Los Angeles Business Journal • February 24, 2014 • Special ReportWho’s Who inBanking & Finance

OWARD Levkowitzdoesn’t offer savings accounts. SaifMansour won’t cash checks. JeriHarman can’t do a home mortgage. Afterall, they’re not bankers.

But if your business needs a loan – tobuy property, to expand, to go after newmarkets – the nonbankers profiled in thissection might offer quicker access to cashthan commercial bankers could.

And it’s not just a matter of speed.These nonbank lenders do lots of thingsbanks can’t. Some take part ownership ofa borrower – that’s something banksaren’t allowed to do. And because theydon’t take deposits, the alternative lenderscan make riskier loans and charge higherinterest. And they don’t have to pleasebank examiners, so they can take collater-al some banks wouldn’t accept.

Roberto Barragan makes tiny loansto restaurants and other small businesses,often as they’re just starting up and haveno track record. Ray Boone helps techstartups bridge the gap between venturecapital backing and self-sufficiency.Mark Zytko and Jeff Friedman lendagainst what a property could be worth,not what it’s worth today.

These and other nonbank lenders sawmore business during and after the reces-sion as banks turned off the money spigot.But even as banks loosen up, Levkowitzand others see plenty of opportunitiesahead.

“It will be quite some time beforebanks get into the business of the types ofloans we do,” he said.

– James Rufus Koren

The Un-BankersH

PROFILES:

ROBERTO BARRAGANRAY BOONEW. SCOTT DOBBINSJEFF FRIEDMANMARSHALL S. GELLERJERI J. HARMANHOWARD LEVKOWITZSAIF MANSOURMARK ZYTKO

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TEN years ago, when Jeff Friedmanand Mark Zytko were trying to securetheir first deal, they had a nearly empty

office, one employee and no track record.Zytko remembers a prospective borrower

sending a questionnaire that asked for all kindsof figures, including the number of loans hisfirm, real estate lender Mesa West Capital inWestwood, had closed in the past three years.

“After filling out the questionnaire and reply-ing ‘zero’ and ‘none’ to almost every question, Icalled the borrower and gave them my word thatwe would get their deal done smoothly forthem,” Zytko said. “We did.”

The firm was new, but Zytko and Friedmanhad been around the L.A. finance and realestate scenes for a while. They worked togeth-er at Credit Suisse First Boston, andFriedman later worked for L.A.’s MaguireProperties until it went public in 2003.

The following year, they co-founded MesaWest to make the kind of property loans thatweren’t available – ones that might not be agood fit in a pool of commercial mortgagebonds, for instance.

“If your property had high cash flow but waslower quality, it would still work in a commercialmortgage-backed security,” Zytko said. “But ahigher-quality property with lower cash flowwouldn’t. We thought we could make a safer loanon a better property, even with less cash flow.”

Mesa West lends to property owners orbuyers who want to improve a property andthen either sell it or get a longer-term, lower-interest loan. The firm makes loans withabout $2 billion in capital from institutional

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SPECIAL REPORT WHO’S WHO IN BANKING & FINANCE

investors, including pension funds. Last year,it raised $752 million with its third fund.

The firm can make bigger loans than a banklikely would on the same property. Friedmanand Zytko say they’ll make loans based on whatthe value of a property could likely be after

improvements, not only on the current value.For instance, Mesa West last month closed

a $120 million loan for a property on RodeoDrive. They say a bank wouldn’t have loanedthat much because a gym on the propertypays relatively low rent. But the borrower’s

plan is to bring in a new tenant that will payhigher rent, justifying the larger loan amount.

“Our job is to find opportunities that fall justoutside the strike zone,” Zytko said.

So far, they’re finding plenty. Last year,Mesa West originated $1.4 billion in loans

Going BeyondLow Cash Flow JEFF FRIEDMAN, 51

Co-Chief Executive, Mesa West Capital

RESIDENCE: Santa Monica

FAMILY: Married; 13-year-old daughter and11-year-old son.

ACTIVITIES: Road trips to the mountains inthe summer and winter; running, sailing,tennis and golf.

MARK ZYTKO, 47

Co-Chief Executive, Mesa West Capital

RESIDENCE: Santa Monica

FAMILY: Married to Nancy; 9-year-old twinsons, Ben and Cole.

ACTIVITIES: Taking the kids to soccer andfootball; golf, skiing, fly fishing and moun-tain biking.

Friedman, left, and Zytko

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