$4,475,000 Secured Revolving Line of Credit on Four Under-Improved Parcels

Transaction Description: Jonathan Lee successfully placed a revolving credit line to provide working capital for an experienced developer with a very active production pipeline. The line of credit was securitized by four recently purchased parcels (2013/2014) for the purpose of developing luxury apartment buildings. Floating at 300 basis points over LIBOR, the revolver carries an 18 month term before extensions and is sized to 50% of acquisition price for the under-utilized land.

Challenge: The properties available for the credit line are infill sites with leased SFR. The lender originally valued the four parcels using in-place NOI, negatively impacting loan proceeds under the 50.0% LTC stipulation.

Solution: GSP worked with the lender to support a raw land value using a land value entitled for multifamily rentals for the four parcels by demonstrating a clear path to entitlements and coupling that with entitled land comps. Using a bank ordered appraisal, the lender obtained the land value to achieve adequate loan proceeds.

Solution: Despite the existence of two separate borrowing entities, GSP was able to demonstrate to the lender that only the final borrowing entity would require underwriting, saving considerable time and effort. Through diligent coordination, early identification of future problems, and regular contact between GSP, lender, lawyer, and sponsor, the bank became comfortable with the structure and closed quickly.