Condo Inventory Loan - $20M A Note secured by 40 units - North Bergen, NJ

Overview

Underwrote the projected sellout of 40 condo units -55k NSF - in a 70-unit building - 103k NSF. The B note holder sought to refinance a $20M A Note which was a part of a $40M whole loan. The deal was received about 18 months after CO was issued and sales were launched. Through our market research, analysis of the sales history and, review of the building and its amenities, we derived a value that assisted in the effective structuring of the loan.

Identified Strengths & Weaknesses

  • New Product 

  • Location – 30 Min from Midtown NYC

  • Amenities and finishes superior to competing product

  • Unobstructed views of NYC skyline a

  • Slow sellout rate

  • The rise in interest rates since initial sales launch

  • No rental fallback

  • Unit listing prices were high and had not yet been adjusted given the change in market conditions

Outcome

  • We derived a projected gross sellout of $725/SF (sponsor's initial projection was $850/SF)

  • Modeled interest and principal paydown schedule

  • Stacked the unsold condo units to better project the sale of each unit

  • Projected 1.5 condo sales/month

  • Lender's basis was $365/SF - 50% LTV