Developer, Leasing Exec to Team on Projects Totaling $1 Billion
Longtime Los Angeles developer Jerry Snyder and Louis Gonda, a founder of jet aircraft leasing leader International Lease Finance Corp., have struck a deal in which Gonda will be Snyder’s financial partner in real estate projects totaling $1 billion over the next four years.
Gonda will invest in Snyder projects through Lexington Commercial Holdings, a real estate investment firm Gonda founded, according to an announcement by the two.
“I’ve been looking for one partner instead of having to look for a different one on every project, and Lou Gonda was looking for someone who has the kind of real estate organization we have,” said Snyder, who has a number of projects in development with other joint-venture partners.
According to a 1998 Times report, Gonda was ranked No. 217 on the Forbes 400 list of richest Americans, with an estimated worth of $800 million. Lexington Commercial Holdings, based in Beverly Hills, owns a portfolio of commercial real estate in California that includes a principal ownership interest in StorAmerica, which owns 22 self-storage facilities in California, Nevada and Arizona.
Snyder said that under the new agreement, his company and Lexington Commercial become joint-venture partners on five Snyder projects now in the works, plus a proposed Lexington project in Beverly Hills. The six projects are valued at about $400 million, said Snyder, who said the two firms hope to develop an additional $600 million worth of projects over the next four years if demand for new space continues.
Snyder and Lexington will be equal financial partners in all the developments, with the two companies providing the equity portion of the financing and seeking lenders for construction and permanent financing, Snyder said.
“Whether any other investors would be allowed to come into the deals would be up to Lexington,” Snyder said.
The two companies’ future projects probably will be shopping centers and office buildings in urban infill projects such as Valley Plaza in North Hollywood, one of the five Snyder projects in which Lexington is investing, Snyder said. Valley Plaza is a proposed shopping and entertainment center on a 47-acre site bounded by Archwood Street on the north, the Hollywood Freeway on the west and south and Laurel Canyon Boulevard on the east.
There has been “a little bit of contraction in the capital markets” lately, said Gary Toeller, vice president of development for the Los Angeles region of Phoenix-based developer Opus West. “But developers who require third-party capital partners are probably finding it more difficult to get financing, especially on spec projects.”
Toeller said such third-party capital is getting a bit harder to find because the combination of rising property prices in Southern California and the Federal Reserve’s half-point interest hike in May mean that investors today will probably realize lower returns on real estate investments than they would have a few years ago.
