Fident Capital secured $30.9MM of bridge financing for a recently completed 3-story, 92-unit multifamily project in National City, California. The borrower, a vertically integrated builder-developer with a strong track record in the immediate area, received a fixed-rate, cash-neutral financing from a Southern California private lender and closed the financing prior project completion and commencement of leasing activity.

Modeling and presenting a mid-construction deal to capital in a way that could demonstrate both the validity of pro forma rents and the costs to complete and stabilize the property proved challenging.

Fident’s extensive market research assisted the property management team in accurately pricing the project’s diverse unit mix to support maximum loan proceeds. This analysis resulted in a strong NOI that helped prospective lenders achieve the desired loan proceeds.

Precise modeling of completion costs and lease-up projections also ensured the appropriate sizing of both interest and operating reserves. This was a critical aspect of securing a cash-neutral refinance of the high leverage construction loan which Fident had originally arranged for the project. Securing the original loan and the cash-neutral refinance kept the operator from needing a JV equity partner, enabling them to own the asset long-term, without partners.

An impending loan maturity further constrained the deal, requiring a year-end close with only a partial certificate of occupancy, due to the staggered building delivery. Many lenders balked at the large holdback required to complete the project, the lack of leasing, and were unwilling to offer terms.

Finally, the absence of institutional trades in the immediate submarket challenged the valuation process. The market’s perception was that a significant cap rate expansion was underway, which made LTV assessment more difficult.

Despite these obstacles, Fident Capital facilitated a competitive bidding process, achieving attractive financial terms for the client and overcoming lender reservations about pro forma lease revenues, the property’s staged completion, and financial structure.