Los Angeles workforce housing specialist tracks lender pivot toward minority communities

The Los Angeles-based company was formed last year by Malcolm Johnson, a veteran lender who spent the past 16 years at JPMorgan Chase and Bank of America, focuses on developing commercial buildings for corporate tenants and acquiring, renovating and operating affordable and workforce housing communities in primarily urban Black and Latino neighborhoods, chief executive Malcolm Johnson tells Real Estate Capital USA.

“If you’re a lender and thinking about the safest space to be in what is ultimately a very cyclical space, would you rather be lending on luxury multifamily properties in cities where renters have a lot of options, or would you rather lend on a type of essential housing?” Johnson asks.

“The person who gave you a covid-19 test last week, or your kid’s third grade teacher are renters by necessity, and also are literally the backbone of the US economy. It’s a safe place to think about when you’re allocating capital as a lender or investor.”

The firm invests via a series of funds and programmatic joint ventures, and has received strategic investments from Los Angeles-based real estate investment manager Kennedy Wilson and Greenwich, Connecticut-based investor Eldridge.

“What we do from a business standpoint mirrors what other value-added real estate owners and operators are doing. But there is one other big difference: we don’t just think about values and where they are going, but what happens to a multifamily building we have been charged with renovating. Can we improve the quality of the lives of our residents through what we do at the property?”

ESG drivers

There is a greater awareness of ESG principles from lenders and institutional investors. Johnson explains that more pension funds are looking at ways to support broader economic growth.

“Investors and lenders are thinking about ways to support broader economic growth, and this especially matters in cities where so much of the workforce is Black and Latino,” Johnson says.

“I do think there needs to be a concerted effort among the capital markets to say, ‘We have to invest in strengthening these local economies because otherwise none of our economic engine will work properly.’”

As a former lender, Johnson has been able to apply this knowledge to his negotiations with lenders as well as to building his own firm’s balance sheet.

“I lived through the global financial crisis at my first employer, and one of the reasons banks like Bank of America and JPMorgan were able to withstand the pressures was from building a fortress balance sheet and thinking about long-term value,” Johnson says. “That is now we are building Langdon Park Capital in a way that allows us to withstand cycles and make investments in Black and Latino communities that sit within the path of growth. That is how we approached decisions to allocate capital when I was a banker and that is how we are approaching it at Langdon Park.”