Fident Capital secured $16.3MM of non-recourse construction financing for a 48-unit, 3-story multifamily development in Escondido, California. The borrower is a vertically integrated builder-developer with approximately 500 multifamily and single-family units completed across San Diego County over the past 13 years. A Salt Lake City-based private lender provided financing at 81% LTC and 69% LTV, with a 21-month term at WSJ Prime + 300 basis points and three 3-month extension options.
The 3-story walk-up development provides well-designed, sustainable housing that addresses the critical shortage of attainable units in North County San Diego. With proximity to major employers, strong freeway connectivity, and walkability to local amenities, the project offers much-needed market-rate housing in an undersupplied area.
A key challenge in the financing was the lack of direct comparables in Escondido, especially for projects with a similar unit mix and non-traditional income stream. The sponsor’s limited track record in the immediate submarket and request for high leverage at 81% LTC in a market with sparse institutional multifamily activity further complicated the capital raise.
To solve for the capital stack, Fident leveraged its relationship with a regional mission-driven fund targeting attainable housing for the “missing middle”. The fund’s impact-driven mandate aligned with the project’s positioning and provided equity that complemented the high-leverage senior loan, reducing the sponsor’s required contribution.
Fident’s in-depth market research validated the project’s unique value, highlighting revenue from solar energy via IVY Energy’s virtual net metering system and paid parking. Fident prepared detailed analyses to underwrite these revenue streams, including data from a comparable build by the sponsor, showing solar income of $140 per unit per month and a 16% marginal yield on cost, providing concrete validation of the solar strategy.
Another hurdle was verifying pro forma expenses and rents in a market with artificial supply constraints. Three of the largest comparable properties had recently transitioned to income-restricted housing, limiting available market-rate units in the immediate submarket. Fident’s analysis demonstrated that these income restrictions excluded a significant portion of potential renters, positioning the subject property to capture unmet demand from households earning above AMI thresholds.
Despite these challenges, strong project fundamentals and the sponsor’s execution history attracted competitive interest. Fident’s process generated multiple competitive bids, with final negotiations securing financing that exceeded the borrower’s initial request by $755,000.
