At A Glance:
| Location: | Greater New Haven, Connecticut |
| Transaction Type: | Acquisition & Construction |
| Capital Type: | Senior Bank Loan |
| Property Type: | 165-Unit Multifamily |
| Capital Amount: | $7,200,000 |
| Total Capitalization: | $10,600,000 |
| Common Equity: | $3,400,000 |
| Senior Debt: | $7,200,000 (68% LTC) |
The Client
Valencia Realty Capital (“Valencia”) was referred to the client by a colleague in the capital markets industry. The client is an experienced, 4th generation real estate investor and developer with a substantial commercial real estate portfolio.
The Deal
During the trough of the COVID health and economic crisis, the Client had located an opportunity to acquire a distressed hotel asset in the Greater New Haven, CT market. Even though the hotel was flagged with a major national brand, it had suffered a prolonged period of abysmal occupancy levels during COVID, and was in a state of deferred maintenance. These factors allowed the sponsor to negotiate a favorable valuation of the asset. Being located in a market with a tight supply of apartment units, he had keenly identified that the out-of-favor building was ripe for conversion to multifamily use.
While this was one of the largest transactions that the client had undertaken, his prior experience had prepared him to manage the project with a construction budget of over $4,000,000. Valencia Realty Capital was hired to arrange bank financing for the acquisition and development of the asset. Tasked with the challenge during a soft bank lending market in Q1 2021, Valencia rolled up their sleeves to source the right lender.
Our Solution
While the deal had many challenges in the eyes of a conservative lending market, Valencia Realty Capital had expertly positioned the loan request to provide a strong, well-researched narrative around the market opportunity and client background. With a thorough deal analysis and underwriting package, prospective bank lenders were able to efficiently process the data and provide offers for financing. By running an efficient process to “make a market” for the client’s loan request, Valencia successfully matched the client with a local bank lender who provided full proceeds at competitive pricing.
The $7,200,000 loan was provided at 68% loan-to-cost, and funded the construction project over a 24-month period with a floating interest rate. The loan was interest-only during the two-year construction phase followed by a conversion to permanent financing on a 25-year amortization schedule.
Results
The client was able to obtain a competitively priced loan, with the terms they requested, enabling them to capitalize on a unique opportunity.
To learn how Valencia Realty Capital can help you seize your next opportunity, contact us today.
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