Situation:
A local builder encountered significant financing challenges due to delays in building permit approvals from the municipality. With 25 out of 44 homes presold, the project hit a roadblock when the institutional lender was unable to proceed with the loan due to the ongoing delays. The builder urgently required financing as construction costs were rising sharply.
The funding was needed to complete Phase 1 of a subdivision development, which included constructing 42 homes and preparing a 6-acre lot for 40 additional future lots. The situation was further complicated by the pandemic, which contributed to increased construction costs and extended timelines.
Solution:
Hillmount Capital provided a tailored solution by leveraging the as-is value of the unsold homes and incorporating additional collateral to mitigate the equity shortfall. By securing extra collateral, we were able to reduce the loan-to-value (LTV) ratio and inject the necessary equity to restart the project despite the increased construction costs.
This solution allowed the borrower to move forward with the completion of Phase 1 while also accommodating repayment terms and partial discharges.
Key aspects of the solution included:
- Leveraging the value of unsold homes.
- Collateralizing additional assets to lower the LTV.
- Offering flexible repayment terms and partial discharges to support project completion.
- Providing adaptable draw schedules as needed