Any Family Offices investing in Multi Development? LA
So ive talked to about 7 family offices and none are investing in developments are you investing in new projects? Message me if you are. This project is in the LA area.
[{"id": "j2dl5eg", "text": "While you are waiting for an answer..off topic question for you. How is the new 4% transfer tax on properties over $5m in LA affecting your underwriting and exit?", "replies": [{"id": "j2ee9rg", "text": "Im assuming thats part of the reason offices arnt interested in LA at the moment but this particular project is to refi once stabilized then hold 10+ years", "replies": [{"id": "j2eg93h", "text": "We have heard on our side(as-built syndication) that many family offices were pencils down through Q1 '23 due to rate volatility...so I assume this adds another wrinkle to the local LA market. \n\nWe avoid CA multi because of rent control but have held out the possibility of acquiring Flex, Med Office, or Industrial if deals come up. Not now, though. We will avoid LA like the plague in all asset classes at our scale, considering going in with a potential 6-7% exit cost, including brokerage.\n\nMy take is if family offices are out of the picture near term, that opens some opportunity for retail syndications and structured capital to get into good deals. That may be an avenue if you haven't considered it.\n\nGood luck with your project, and happy new year!", "replies": [], "depth": 3}], "depth": 2}, {"id": "j2f6144", "text": "Add 4% to selling costs in the reversion value and then discount it back at ~6% to present day.  Its not a huge impact on today's value.  If the 4% transfer tax in Year 11 is enough that the deal doesn't pencil, the other macro factors like increases in costs, increases in interest rates, and a possible recession would have likely killed the deal before that.", "replies": [], "depth": 2}], "depth": 1}]