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$4,390,000, 18 Unit Ground-Up Apartment Construction Loan

7 – 16 – 2014
Transaction Description:  GSP arranged the financing for the ground-up development of an 18 unit apartment building in the Warner Center area of Los Angeles. The developer had recently purchased the land before entitling it. Because of the strong housing demand in the Warner Center sub-market, the Borrower was able to syndicate equity amongst friends and family. GSP successfully negotiated for imputed equity to round-out the capital stack in lieu of an additional cash investment. Sized to 75% of cost, the 18 month term floats over LIBOR but requires a 5.5% interest rate floor.
Challenge: The Borrower’s previous construction projects were financed by private lenders with high interest rate coupons. While financially sound, with two other projects under construction, the Borrowers’ contingent liabilities pushed underwriting standards.
Solution: GSP worked with the capital provider to demonstrate a clear pipeline of projects based on existing assets under construction. Because of the construction progress in the other assets, GSP was able to demonstrate that several recourse construction loans were about to roll to non-recourse debt within six months of funding.
Rate: 5.5%
Term: 18 Months + one 6 Month Ext
Amort: Interest Only
LTC: 75%
Recourse
Lender Fee: 0.75%
Advisors:  Jonathan Lee, Adam Candler

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