LOS ANGELES—A local developer has secured a $41 millionconstruction loan to build theValencia, a 218-unit, class-A apartmentcomplex in Downtown Los Angeles. Located on one city block atWilshire Boulevard and Valencia Street, the project includes4,500-square-feet of ground-floor commercialspace.


The interest-only construction loan isLIBOR-based and has a 70% loan-to-cost ratio. Thefunds will be used to cover both the hard and soft constructioncosts as well as reimbursement for an existing land loan, which wasused to purchase the development site. The loan has a three-yearterm and includes two one-year extension options. “The loans were agreat match for the borrower since they were only looking for onelender to close the loan,” Mitch Paskover,Continental Funding Group president, tellsGlobeSt.com. “Most of the banks we approached wanted to split theloan with another lender given the size. The borrower wanted toavoid that. We found a lender to originate the whole loan and thensyndicate a portion of it after we closed.” Paskover secured thefunds on behalf of the developer.


Because the borrower invested only 30% equity into the project,Paskover was tasked with convincing the lender to use the currentmarket value of the land site, which reduced the equity requirementto close the loan. “We presented the deal to over 43 banks andfound the four banks that were the most aggressive. All four bankspresented term sheets and were able to finalize a deal with thelender that was able to meet all of the borrower's requirements,”Paskover says. The loan was funded through a bank that specializesin multifamily construction debt.


Once complete, the interior units at the property will feature9-foot ceilings, private balconies and in-unit washers and dryers.The property itself will offer a plethora of amenities, including20,000 square feet of recreational open space, a fitness center, a5,000-square-foot outdoor garden, club lounge, and a pool and spa.With a nod toward the property's green elements, there will also be244 bicycle parking spaces.


Downtown, of course, is booming with multifamily development.Although many of the units in the pipeline are rental units, likethese, there is also an increasing demand forcondo units in the market. Last month, GlobeSt.comreported that condo sales were up 13% year-over-yearwith a steady 1% increase month-over-month. The average cost of acondo in the downtown market is $701 per square foot.

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Kelsi Maree Borland

Kelsi Maree Borland is a freelance journalist and magazine writer based in Los Angeles, California. For more than 5 years, she has extensively reported on the commercial real estate industry, covering major deals across all commercial asset classes, investment strategy and capital markets trends, market commentary, economic trends and new technologies disrupting and revolutionizing the industry. Her work appears daily on GlobeSt.com and regularly in Real Estate Forum Magazine. As a magazine writer, she covers lifestyle and travel trends. Her work has appeared in Angeleno, Los Angeles Magazine, Travel and Leisure and more.