Real estate veteran Lawrence Taylor, who founded Christina Development Corp. more than 40 years ago, was fortunate to have several mentors during his career.
But perhaps none had as a big an impact on Taylor as former Los Angeles Lakers owner Jerry Buss.
A noted real estate investor in his own right, Buss told Taylor that if he invested in Westwood and Brentwood, he would never lose money.
“I took that to heart and never left the Westside,” said Taylor, 67, who founded Christina Development in 1977 and focused the company on commercial properties, including multifamily sites around West Los Angeles.
Malibu-based Christina Development doesn’t do big ground-up development projects. Rather, the company specializes in real estate investment for clients as a sponsor and a manager. The firm co-invests with those clients and receives a portion of the resulting profits.
“Christina’s story is not about the real estate,” Taylor said. “We are lifetime sponsors of real estate investments. We are lifetime protectors of people’s investments.”
Christina Development’s Chief Financial Officer Vincent Chan said the company succeeds by sticking to the basics. “We have a very simple strategy. It’s location driven. We’re geographically focused, not asset focused, as long as it’s in our borders,” he said.
In the Christina 4 fund, for instance, which is still open, the company is invested in six multi-family properties on the Westside. Investors invest in a fund, not in a specific property.
Peter Yorck, a managing director at Jones Lang LaSalle Inc., said that despite the Covid-19 pandemic, demand for multifamily assets on the Westside has remained strong.
“Overall capital formations, specifically equity, have increased every year over the last decade, so demand is very strong from a historical perspective,” he said in an email.
Yorck said the Westside has performed better than many other submarkets due to its amenities, proximity to the beach and tight supply.
An early start
Taylor was fascinated by real estate from a young age. He grew up with real estate legend Kenneth Leventhal’s nephew and was a fan of Samuel Freshman’s 1971 book “Principles of Real Estate Syndication.”
Taylor met Buss after founding Christina; he was introduced to the Lakers’ owner through the husband of one of his tenants. Taylor would later purchase properties from Buss, and the two men used the same broker for their deals.
Taylor said Buss told him he had to be confident that what he was buying would never lose investors’ money.
A key advantage for Christina Development, according to the company, is that it provides investors with the opportunity to own something physical, as opposed to virtual investments like stock.
“Real estate is tangible. People love to own,” Taylor said. “Particularly in times of distress when people seek tangibility, they seek gold, they seek art, and real estate is something tangible people always desire.”
By investing in a Christina Development fund, an investor goes into real estate without having to deal with brokers or having to seek out the right property on their own, a process which can take time and money.
Owning real estate through Christina, Taylor said, is desirable for many.
The company buys properties that investors have a stake in. It does not buy and manage properties for an individual.
“If you own real estate, and you own great real estate, you can only go up, you can only increase your wealth,” Taylor said.
He added that real estate owners can take advantage of tax breaks to “shelter your returns” and are afforded tax benefits that others are not.
“We’re very focused on taxes,” said CFO Chan, adding that the company was seeing returns in the double digits.
To date, Taylor said Christina Development has raised more than $100 million and purchased more than $250 million worth of real estate.
Last year, the company purchased six properties, sold one and refinanced one.
It requires a minimum investment of $250,000. The money is committed to a fund and paid when Christina is ready to invest in a new property.
“We only call for the money when we have a reason to use that money, which is usually to acquire something,” Taylor said.
He called picking the right investment properties “the secret sauce” that has made the company so successful.
Christina Development only acquires properties on the Westside because of the area’s high value.
“$10 billion can buy you an entire city in Oregon. It doesn’t even move the needle on the Westside of Los Angeles,” Taylor said.
To buy valuable properties, the company only purchases from people who need to sell for reasons like death, divorce or bankruptcy.
“Without that, there’s no reason anybody would ever sell good property. Good property only becomes available because of an event,” Taylor said.
When Christina Development purchases a property, it’s in it for the long haul. The company may decide to sell if a buyer offers more than what Taylor thinks the property is worth. In the meantime, Christina and its clients make money from tax benefits associated with owning real estate, operating cash from the property and the ability to add debt that can be deferred on taxes.
Expanded reach
Christina Development expanded its reach in 2012 following passage of the Jobs Act, which was signed into law by President Barack Obama.
The measure allowed companies like Christina to acquire funding online from investors and to advertise nationwide.
“It changes the entire landscape for how people may access real estate,” Taylor said.
Previously, investors found the company largely through referrals because companies could not market exempt offerings.
And there may be more changes in store for the company as it looks beyond the Los Angeles market.
“With the pandemic, we’ve refocused our strategy, and now we are focused on growing the firm nationwide with the same strategy,” Chan said. “Now we can take this real estate strategy we have been doing for the last several years and grow the business.”
Taylor said he didn’t see the need to grow geographically, “but based on the success we’re having with our capital side, and there just aren’t that many opportunities on the Westside, we are looking at other opportunities in prime cities and prime neighborhoods. But only if we can buy an existing entity with a 40- or 60-year track record like we do or be able to pair with them.”
Christina has not yet teamed with any other companies, and Taylor said the Westside will remain its primary area of focus.
Lately, the company has been purchasing assets in the area that are deemed seismically unsafe and retrofitting and, at times, replacing them with buildings that are earthquake safe.
Taylor said he sees a lot of redevelopment potential on that front.
And while he said Covid has had an impact “on anybody that owns investment real estate” especially due to anti-eviction regulations, he thinks the company will continue to do well.
Taylor also pointed out that Christina Development doesn’t invest in buildings that could be most impacted for the pandemic, like high-rise product.
Chan and Taylor agree it’s the new investors now seeking out the company that will aid its growth.
“We’re growing exponentially just on the strategy and structure we have in place to allow people who want to own quality real estate the … ability to own something tangible,” Taylor said.
He added that the company has many repeat clients as well as return investors. Chan added that, as a result of the new regulations, it is easier for investors to find them.
“The floodgates are opening as a result of changes that are there, and we see that continuing,” Taylor said.