Capital Spotlight – Highlighting featured capital investors. We regularly publish the detailed criteria of our most unique real estate capital sources.


Family Office Managed by Experienced Developer Providing Non-Recourse Multifamily Construction Loans

This family office, experienced in multifamily development, provides non-recourse construction loans for multifamily asset classes and select flagged hospitality transactions. Geographic focus is on primary and secondary markets throughout the US but they typically do not lend in New York or California. They will consider sponsors who have been turned down by bank financing and require experience and the ability to perform based on previous experience. They prefer to work with friendly and reliable people and ideally require a net worth equal to the loan amount and liquidity of about 10% of the loan amount, but can be flexible based on deal and market strength.

 

Capital TypeNon-recourse construction loans for multifamily asset classes and select flagged hospitality transactions
GeographyPrimary and secondary markets throughout the US, but typically do not lend in New York or California
Property TypesAll types of multifamily related asset classes, including manufactured housing communities and build to rent. Will also consider select flagged hospitality transactions
Uses of FundsAcquisition, hard and soft construction costs
SponsorshipWill consider sponsors who have been turned down by bank financing, but require experience and ability to perform. May require third-party GC for sponsors moving up in the size of transactions
RecourseNon-recourse for most deals
Check Size$30M to $200M
ConstructionWill fund ground up construction with entitlements in place
Mixed UseWill consider mixed-use, as long as the proportion of commercial space qualifies for an agency debt take-out
Loan to ValueUp to 70% loan to cost, or loan to value on an as is basis, subject to 65% loan to value on an as complete basis
Sponsorship EquityWill consider imputed equity, but prefer to see substantial “skin in the game” and alignment of interests
Interest Rate10% to 11.5%; SOFR plus 5.25% to 5.75% for multifamily, SOFR plus 6% to 6.5% for hospitality
Origination Fee1.3% is the typical origination fee
Payment StructureInterest only payments
Duration3 to 4 years plus a one-year extension
Prepayment Structure36-month make-whole provision
Underwriting RequirementsLoans underwritten on projects with a 6%+ yield on cost will drive maximum leverage. Minimum DSCR of 1.1x based on stabilized net operating income
DepositsTypical deposit is $100,000 to fund third-party reports and legal
Closing Time Frame60 to 90 days
ServicingConstruction loan draws are serviced with the best level of quality as a developer-friendly lender

 

If this capital source may be of interest, book a call to discuss a potential capital arrangement.


Read our last Capital Spotlight: Capital Spotlight: Israeli Capital Funding Subordinated Debt up to 87% LTC for Multifamily Asset Classes