Location: Adjacent to Culver City, California
Lender type: Insurance Company + Preferred Equity
Property type: Multi-Family / Retail
Transaction type: Construction
Loan amount: $42,000,000
Preferred equity: $16,000,000
Rate: L + 390 (Senior)
Term: 5 Years
Amortization: Interest Only
Prepayment: None Upon Certificate of Occupancy
Guaranty: Non-Recourse; Guarantee with Standard Carveouts to an Entity

Team Hachem successfully closed $58,000,000 in non-recourse construction financing for a seven-story, mixed use development across from Sony Pictures Studios and adjacent to Culver City, CA. The Project features 139 apartment units over 1,969 SF of ground floor retail. The Sponsor received a density bonus thanks to TOC incentives, in exchange for allocating 14 affordable units.

While this is the second U.S. project for a successful international developer, the pool of capital providers was significantly reduced due to the borrowing entity being headquartered in a foreign country. Presenting this deal during the height of the COVID-19 pandemic also presented significant challenges. Team Hachem leveraged its structured financing expertise, lender relationships, strength of the Project, and the Culver City market to negotiate the most desirable terms for the Sponsor.

The financings are comprised of $42,000,000 in senior construction debt from a insurance company lender and $16,000,000 in preferred equity and includes a substantial amount in recap funds to the Sponsor at closing. The term is five years, with interest-only payments and no prepayment penalty upon Certificate of Occupancy. The senior note is LIBOR + 390 and the preferred equity investment’s interest will be fully accrued during the entire term, thereby reducing the amount of interest reserve and the Sponsor’s initial cash equity contribution.

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