Fident Capital secured $14MM of Joint Venture Equity for the acquisition, entitlement, and development of a 129-unit multifamily project in downtown San Diego’s Little Italy. This submarket boasts very strong performance with rents, occupancy, and exit cap rates all at peak levels. The 129 units sit above 8,000 square feet of retail podium space and 2.5 levels of subterranean parking. The site represents an exceptional infill location sitting only 3 blocks from the harbor.
The project offered an array of challenges to funding. The negotiated purchase and sale agreement contemplated a close before entitlement. However, the equity investor could not accept entitlement risk. Instead, Fident and the Sponsor restructured the purchase agreement to allow periodic deposits and a close upon entitlement.
Additionally, during the due diligence and entitlement period, changes to the FAA regulations allowed for an increase from 106 to 129 units. The increase added a level of subterranean parking and an additional floor; both of which materially changed costs and consequently equity requirements requiring the restructuring of the joint venture agreement. While the particulars on the negotiated terms must be kept confidential, the outcome Fident secured was very advantageous to the Sponsor.
Early on in the process, Fident identified an institutional equity partner ideal for the opportunity. This Los Angeles based fund manages over $2 billion in assets with investment from some of California’s largest pensions. Both equity and the Sponsor focus exclusively on urban infill residential projects which provided the project an exceptionally strong partnership.