Fident Capital secured $9.8MM of horizontal construction financing for a 14-lot residential development located in San Diego’s prestigious La Jolla submarket. The 5-acre site will offer ocean-view lots that average 11,000 square feet to homeowners and spec. builders looking to develop on these $1.5MM finished parcels.
Following the successful entitlement of the site (previously a City-owned residential water reservoir), the client found their incumbent lender unwilling to proceed with the project due to concerns around for-sale housing and economic implications of COVID-19.
Fident jumped into the fray and quickly heard dozens more lenders pass on the opportunity due to concerns around the impact of the virus on high-end residential product. Fident knew that delivering 14 finished lots, of this quality, into the La Jolla market was a rare opportunity and extremely valuable. Reaching out to over 100 capital sources, Fident secured a private lender that understood the merit and durability of the borrower’s business plan.
The lender provided non-recourse, cash-out, financing under a compressed timeframe that repatriated a significant portion of the borrower’s equity. This allowed the client to advance other real estate projects on the timeline they had originally anticipated.
Beyond the extensive marketing required, challenges included the lender’s inclusion of a syndicate partner who required education on the nuances of tentative maps, final maps, and the California Map Act before close. That delay risked triggering a late fee and paydown requirement from the incumbent lender, an issue Fident had to mitigate. Additionally, the non-recourse and cash-out components were not easily met.