Portfolio Even visionaries can benefit from an advocate.
Fident Capital secured joint venture equity and a builder/developer partner for a fully entitled 43-unit multifamily project in Chula Vista, CA. Our developer-client engaged Fident on two possible executions; either raise JV-equity to allow the completion of design-development and groundbreaking to follow in approximately 6 months, or find another builder to bring most of the equity to the venture and execute the development while affording our client a passive position. Given the dramatic increase in the site’s post-entitlement value, the formation of a venture with another builder/developer proved the most attractive. Our client pulled equity off the table and retained an attractive L.P. role in the go-forward venture.
The Third Avenue Village location, an infill parking lot, lines up very well for redevelopment. The proposed four-story, surfaced parked, and elevator-served project will deliver high-quality product into a market with sub 2% vacancy and virtually zero incoming supply. Further, due to its location within the City’s redevelopment zone, the project secured a material deferral of impact fees which significantly improved economics.
This transaction came with a unique set of challenges. The business required the sale of entities and of fee title, unique timing of each of those transactions across two separate escrow companies, a complex flow of funds, and substantial rigor regarding the collateral, security agreements, and promissory notes which tied these escrows together. In the interest of brevity, we can’t explore all of these dimensions, but, all participants were pleased with the outcome in terms of price, leverage, tax implications, and legal exposure once the dust settled.
This truly off-market transaction allowed our client to capture an excellent step-up and a carried interest and it brought the builder/developer partner a deal they may not have been able to source through conventional means.