LOS ANGELES—Elite Real Estate has secured $21 million in financing to develop a 49-unit 80,000-square-foot multifamily complex in Brentwood. It is the largest development to break ground in the Brentwood market in more than a decade. The construction loan carries an 80% LTC ratio, an unusually high ratio that shows, under the right circumstances, lenders are willing to increase leverage to stay competitive.

In taking quotes from lenders for the loan, Jonathan Lee, SVP at George Smith Partners, who secured the funds on behalf of the borrower, received two quotes from lenders for 80% LTC, which the borrower needed to complete construction. “They run a debt-yield test of the NOI at stabilization, and we were able to argue up to 80% and get them comfortable because the borrower had bought the land at a great basis and there is a lot of value there, even though the loan to cost was relatively high,” Lee tells GlobeSt.com. “The land basis was such that the loan to value was in line with what you would normally see in the market, but the loan to cost was a little bit higher. Additionally, because this was an infill location, they lowered their threshold on the backend.” The loan has a 30-year term at LIBOR plus 2.5 and recourse limited to the top 50% of the loan amount.

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