Multi-Family Construction Loan
Case Details
Middle of the Pandemic
Limited Equity
$20,000,000
Los Angeles, CA
The Challenge
Our client acquired a retail property and had it rezoned to apartments/ mixed use. At the point that the refinancing was needed, the construction loan market had become very conservative due to the Covid Pandemic. Many construction lenders were completely out of the market or were limiting loans to 65% of actual cost. The client only had 15% of cost in as hard equity. We needed to find a lender that would count the value created in obtaining the entitlements as equity for the project.
The Solution
We were able to find a lender that gave the client credit for 100% of the value created by obtaining the entitlements. They agreed to make a loan at 75% of cost, 65% of value. Including the imputed value from the entitlements, the client was able to meet the lenders equity and LTV test. We closed this loan at 3.75% fixed rate for 5 years, interest only for the first two. There is an extension option for another five years. The property is under construction. This loan was the perfect solution for this client.
