Rate: 5.0% Fixed
Term: 5 Years
Amort: One Year IO; 30 Years Thereafter
LTC: 82.0%
Prepayment: None
Recourse
Lender Fee: 0.5%
Transaction Description: Jonathan Lee arranged the construction loan take-out financing for a 12-unit Toluca Lake Apartment Building currently undergoing lease-up. The newly constructed multi-family building had recently achieved certificate of occupancy and had yet to stabilize at the time of funding. A 5.0% fixed rate loan was sized to 82% of total capitalization, allowing for a $650,000 return of equity to the Sponsor. Interest Only for the 1st year, the loan will amortize over 30 years for the remaining four years of the term. There is no prepayment penalty during the loan term.
Challenge: The subject features units that are 20% larger than the competitive set. To the Sponsor, this represented an opportunity to fulfill a market need. To a Lender, this represented unproven product risk. Having just received the certificate of occupancy, the building was vacant at the time of funding.
Solution: Market research, area demographics, and asset quality demonstrated the strength of this newly constructed project. Occupancy risk was mitigated through a financing strategy that included an appropriate interest reserve, allowing the Sponsor time to lease up the 12 units.
Related Financings
- No related financings.
