A Creative High-Leverage Solution for Experienced Developers
This lender, backed by a unique overseas investor, specializes in senior construction debt offers high leverage and creative terms, targeting multifamily developers in the Southeast, Texas, select Midwest markets, and parts of Washington State, with funding ranging from $20 million to $70 million. A key feature is their conversion of any shortfall between construction loan payoff and permanent financing into participating preferred equity, alleviating the pressure to secure additional capital at critical project stages.
This lender provides aggressive leverage structures, with loan-to-cost ratios up to 85% and loan-to-value capped at 75%, reducing equity requirements for developers. While interest rates range from 11.99% to 12.5%, the lender’s quick 30 to 45-day closing window is advantageous for time-sensitive projects. By sizing loans to support permanent financing at a 75% LTV and requiring sponsors with a proven track record, this offering presents an attractive option for multifamily developers looking to enhance leverage and flexibility in a challenging market.
| Capital Structures Offered | Senior Construction Debt **Remaining balance converted into preferred equity if takeout loan is insufficient |
| Geography | Southeast, Texas, select Midwest markets, select locations in Washington State. |
| Property Types | Multifamily |
| Construction | Ground-up construction and construction completion |
| Recourse | Full recourse required |
| Check Size | $20MM to $70MM |
| Loan to Cost / Loan to Value | Up to 85% LTC, take out at 75% LTV |
| Sponsorship Requirements | Sponsor must have 7.5% of loan amount in liquidity post-closing. Similar project experience to subject asset. The fund prefers to work with experienced sponsors who have completed at least one or two similar projects.. Must equal the loan amount (with flexibility) |
| Uses of Capital | Construction Hard & Soft Costs, Closing & Financing Costs, Developer Fee up to 5% |
| Interest Rate / Returns | 11.99 – 12.5% Fixed rate. If proceeds exceed the level of a take-out refinancing, such proceeds will be structured as preferred equity with a profit participation to be negotiated. |
| Fees | 2% upon origination, and 1% at exit |
| Term | 24 – 36 months, plus extensions |
| Underwriting Requirements (Based on Investor’s UW) | Loan size is subject to the trended NOI being able to support a senior refi loan at 75% LTV with a 30 year amort, 6% rate, at a 1.05 DSCR. This roughly equates to a trended stabilized debt yield of 7.6%. |
| Collateral Requirements | First Mortgage, and UCC or preferred equity units, as required. |
| Closing Time Frame | 30-45 days |
If this capital source may be of interest, book a call to discuss a potential capital arrangement. Read our last Market Insight: Navigating the Distressed CRE Landscape: Opportunities Amid Market Pressures.