City Spotlight- Nashville: Beyond the Bachelorette
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Ground-up development and major renovation financing from banks, debt funds, and alternative lenders
Construction financing provides the capital necessary to build new commercial real estate projects from the ground up or to undertake major renovations and repositioning of existing properties. Unlike permanent loans secured by stabilized cash flow, construction loans are underwritten based on the sponsor's track record, the project budget and timeline, and the projected value and income upon completion.
George Smith Partners has extensive experience arranging construction financing for projects ranging from $10 million to over $500 million across all property types. Our relationships with construction lenders—including national and regional banks, debt funds, life companies, and alternative capital sources—allow us to identify the optimal lender and structure for each project.
New construction across all property types including multifamily, industrial, office, retail, and hospitality.
Substantial renovation and repositioning projects that require construction-level financing and oversight.
Converting existing buildings to new uses, such as office-to-residential or industrial-to-creative office.
Complex projects combining residential, retail, office, and hospitality components requiring coordinated financing.
Land development, infrastructure, and horizontal improvements for residential and commercial projects.
Acquisition and pre-development financing for entitled land parcels ready for vertical construction.
$10 million to $500+ million
55-75% of total project cost (senior debt)
Up to 70-75% of stabilized value
24 to 36 months plus extension options
SOFR + 250-450 bps depending on lender type and risk
Completion guarantees standard; non-recourse available
Funded at closing to cover interest during construction
Nationwide
We know which construction lenders are active for different property types, markets, and deal sizes. This knowledge allows us to target the right lenders from the start, saving time and improving terms.
Before approaching lenders, we review your development budget and timeline to identify potential issues that could affect underwriting. This preparation leads to smoother lender approval and fewer surprises during closing.
Beyond senior construction debt, we can arrange mezzanine debt, preferred equity, and JV equity to complete your capital stack. One team managing the entire financing process ensures alignment across all capital providers.
Beyond senior construction debt, we can help structure the complete capital stack for your development project:
Most construction lenders require sponsors to contribute 25-35% of total project cost as equity. Some debt funds will go higher on leverage, but typically at higher rates. With mezzanine debt or preferred equity, the cash equity requirement can often be reduced to 10-15% of cost.
An interest reserve is a portion of the loan proceeds set aside at closing to pay interest during the construction period. Since the project does not generate income during construction, the interest reserve ensures debt service is covered until stabilization.
Construction loans fund in stages as work is completed. The lender sends an inspector to verify completed work before approving each draw, typically on a monthly basis. The lender releases funds based on the percentage of completion relative to the approved budget.
Nearly all construction lenders require completion guarantees, ensuring the sponsor will complete the project even if costs exceed budget. Some lenders also require repayment guarantees or full recourse. Non-recourse construction loans are available from some debt funds for experienced sponsors.
Our team can help you structure and secure construction financing for your next project.
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