Summary: Continental Partners successfully arranged a 20-year fixed rate loan to refinance the existing construction loan on a brand new 144-unit asset in North Hollywood, California. Continental Partners identified a life insurance company who was willing to take lease up risk, fund the loan at temporary certificate of occupancy (TCO) and did not require any recourse during lease up.
Opportunity: The sponsor needed to refinance the current construction loan that was nearing maturity and requested a long-term fixed, non-recourse loan with a cash out component. Most lenders were limiting the cash out component due to a loan to cost restrictions. Some Lenders were conservative as they felt the submarket was saturated with a large number of units coming online. The Borrower was also in the early stages of lease up (approx. 30%) and most lenders would only fund at stabilization (95% occupancy) with the certificate of occupancy in place.
Result: Continental Partners was able to pinpoint a lender specializing in multi-family take out financing on new construction. They understood the difficulty of dealing with the building department and only required a temporary certificate of occupancy to close. Continental also had the lender structure escrow provisions that allowed the borrower to fund the loan at pre-stabilization through a holdback and would release the remaining proceeds at stabilization. In the end, the asset had reached stabilization and we funded the deal in less than 8 weeks.