Wednesday, March 16, 2016

George Smith Partners Secures Construction Financing for Ground-Up Luxury Townhome Development in San Diego County, CA

Jonathan Lee
 SAN DIEGO, CA – Commercial real estate investment banking firm George Smith Partners has successfully secured $16.25 million in non-recourse construction financing on behalf of an institutional fund manager for the ground-up development of the Silver Springs Townhomes, an 18-unit luxury townhome project in the La Jolla Village submarket of San Diego, California. 

The financing was arranged by George Smith Partners’ Principal Jonathan Lee, along with David Stepanchak, Senior Vice President, Director of Research and Adam Candler, a Vice President with the firm.

“This project will be the first of its kind to come online in the La Jolla submarket in many years,” says Lee.

 “This market is extremely supply-constrained and competitive, and demand for residential product in this high-end area continues to climb.  Our client was seeking non-recourse financing for this Class A residential development, which will deliver luxury homes in the $2 million sales price range.”

Lee notes that identifying comparable sales to justify the price-per-square-foot for lenders was a challenge initially, however, the George Smith Partners team conducted extensive market research to support the planned per-unit sale prices based on the limited number of residential asset trades in the surrounding markets.

Adam Candler
"Ultimately, we were successful in garnering the interest of four separate lenders, enabling us to negotiate terms that were beneficial to all parties,” says Lee.

Lee notes that this level of interest is rare in the current lending market, as construction lenders are adapting to a changing regulatory landscape.

“Construction financing continues to evolve, as many banks are trying to make sense of the new regulations that have been set by Basel III and the Dodd-Frank Wall Street Reform and Consumer Protection Act,” he says. 

“These regulations have caused relationships between borrowers and lenders to become even more complicated, which increases the importance of a financial intermediary.

“ In this case, we were able to identify a capital provider that is active in the greater San Diego market and understood the strength and experience of the borrower, as well as the potential in this development.”

David Stepanchak
The development site is an assemblage of two contiguous parcels, 7601 Draper Ave. and 720 Silver St. in La Jolla, California, on which a single-story vet clinic as well as a U.S. Postal Service location currently exist.

The planned 18-unit, 41,881 square-foot townhome style development will replace these structures, resulting in a centrally located residential community that is within walking distance of restaurants, shopping and the bluffs overlooking Torrey Pines and the Pacific Ocean.

George Smith Partners secured the $16.25 million non-recourse construction financing, which is sized to 65 percent of total development cost, for a 24-month term.  

The loan is priced at PRIME + 1.00 percent with a floor of 4.75 percent. A construction completion guarantee was provided, although there is no repayment guarantee.

For a complete copy of the company’s news release, please contact:

Jenn Quader / Courtney Williams
Brower, Miller & Cole
(949) 955-7940

No comments: