Fident Capital secured $4.8MM of joint venture equity and $16.9MM (75% LTC, 69% LTV) of non-recourse construction debt for a 50-unit multifamily development in the Carmel Mountain Ranch area of North County, San Diego. The sponsor, a longtime Fident client, specializes in infill multifamily development and has completed numerous successful projects throughout San Diego County. Fident sourced the equity from a close capital relationship based in Southern California, who will provide 85% of the project’s equity. Fident sourced the project’s construction financing from a private debt fund based out of Salt Lake City.
A primary challenge of getting the deal done was managing concurrent closings of debt and equity. Fident coordinated all relevant parties, compiled due diligence items, and facilitated weekly calls to keep the closing process on track. Prior to closing, during the marketing stage, another challenge was educating capital about the nuances of the proposed project itself in terms of its construction type, unit mix, and large affordable component. As a transit-oriented, adaptive reuse development that utilizes an abandoned two-story “park and ride” facility as its podium, the project’s smaller units proved difficult to comp in a largely suburban submarket. Fident provided ample market research and support for the project and its proposed rents to both potential lenders and the appraiser.
Another challenge of the deal was raising capital in a rapidly rising interest rate and construction cost environment, which squeezed the deal’s returns. Fident uncovered new revenue sources – such as increased rental rates available for the project’s 15 affordable units – to help bring returns back in balance. Fident’s marketing materials also emphasized the high quality of the real estate itself, including its proximity to high-paying tech jobs and the new $445MM Apple corporate campus in Rancho Bernardo. Fident was thrilled to help get this project out of the ground and bring badly-needed new housing to a desirable and highly supply-constrained area of San Diego County.
