Fident Capital secured $6.2MM of construction financing for the development of three, 3-story, single-family residences in the Pacific Beach submarket of San Diego, California. A national private lender provided the 80% LTC financing with a favorable rate floor and quick closing process.
 
Fident arranged the initial land acquisition financing, 14 months ago, which included a construction loan option. The borrower’s election to exercise that option streamlined the entire process, closing occurred in less than 90 days from the start of our efforts.
 
During due diligence, a residual land valuation analysis supported an increase in loan proceeds while maintaining the lender’s LTC/LTV thresholds. This welcomed news reduced the borrower’s equity need for the vertical build. The client’s recent rehabilitation and sale of an adjacent historic property also provided further support for the project’s terminal value in a market with few luxury comparables.
 
Challenges included an increase in project costs that necessitated a rebalancing of debt and equity contributions. The lack of new home sales in a highly desirable beach submarket also required additional market research to ensure the project’s viability and the perceived pressure on potential residential buyers due to the rising interest rate environment needed to be addressed.