Innovative loan allows Select Comfort developer to secure 94%
Loan-to-Cost financing and maintain 100% ownership of properties
throughout the development process
The transaction allowed a Select Comfort preferred developer to achieve 94 percent loan-to-cost construction financing for a 49 percent preleased, two-tenant, 7,780 SF retail center.
Envoy worked in tandem with its senior bank partner to provide the subordinated “B-piece” financing of the wrap construction loan for the retail center, located in
“North Hills is a tight urban infill market with nearly zero shop vacancy, no vacant land and no other new shop space scheduled for delivery in 2014,” says
The retail center transaction was the first to be completed under a new high leverage construction program designed to provide developers with the additional capital they need to increase the size of their pipeline and meet their tenant’s construction schedules.
“Envoy's program helps developers secure up to 95 percent loan-to-cost financing for their pipeline of net lease development properties without the hassles associated with JV agreements or mezzanine loan documentation,” Cram says. “And they no longer have to give up control as is typical with pre-sale contracts. It’s everything the preferred developer has been asking for.”
Unlike many financing programs available to developers, including those offered by REITS, Envoy doesn’t require the developer to sell the property immediately following construction. Instead, the developer retains control of the property simply by paying off the construction loan and paying an exit fee. For many developers, the Envoy program can represent the lowest-cost option for capital when compared to third-party equity and traditional bank construction debt.
Based in greater
Envoy is backed by a