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.