Fident Capital secured $29.0MM of non-recourse construction financing for The Marlette, a 140-unit multifamily project in Carson City, NV. The winning bid, at 75% LTC, met the borrower’s original ask in terms of proceeds and provided a quick close that allowed them to start construction expediently. The borrower, a repeat Fident client, is an experienced owner-developer headquartered in Las Vegas, NV, with projects throughout the Western US. The lender was a private debt fund based out of New York.
A primary challenge of the financing was the lack of real estate and economic data in Carson City, as well as the area’s lack of comparable multifamily properties. As a small, tertiary Mountain West market, there was a dearth of established sources to pull data from to inform potential capital sources of the market’s underlying demographics; However, Fident was able to use alternative sources such as NRHA reports to determine that the region’s multifamily vacancy is an astonishingly low 1.7%. Fident also creatively established a competitive market area that pulled comps from nearby South Reno and Sparks to provide more data points in order to give lenders assurance that institutional-quality multifamily product has been successfully built in the area before and that the subject property could achieve its underwritten revenue assumptions.
Another challenge of the financing was navigating the project’s changing hard cost budget. Labor shortages in a tertiary market, along with supply chain issues and material delays, caused the borrower’s budget to fluctuate. Fident fielded all questions pertaining to the project budget and provided considerable market research to help justify revenue increases that would offset any potential cost overruns. Fident’s marketing materials showcased the project’s efficient garden-style design and highlighted a construction schedule that phased the building deliveries, allowing the project to start generating revenue even as it wrapped up construction.
Fident’s presentation of the opportunity, along with the experienced borrower’s strong institutional pedigree, attracted over ten bids for the construction financing. By creating a competitive market for the financing, Fident was able to negotiate down lender fees to arrive at the most advantageous terms possible for the client. We look forward to seeing the project progress through the construction phase to eventually provide much-needed housing to the Carson City community, which has had only one market-rate development deliver since 2010.
