Marcus & Millichap, financing subsidiary Marcus & Millichap Capital Corporation (MMCC), has arranged a $34.5 million construction loan for a 48-unit condominium development project in Pasadena, California.
“After completing the first phase of the project, with financing from another intermediary, the developer asked us to create a more flexible and competitive financing option for the second phase,” said Stefen Chraghchian in MMCC’s Encino office. “Phase I involved converting the adjacent office tower to 57 condominium units and Phase II will add 48 units above a parking structure.” Chraghchian and Sharone Sabar, senior managing director capital markets, arranged the loan. “The structure of the deal was complex as the unsold units from Phase I were attached to the Phase II loan as collateral,” continued Chraghchian. “We negotiated a payout structure for unit sales that would pay down the loan balance over time while allowing the developer to access more immediate sales proceeds.”
The 30-month loan was structured with a 5 percent adjustable interest rate and 40 percent loan-to-value. “Being in the midst of the Covid-19 pandemic added an additional challenge,” added Sabar. “We emphasized the importance of timing to all parties and pushed to close as quickly as possible.” The six-story, 62,075-gross-square-foot project is expected to be completed 2021. It will include an amenity deck with a pool, hot tub, and outdoor entertainment area. The average unit size will be 1,243 square feet.
