Fident Capital secured a $23.8MM construction loan for the development of a 60-unit multifamily project in Vista, a growing submarket of North San Diego County. The borrower, a repeat Fident client, is a local multifamily developer who has built numerous for-sale residential and multifamily rental projects of a similar scale across San Diego County. The winning bid exceeded the borrower’s original ask, at a sizing of over 97% LTC. The lender was a private debt fund based out of the Salt Lake City area.
Fident’s marketing efforts produced over ten competitive bids from which the borrower could select. The lack of competitive new apartment supply in the submarket and the area’s strong biotech and biomedical manufacturing presence contributed to a high level of lender interest. Vista’s positioning as one of the more affordable areas of North County has led to very strong multifamily demand and a current 1.6% vacancy rate, trends made even stronger by pandemic-induced migration to the suburbs. In addition to effectively conveying these points, Fident also emphasized the sponsor’s long-standing, successful track record in developing multifamily product within the Greater San Diego region and provided in-depth market research to support the deal’s underwriting assumptions.
The stretch senior construction financing solution of 97%+ LTC allowed the borrower to contribute the land as the primary portion of equity into the project, freeing up capital to pursue other development and investment opportunities. Fident created considerable value in this effort by successfully pushing the lender to attribute significant lift to the project’s land value. This decreased the amount of additional equity that the borrower needed to contribute to capitalize the deal.
Fident’s internal review of the appraisal also contributed to the project’s appraised value coming in higher than expected, which garnered the borrower an additional $2MM in loan proceeds. To provide support for a higher than anticipated valuation, Fident compiled thorough market data on rents at comparable properties, analyzed the project’s potential alternative revenue sources, and pushed back on expense line items that were market outliers.
The strength of the submarket, opportunity, and sponsor, coupled with Fident’s successful marketing strategy and thoughtful analysis, provided our client with an array of choices for the project’s financing. Fident secured construction financing that exceeded the client’s expectations and ended up being highly accretive to the developer’s returns. We look forward to seeing the Vista project break ground this summer to provide much needed rental housing stock to North County.
