Deal Summary
| Location | Naples, FL |
| Transaction Type | Acquisition Financing |
| Asset Class | Multifamily |
| Capital Structure | Senior Bridge Loan |
| Unit Count | 110 units |
| Total Capitalization | $20,100,000* |
| Senior Debt | $15,100,000* (Private Credit Fund) |
| Leverage | ~70% Loan-to-Cost |
*Approximate figures
Project Background
One of Valencia Realty Capitals (VRC) repeat client relationships recently came across a light value-add acquisition opportunity of a 110-unit multifamily property in a highly desirable pocket of downtown Naples, FL. The sponsorship’s original capitalization strategy was to utilize agency financing and institutional LP equity. However, significant challenges arose due to a rising interest rate and volatile insurance environments as well as increased scrutiny over 1970’s vintage products. Given the challenges outlined above VRC sourced a more competitive private bridge loan in the SOFR+ 300 range reducing the equity raise for the sponsorship and allowing for high-net-worth capital to be invested into the deal.
Role of VRC
VRC was engaged to source an optimal debt structure that achieved the targeted level of leverage and cost of capital that aligned with the sponsor’s business plan. Initially, VRC conducted an expansive process evaluating agency and preferred equity options but quickly recognized that a single senior bridge loan execution was the most efficient path forward to ensure the success of the project. Leveraging its private credit fund relationships, VRC launched a targeted marketing process, fielding approximately 7 to 10 initial lender quotes. This effort led to 4-5 competitive term sheets, allowing the sponsor to select the most accretive financing solution for their business plan.
Throughout the process, VRC played an active role in optimizing loan terms, negotiating key structuring elements, and facilitating seamless communication among all stakeholders to ensure a timely and efficient closing.
Financing Structure
The final capital structure featured a $15.1MM senior bridge loan provided by a trusted private credit fund. Through VRC’s negotiation, the financing package was optimized to include:
- Leverage: Achieved 70% loan-to-cost, allowing the sponsor to preserve equity while securing the necessary funds for acquisition.
- Interest Rate: Negotiated a highly attractive rate in the high SOFR 300’s, exceeding the sponsor’s initial expectations.
- Term: Structured a 24-month term with flexible extension options to accommodate the sponsor’s business plan.
- Prepayment: VRC negotiated zero prepayment penalty
- Guarantee: Non-recourse loan with bad boy carve-outs only.
- Closing: 3-4 weeks from term sheet signing.
Value – Added
By swiftly adjusting the financing strategy, VRC ensured that the sponsor secured optimal terms under a challenging market environment. The sponsor benefited from:
- Expedited Closing Process: VRC’s close lender relationships and proactive management enabled a seamless closing.
- Optimized Debt Structure: The single-source bridge loan eliminated the complexity of agency execution and preferred equity constraints.
- Underwriting Support: VRC provided continuous analytical guidance, ensuring the sponsor remained focused on key deal metrics and long-term execution.
- End-to-End Transaction Management: From initial underwriting to lender outreach to final closing coordination, VRC’s hands-on involvement ensured a smooth and efficient process.
With financing in place, the sponsorship group successfully acquired the property and is now positioned to execute its value-add strategy in one of Florida’s most sought-after multifamily markets.
If capital of this nature may be of interest, book a call to discuss a potential capital arrangement.
Read our last Case Study: $14.5MM Construction Completion Loan for Martha’s Vineyard Beachfront Development
Disclaimer: This article is written as a “high-level” overview to illustrate a real-life deal example for educational purposes only. In order to preserve the confidentiality of the Parties involved in this transaction, some identifiable information has been modified slightly including approximations of financial figures. Please do not construe this article as legal, tax or financial advice. As all situations are unique and nuanced, be sure to seek the counsel of qualified professionals before making any investment or financial decisions.