Commercial Mortgage Broker arranges Cutting Edge Land Loan
Commercial mortgage broker Financial Compound arranged a $20 million land loan for acquisition and entitlement for 4,000 acres of land in southern California. The borrower intends to divide this raw land into approximately 450 home sites and a large commercial pad for a hotel, and views this large land parcel as ideal for development. They also plan to build a private golf course for the residents. Given the potential value of this land should the borrower obtain all approvals for this subdivision the parcel should be worth $675 million making the loan-to-value 3%.
Land entitlement loan
With such an ambitious project on the line, getting approval from local authorities is key. This land entitlement loan from commercial mortgage broker Financial Compound represents an excellent opportunity for growth and investment in southern California. The terms of this hard money commercial land entitlement loan included a 12% interest rate, and 6% lender fee. The loan is non-recourse. However, since the entitlements are not guaranteed, the borrower’s down side scenario is to divide the land into 40 large estate lots, worth $150 million so that the downside LTV is projected at 13%.
Land entitlement loans are financial products that are specifically designed to help commercial property owners secure the capital they need for horizontal infrastructure development projects, including roads, blue top pads, utilities, curb cuts. Oftentimes this type of property may not meet the traditional lending criteria. These loans may be processed through commercial mortgage brokers, who can connect borrowers with a range of lenders that cater to different project types and funding amounts.