Fident Capital secured a full capital stack comprised of a $9.8MM construction loan and $4.0MM of joint venture equity for the development of a 4-story, 43-unit multifamily project in one of San Diego’s fastest growing cities, Chula Vista. A local bank provided the construction financing and a private investment firm provided the equity.
The project will offer the community a mix of mostly one-bedrooms with a few studios, two-bedroom, and three-bedrooms units. The project sits one-half of a block away from the blossoming downtown village corridor of 3rd avenue and offers renters a pedestrian-friendly environment filled with restaurants, breweries, shops and services. With dated product dominating this submarket, this infill development will be met with high demand and limited competition.
Fident engaged with the developer early on and played a vital role in negotiating the off-market acquisition from another client. Fident remained involved throughout the City’s approval process, updating financial models and helping vet construction costs before embarking on the capital raise. The City’s 10-year deferment of 100% of its impact fees, provided an additional, very low cost, layer of financing that help bring the project to full capitalization.
Challenges to the project included communicating the financial impact of the unique fee deferral method to investors, a lack of direct comparable new projects in the immediate area and negotiating a custom equity structure that resulted in a minimal sponsor co-invest. Additionally, late-stage construction cost increases motivated the sponsorship to switch lenders mid-closing in order to preserve equity returns. Fident championed the analysis of cost-savings associated with the change and assisted with the coordination of transactional documents to keep equity at the table during that turbulent time.