The Lair - Highland Realty Capital Deal

The Lair

Construction Debt
183-Bed / 40-Unit Student Housing & Mixed-Use Property
Berkeley, CA

Highland secured a $28,150,000 Construction Loan to fund the development of an 8-story mixed-use student housing project on behalf of a client relationship and experienced local developer. The property is located within an Opportunity Zone, a short distance from the Berkeley campus. HRC arranged the Construction Financing from a Foreign Bank. The bank was not subject to Dodd-Frank’s Basel III’s High Volatility (HVCRE) cash equity requirement. The sponsor’s goal was to maximize its land contribution in the form of equity and minimize its cash contribution.

The property was previously acquired as a covered raw land site. Highland Realty needed a conventionally priced lender who would recognize the value of the subsequently entitled land for student housing, worth many magnitudes above the sponsor’s actual cost basis.  While an extremely challenging request, Highland identified a bank that provided a $28.15 million low interest rate construction loan, which represents 85% of the project’s actual costs. The loan was sized to $687,000 per unit, with a recourse burn-off at CofO.  Additionally, HRC arranged the $3.0 million pre-development Line-of-Credit in Nov 2021, which funded entitlements.

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