$3,250,000 Construction Loan for Six For-Sale Luxury Condo Units in Westwood, California

Transaction Description: Jonathan Lee successfully placed the construction financing for a ground-up six unit luxury condominium property in Westwood, California. The Sponsor purchased the entitled land in 2012 all cash and re-designed the building, spending over a year obtaining required approvals. The 18 month construction term is priced at LIBOR plus 3.5% and was sized to 75% of total cost. Imputed equity was factored in to a 65% of value metric.

Challenge: The Sponsor required high leverage for a for-sale development and was not seeking to invest additional cash equity into this project. Pro-forma sales were difficult to comp given the older product in the area. The high price per foot added to the comparable challenge.

Solution: GSP supported the leverage request by highlighting the Sponsor’s and the Contractor’s successful development history with similar project types. By canvassing the market and demographic data, a sales pro-forma for the finished project was developed by GSP, reviewed and accepted by the Appraiser. The estimated demand and price point for new product was independently supported by the MAI appraiser.