Commercial Mortage Lenders- Condo Conversion Financing

Commercial Mortgage Lenders for condo conversions

These are three nearly completed condominium conversions in southern California totaling 225 units.  Financial Compound arranged $9,000,000 of high-leveraged second mortgages with commercial mortgage lenders when the conversions were  75% completed.  The borrower needed to quickly monetize some of the equity in the unsold condo units to meet its liquidity covenants required by another construction lender. Our second mortgage lender was able to get comfortable with the transactions based on the borrower’s track record of success in the trade area.  The loans were approved in two business days and closed within two weeks, during which time inter-creditor agreements with the first mortgage lenders were documented and approved by the  seven sets of lawyers involved (each first mortgage lender had in-house and outside counsel, and our lender had their own lawyers).

Loan terms included an 18% interest rate, 1 year loan term, interest only.  Combined loan to value 94%.  Lender fee of 10%, no pre-payment penalty.  Two of the properties were cross collateralized and require 100% of the cash flow to paydown our loan, and the other property had favorable release prices.

Commercial mortgage broker Financial Compound was able to place and close this transaction quickly to meet the borrower’s liquidity covenant deadlines on an unrelated project, allowing the borrower to continue executing its overall business plan of converting apartments to condos.  The borrower was able to avoid a technical default on this other transaction, which potentially could have caused them big problems as well as triggered the lender to try and pursue personal guarantees on that project.