TUCSON-A local developer has rescued an under-construction apartment complex, the 218-unit Villas at Hacienda Del Sol, with help from a $31.5-million bridge loan to buy and finish the development. The exit strategy is to set up the 21-building complex for condo sales.
Potomac Realty Capital LLC of Needham, MA provided the financing for the Villas, a 12.28-acre development at 2550 E. River Rd. About 14 more months are needed to complete the project, according to Dan Palmier, president and CEO of Potomac Realty Capital. "The borrower was looking for 90% of all-in costs," he explains to GlobeSt.com, "and this loan allowed about $7 million in construction proceeds."
Palmier says that the short-term loan is his company's first in the Tucson market, but not his last. "This borrower is very active in the market and we're working on five other deals that should close in the next week," he adds.
Despite the complex's incomplete state, Palmier says he is comfortable with issuing the loan for a variety of reasons. "We like the borrower. He has construction experience and some good financial backing," he says. "We thought they unearthed a winning deal with this project. The previous owner didn't have much experience with this type of project, but the borrower does."
The 18-month financing was underwritten at a 90% loan-to-value ratio. It is a floating-rate vehicle based on the 30-day Libor. Palmier says Potomac's spread on the debt is 625 basis points over Libor.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.