Fident Capital secured a $6.7MM construction loan for the development of a 14-unit townhome project located in the Pacific Beach submarket of San Diego, California. A regional bank provided the 80% LTC, recourse, financing at a 4.00% rate with very low transaction costs.
The infill project rests between the main Pacific Beach arterials of Grand Avenue and Garnet Avenue, steps away from the area’s restaurants, coffee houses, bars, nightlife, beaches, parks and plethora of unique retailers. The development will deliver new, attainable condominium product to an area with severely limited supply. The three-story, two-bedroom townhomes come with one-car garages, roof-top patios, and target first time or move-up home buyers who prefer the amenities of a new home and modern architecture over the older and more expensive inventory nearby.
Challenges to the project included high values per unit which, while attainable for San Diego, fall above the average regional home price and are quite expensive by national standards. Additionally, the project required two units to be designated as affordable rental stock, to be held by the developer, and rented to income-qualified tenants. The team needed to liaise with the San Diego Housing Commission and lender to establish that the mixed collateral and the housing commission’s subordinate deed restriction for the affordable units provided the appropriate flexibility to the lender in the event of default. Finally, construction commenced before the financing closed which required title to address lien priority and provide the lender comfort with their senior position.