biggest issue is the creation of more housing. If you look at surveys of why businesses leave, it’s really not higher taxes or regulation. It’s because their workers can’t afford to live here. We’re working a lot with her on figuring out how to dramatically increase housing production in the right way at the right income levels.

Another thing we talk about is — how do you change the brand of L.A. with businesses? A lot of businesses feel that L.A. is hostile to business. But she wants businesses here. 

A lot of people tell me, “It’s hard to see the city as pro-business when Measure ULA exists.”

I think the City Council needs to get the message that a lot of their policies are really hostile to business and housing development. I think the mayor understands it. I do think many council members are hostile to business. 

ULA is devastating. I think voters were misled in the ULA camp. People were told it was a mansion tax, that “Millionaires and billionaires in the Palisades and Brentwood need to pay their fair share.” It’s not a tax on profits. It’s a tax on the actual real estate. It’s a disincentive to build more and develop. It’s actually going to make your rent go up, because people aren’t building new housing. 

Most people don’t remember this — the mayor opposed ULA during the election.

Since the mayor was elected, she has signed a number of executive directives to push for affordable housing development and streamline permitting processes. Is this a step in the right direction?

She knows this has to be a major priority. But part of what we’ve been discussing is that you have to build market-rate housing. People think we just have to bring government-subsidized affordable housing, which is really important. But it costs $750,000 per unit. If you just delivered affordable housing, the city would need like $40 billion a year. The entire city budget is $10 to $11 billion. You can’t solve this with money from the government. 

Many L.A. developers tell me that only luxury projects pencil out financially.

It’s hard. If you’re gonna build 100 percent affordable housing for people that make $70,000 a year — you can’t build that housing without government subsidies. The numbers don’t work between labor costs and land costs, and then all the regulations.

Obviously, it’s tough for anyone to get financing right now. What has it been like for Cityview?

We’ve been blessed that we’ve been able to finance our projects. We’re closing on a value-add deal in Northern California, our first deal in two years that we’ve closed up there. We had a bunch of different lenders. We just did a recapitalization of six assets in L.A., refinancing at better rates. 

We’re not really starting any new developments today. Those would be more difficult to finance. We have a bunch of land under control that we’re entitling in California and Colorado, to start 12 months from now. 

Do you see this as an opportunistic time to start planning?

The next two years might very well be the best real estate advantage for buyers that we’ve seen. Last year, we  underwrote 183 deals. We closed on three. This year, we’re seeing more opportunities. We like this land option strategy. If we can control great land in a great location, add value through the entitlement process, then actually start construction, once the markets turn we’re not gonna have much competition.

Are you buying distress?

Every deal that we are buying or optioning is distressed in some way. The seller needs to sell, usually driven by a lender event where they have debt maturing and can’t refinance. We bought so few things last year, because there was some distress but the banks weren’t really cracking down. They’re cracking down now, and it’s creating opportunity. You’re seeing things start to break free that you couldn’t see before. 

A non-work-related question: Tell me about your family.

I just had my 26-year wedding anniversary. I met my wife at NYU. We were assigned to argue against each other in moot court, and the rest is history. My son went to NYU for undergrad and played baseball there. He’s working in real estate, at 3650 REIT. He’s actually working on closing his first deal next week. 

Did you know that he wanted to go into real estate?

I had no idea. He came home one day and said, “I’ve decided I’m going to NYU, I’m gonna major in real estate.” I told him he had a choice. And he was like, “Dad, do you know how many Saturdays and Sundays we’d be on our way to something, and you’d say — ‘I just have to stop for 10 minutes at our site,’ or ‘I just have to look at this,’ or ‘Hey, let’s look at this apartment.’ It’s in my blood.”  

My daughter is the underachiever in the family. She is a junior at Yale, majoring in physics. 

What do you do when you’re not thinking about real estate?

We love to hike and bike, and I like to fly-fish. Any time I can get to the mountains — Utah or Colorado — I do. I always have two or three books I’m reading at one time. I always like to have a really good fiction book and a good nonfiction book, and something about real estate. 

What are you reading about real estate right now?

I just read Steve Schwarzman’s autobiography — Blackstone’s CEO. We’ve done 30 deals with them. 

How did you first connect with Blackstone?

We had a separate account with a pension system. When the great financial crisis hit, they made the decision to move away from housing. We thought there was a lot of value in these assets to them. We ended up recapitalizing with Blackstone [and buying the investor out]. It was really complicated — 29 assets across 12 states in various stages and in the depths of the GFC. Most capital was not interested in anything. But Blackstone said they saw an opportunity and believed in the markets. We ended up building them all out. So I wanted to read [Schwarzman’s] biography. I may not always agree with him on politics, but wonderful businessman. 

Does that happen a lot? I’m sure there are lots of people in the business world that you clash with.

[Laughs] I complained to my wife about this. I feel like I don’t fit in anywhere. When I’m with my friends in L.A. who are involved in politics, they think I’m like a right-wing Republican, because I believe in things like private property and real estate, and I don’t think rent control is a good idea. Then when I’m with people in real estate, they all think I’m a left-wing Communist, because I was the Biden supporter. 

I work on both sides, I talk to my friends on the left, try to give them a business perspective and explain the private sector. Then I try to explain to the people in real estate that Joe Biden isn’t evil.