Borrower acquired a landmarked office property out of bankruptcy and intends to convert the use to multi-family. Borrower needed a lender that could provide bridge financing until the historic tax credits were sold, and then provide construction financing once project funds were completely sourced. Multiple capital layers, with a foreign equity source and mezzanine capital provider.
Red Fox was able to assist the borrower in the bridge phase, getting comfortable with the complex ownership structure, borrower’s experience in extensive renovation projects, and the likelihood that the tax credits (allocated pre-closing) would be saleable to a tax credit investor. Once all equity is in place, Red Fox’s bridge loan automatically converts to a construction loan; providing the balance of funding required to complete the project.
Red Fox’s takeout source will be an agency re-finance of the property. The property is in an emerging area of Brooklyn with multi-family demand that exceeds current supply. The developer’s equity, coupled with the equity injected from the sale of the tax credits, helps to reduce the overall loan basis and provides a comfortable cushion to exit at agency underwriting standards.