Construction Refi Bridge to Stabilization (it’s a mouthful)

Supply chain issues have wreaked havoc all over the nation and the world. Covid showed us many things that we weren’t aware of before, but none more so than our inability to supply demand.

One of the sectors hardest hit by supply chain issues has been the real estate construction/development sector. A project that was carefully bided and financed in February 2020 can, now, be completely underwater due the increased costs of construction in both material and labor.

Unfortunately, going “back to the well” for more money on a large $50M+ multifamily development deal is not an option for many developers, but being out of money helps nobody. So what is one to do?

Well if you, or someone you know, in the industry is in this position you’re in luck. We have a group that is one of the largest Mortgage REITs in the nation that loves working on complex problems, understands the difficult positions developers are in, and has a lot of money that they need to deploy.

This group has done a ton of construction completion projects in the past and has told us that they want to help. They have this highly specialized “program” (they don’t even like to call it a program, it’s just a super specific niche that they’re very good at) that is essentially a “hybrid construction completion refi-bridge-to-stabilization” program.

Essentially they will refinance your current construction loan with their LTC being determined by backing into loan sizes from the required projected debt yield on the project, and can also lower your cost of financing. They do have minimum loan sizes based upon the percent the project is completed (see below for info).

They’re currently super bullish on: Multifamily, industrial, hospitality, and will even consider retail provided there are signed leases in place.

One thing they will NOT do, however, is provide any cash out.

That’s enough from me, how about some specifics.

Deal Criteria:

  • Debt Yield Minimum Requirements (Determines LTC)
    • Multifamily – 7.5%
    • Hospitality – 13-14%
    • Industrial – 7.5%
    • Retail – 9-10% (or better)
  • Loan Sizes by % Complete
    • Projects 75-95% complete – $15M+
    • Projects 50-75% complete – $40M+
    • Projects under 50% complete – $50M+
  • Rate: SOFR + 5%
    • Drops to SOFR + 450 bps at issuance of CofO
      • This is written into the loan docs so it cannot not happen
  • Lender Fees 1 pt
  • Term: 18-24 Months I/O
  • Recourse: Non-Recourse with Bad-Boy carveouts
  • Gographics: Nationwide
    • Primary and secondary markets preferred

If you have a deal that fits the above criteria don’t hesitate, click here.

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