Fident Capital secured a $12.0MM non-recourse bridge loan at certificate of occupancy for a 4-story, 43-unit multifamily project in Chula Vista, California. A private debt fund provided the high-leverage financing which repaid the construction loan, repatriated a significant portion of the project’s equity, and dropped the cost of debt financing. Rate savings at close of 225 basis points increased, incrementally, with occupancy hurdles to a 290 basis point savings at 70% occupancy. After only 6 months, the loan offered an open prepayment.
The four-story, walk-up project delivered a mix of studio, one-, two-, and three-bedroom units into one of the most walkable locations in western Chula Vista’s downtown area, 3rd Avenue. The units cater to the entire market, offering competitive finishes with covered carports and a roof-top deck with grill, fire pits, and lounge chairs. The location provides tenants easy freeway access to major employment centers, and schools within walking distance. Challenges to the project included the non-recourse request and the fact that only 15% of the project was leased (on a temporary certificate of occupancy) when we approached the market, which limited the competitive lender pool. Additionally, loan proceeds needed to return a significant portion of equity with a minimal prepayment penalty to be compelling. Armed with project-specific knowledge from having placed the development capital, Fident was able to attract a pragmatic, value-focused, lender that delivered maximum proceeds at an interest-only rate which competed with local banks and agency lenders. The deal closed in 5 weeks.
