Fident Capital secured a $3.7MM cash-out, predevelopment loan to fund a portion of the land and soft costs (including a development management fee), associated with a by-right development of a 3-story, 96-unit multifamily project in National City, CA. The project will provide the community with a mix of one-bedroom and two-bedroom market-rate units.
The client’s off-market acquisition of the subject property’s assemblage provided for a demonstrably attractive land basis. This, coupled with the fact that the client’s ownership stemmed from an in-kind profit distribution and partnership buy-out following the successful development of the adjacent property with prior a JV equity partner proved challenging for many potential lenders to underwrite. The lender, a private fund based in Southern California, saw through the tax sheltering moves and cash contributions to understand the true imputed land equity. They provide some cash to the borrower, funded 12 months of development management fees, and capitalized the entire go-forward cost required to make the project “shovel ready.” The non-recourse loan was funded at 50% LTV and closed quickly, “as advertised,” within the original term sheet.
Other challenges to the financing included the extensive marketing required by Fident the during COVID-19 disruption which brought a high degree of scrutiny to demographic shifts and employment trends. Additionally, the early stage of project design and approval, mixed-zoning, and the non-recourse mandate all needed addressing.