Fident Capital secured $29.0MM of bridge financing for the conversion of 52-unit mixed-use multifamily asset to for-sale condos three blocks from the beach in Oceanside, CA. The borrower has decades of experience entitling, developing, and selling mixed use projects, often in partnership with the public sector. The lender, a private debt fund based out of New York, provided non-recourse financing that allowed a cash-neutral refinance of the existing debt and funding of all conversion costs.
The primary focus of the assignment was navigating the phased transition from a fully occupied multifamily asset to a for-sale business plan. Fident’s substantial cash flow analysis helped ease lenders concern of their max allowable outstanding balance on a multifamily asset against appropriate funding sources of HOA, taxes, insurance, and interest reserves from proceeds and in-place cash flow as units were vacated prior to sale.
Despite having been originally built to condo specifications with a recorded tentative map, the mixed-use nature of the wrap-design surrounding a bifurcated parking garage as part of a Public Private Partnership with the City of Oceanside added some texture. Communicating the nature of easements, access points, and operating responsibilities that fell to the projects HOA to the lending community required special attention.
Tailwinds from the pandemic induced demographic shifts towards and up the cost of San Diego County, in addition to the material public investment in the City of Oceanside downtown area and coastal location, kept a lid on available inventory and helped provide enough market support for pro forma sales value in a rising interest rate environment that put pressure on residential buyers.
After creating a market and procuring term sheets, Fident successfully securing an attractive deal for the client in a volatile capital markets environment. The winning terms met the pro forma proceeds sought, providing a cash neutral refinance, and offered a lenient repayment structure which balanced the lenders minimum interest requirement against the sweep of net sales proceeds after reserving for taxes obligations and pro rata payment of the lenders exit fee.