Type of the loan: Construction Loan
The loan was to provide necessary funding for the demolition of existing improvements and to construct a 6-unit ocean view townhouse.
This deal came to Grand Pacific with various challenges. The subject property was originally an aged, deferred-maintained triplex and single family residence in a prime location of Hermosa Beach, CA. City of Hermosa Beach has strict guidelines which prevent construction permits to be issued prior to the demolition, which was one of the funding conditions for most lenders. In addition to the high leverage that other lenders would not be entertained, the turnaround time for this project is expected to be lengthy, from acquiring the property to successfully selling all 6 units.
Despite the hurdles, Grand Pacific believed in the profitability of the project because of the desirable location along with an experienced developer. Grand Pacific was able to underwrite this deal with a full term interest reserve sufficient to cover loan payments for the whole process of this project. First, Grand Pacific financed 72% LTV for acquisition of the property giving sufficient time to apply for entitlement, vacate tenants, and getting necessary permits. On a separate transaction, Grand Pacific funded this construction loan with land draw, all hard costs, and soft costs. Grand Pacific once again was able to satisfy borrowers’ needs with flexible solutions.