Transaction Details

Loan Amount: $41,000,000
Rate:  L + 2.75%
Term: 3 Years
Amortization: 3 Years I.O; 30 Years Thereafter
LTC: 72%
Prepayment: None
Recourse:  Non-Recourse
Lender Origination Fee: 0.5%

Transaction Description

Summary: Continental Partners arranged the $41,000,000 acquisition and construction debt financing for the development of Valencia, a Class “A” multifamily housing project with 218 units in downtown Los Angeles. The transaction closed at LIBOR + 275, interest – only and featured 72% loan-to-cost.Valencia is located in the emerging Central City West residential community of downtown Los Angeles. The 1.5-acre site consists of nearly an entire city block, approximately 64,472 SF, which fronts both Wilshire Boulevard and Valencia Street.The Valencia project is entitled for 218 apartment units and 4,500 SF of commercial retail.

Opportunity: The Sponsor insisted on a loan where the construction Lender would value the land based on market value.Lenders took issue with this request seeing as the land was purchased a little over a year ago and the market value of the land was substantial higher than the purchase price. Most lenders required a two year hold term before they could value the land based on market value. The Lenders that the Sponsor approached on their own, were all concerned that if the land was valued at market, the Sponsor would only have 10% of their own cash in the overall Project. After retaining Continental Partners, the Sponsor requested we find a lender that would accept the Purchase Price of the Land and originate the entire loan on their balance sheet, so they did not have any syndication risk.

Result: Continental Partners was able to pinpoint a bank specializing in multifamily construction debt. The Lender provided the three-year, floating rate, interest – only loan to the Sponsor who was an experienced developer. Continental Partners was able to convince the Lender to use the current market value of the land based Continental Partners’ detailed market comps, which lowered the overall equity required to close the Loan. Both the Lender and the Sponsor brought highly competent teams to the transaction and worked with a cooperative spirit throughout the process ensuring a lasting business relationship.