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$14.4M Construction Financing
$6.2M Joint Venture Equity
Fident Capital secured the full capital stack comprised of a $14.4MM construction loan and $6.2MM of joint venture equity for the development of a 16-unit luxury condo project with a ground level commercial unit in the desirable Bankers Hill neighborhood of San Diego, CA. A regional bank provided the construction financing and a national institutional private equity group provided the equity funding.
Located in an excellent infill location walking distance to Balboa Park, and in close proximity to local thoroughfares, this site straddles a city block and will boast views of both the San Diego skyline and harbor. This moderate 5 story build is designed by famous architects Safdie Rabines and will provide a unique boutique product for the local luxury condo market at a competitive price point. Units offer 2 to 3 bedrooms, with 2 to 4 baths along with a surface level and sub-terrain parking garage outfitted with mechanical lifts. Averaging over 2,000 SF, projected pricing for the project ranges from the low $1.0MMs to $2.0MM+.
Despite the project’s incredible location, the project came with its share of challenges. This transaction represented a significant scaling up from the client’s previous experience and was located in a market that is seeing a good amount of new competitive luxury condo supply. An attractive land basis, diligent underwriting, an A team of consultants, and our client’s willingness to contribute a healthy about of equity – putting their money where their mouth was – was imperative and contributed significantly to the project’s successful financing and getting equity comfortable with the deal.
Market research to support the pricing of these units was also critical. Fident, along with a third-party researcher, worked tirelessly to demonstrate supportive pricing, benefiting from a plethora of competitive sales nearby and our history financing other deals in the neighborhood.
The financing team and JV structure was also a unique situation. A regional bank provided leverage up to a true 65% LTC, derived from 60% LTC with an elevated land basis, but had not financed a joint venture with an institutional equity source. On the equity side, through intensely iterative stress testing, Fident was able to negotiate a hybrid participating pref joint venture waterfall structure that was accretive to both parties. Additionally, Fident’s ability to mediate the negotiation of project management responsibilities, org structuring, and guarantees, lead to a successful close.