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| 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.
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| 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
