San Francisco, CA – July 22, 2019
Laguna Reserve Marketplace – $2.4M Value-Add JV-Equity Financing
Highland Realty Capital has arranged a $2.4M joint-venture equity partnership for the acquisition and value-add business plan of the Laguna Reserve Marketplace, a 33,308 square foot unanchored neighborhood retail center with the potential to develop for total retail square feet of 92,352. The inline shop space including the land was acquired with strong in-place cash flow, however, once the anchor tenant is in operations, the inline shop rents will increase by 30-40%. The Sponsor plans to either ground lease the anchor land to a single tenant, or as an alternative, develop the anchor building itself.
1500 S Street & Cathedral Square – $5.7M Land Acquisition Debt Financing
Highland Realty Capital has arranged $5.7M in financing to capitalize the acquisition and entitlement of two vacant properties proposed for multi-family developments. 1500 S Street, slated for 132 units, is located on 15th and S in Midtown a block from the newly revitalized R Street corridor of Sacramento. Cathedral Square, slated for 159 units, is located on 11th and J Street in the heart of Downtown Sacramento, steps from Downtown Commons / Golden1 Center. On behalf of a development company owned by a foreign entity, Highland arranged two land loans sized to 56% of purchase price and 50% LTC including the predevelopment budget. The loan request was challenging for many reasons; in addition to the foreign parent of the Sponsor, the borrower required an entity-only guarantee, and finally, one of the sites had environmental contamination that needed to be remediated during the term of the loan. Given the challenges, Highland received over 13 Quotes/Term Sheets on the request. Ultimately, the Sponsor selected a bank lender which was able to attractively price the loan at 7% all-in.
Huntington Apartments – $6.1M Value-Add Acquisition Debt Financing
Highland Realty Capital arranged a $6.14M acquisition bridge loan sized to 80% LTC with initial funding sized to 75% loan-to-purchase price, with the lender funding 100% of the $1.0M renovation budget in monthly draws. The 5-year, full-term IO loan will be fixed in the mid 4%’s and will be open to pre-pay after year two and featured a minimal origination fee. This low-cost loan will allow the Sponsor to acquire and rehab the project with minimal cash equity at an interest rate far below the property’s stabilized yield-on-cost.
6.3 Acres of Unentitled Elk Grove Land – $1.85M Land Acquisition Debt Financing
Highland Realty Capital arranged a $1.85M in financing to capitalize the acquisition and predevelopment of 6.32 acres of unentitled land in Elk Grove, CA adjacent to Interstate 5. The financing was sized to 80% of the purchase price of the acquisition. The land is adjacent to a 5-building, 45,000 square foot occupied office park and an extended stay hotel. The Sponsor’s business plan is to finalize entitlements and develop the second and third phases as an extension of the existing office park. Future improvements may include office, residential, storage, and/or hospitality. The Sponsor added a second piece of pre-encumbered collateral to strengthen the security of the loan.