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CONSTRUCTION LOAN UNDERWRITING PROJECTS
*A representative list of Construction Loan Underwriting Projects
Kamin Office Building, Seattle, Washington
The client was a local lender making an initial foray into ground-up development. The majority of the support effort was the development of a dynamical projection model that incorporated the disbursements of construction funds, the lease-up to stabilization, and the eventual stabilized value serving as the basis of refinancing the construction loan. The model allowed the client to make various assumptions regarding key inputs and immediately see the results on the adjacent dashboard. An emphasis was placed on adequate construction interest reserves, sufficient tenant improvement reserves, and necessary cash flow and capitalized value to support the construction loan being repaid within the maturity date.
South Main Street Apartments, Longmont, Colorado
The client was a Los Angeles based private equity group well practiced with existing building finance, but new to the ground up construction financing. The focal point of my work was the development of a dynamic cash flow model that incorporated the disbursements of construction funds, the lease-up to stabilization, and the eventual stabilized value serving as the basis of refinancing the construction loan. Given the amount of new construction competing with the subject, a special emphasis was placed on market vacancy as the subject’s units began to come on line and corresponding rental concessions likely to be needed to fill the units.
The Twenty 1 Residential Condos, Chelsea, New York
The client was a Philadelphia based private equity group, well-versed with residential condominium rehab projects. The majority of the support effort was the development of a dynamical projection model that incorporated the disbursements of construction funds, the lease-up to stabilization, and the eventual stabilized value serving as the basis of refinancing the construction loan. Given the oversized nature of the units, the lease-up was “chunky”, therefore special consideration was given to the sequence of units sold and how that impacted remaining unit values as compared to the outstanding balance of the construction loan. Release prices were adjusted accordingly.
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