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Halfway Completed Project Loses Financing
4 Feb 2009 | No Comments | posted by Corey Curwick | in Success
I have an awful story to share with a good ending. A developer friend, who I have put deals together for in the past, called me frantically yesterday.
With a halfway completed commercial office building, his private banker of over ten years, just told him that the bank would be pulling his line of credit effective now. His banker told him there was nothing they could do. Despite the fact that the development is in a prime location, despite the fact that he already had contracts which would have the building 100% occupied after its completion in six months, the bank simply said they could not fund the project further.
For my developer friend, commercial bridge financing is his saving grace. Many banks are calling the Notes on many projects that are still under construction. For a developer with a great project even during tough economic times, this is a death knell.
Because halfway completed construction projects are nearly impossible to find traditional funding for, a developer in my friend’s situation has to be able to depend on private money. Obviously the goal then is to get permanent financing in place while the bridge loan provides some breathing room.
Private money lenders do not want your property, so the loans are for short-term. However, in special cases that require longer terms, there are investors that are stepping up to provide financing for up to 3 years.
The availability of private money for unexpected financing nightmares like this is just one example of how the wheels of our delicate economy keep on turning! Thus a good ending to an awful story!
Posted by Blake Reese on Wednesday, February 04, 2009
This article was written by: Corey Curwick