Transaction Overview
GSP arranged the bridge financing of a stalled residential condominium project along the a Pacific Northwest waterfront. The project consisted of a 204- Slip Marina and entitlements for 208 to-be-built condominium units. The original construction lender was seized by the FDIC late 2007 and the project stalled mid-stream. At the time of the bank take-over, $44,000,000 of developer equity and bank debt had been invested in to development. The FDIC later forgave $24,000,000 of the then outstanding debt as a result of the bank failure. Our Sponsor has since engaged GSP to provide construction financing for what is now a re-entitled 373-Unit Apartment site.
Challenge: Although the FDIC settlement forgave a bulk of the bank debt, many creditors were not paid when the project stalled. The sponsor entered into bankruptcy, ultimately exiting in 2011 with a court approved re-organization plan that included the repayment of all mechanic’s liens. The Developer was ordered to pay off the creditors by a specified date or the property would revert back to the creditors. Timing was critical with no opportunity for an extension.
Solution: GSP identified a private bridge lender who became comfortable with the special purpose use, Sponsor credit issues and partial development of the site. The marina was completed and 95% occupied, offering a nominal cash flow to cover taxes and operating expenses. All grading and horizontal improvements were finalized with finished pads. A parking garage for the residential units had been completed to further support the “As-Is” value. GSP also identified a qualified ‘exit’ for the bridge lender having secured a qualified term sheet for the final phase of construction. While the construction due diligence was underway, funding could not occur timely to meet the court ordered schedule. The GSP lender funded literally in the 11th hour.
