$28.15MM Construction Loan Secured for 183-Unit Mixed-Use Development in Berkeley

Highland Realty Capital Inc, Berkeley, Bay Area

Highland Realty Capital, Inc., secured a $28,150,000 construction loan to fund the development of an 8-story mixed-use student housing project on behalf of a client relationship and experienced local developer. The property is located within an Opportunity Zone, a short distance from the Berkeley campus.

HRC arranged the Construction Financing from a Foreign Bank, which is not subject to Dodd-Frank’s Basel III’s High Volatility (HVCRE) cash equity requirement. The sponsor’s goal was to maximize its land contribution in the form of equity and minimize its cash contribution. The property was previously acquired as a covered raw land site and needed a conventionally priced lender who could recognize the value of the subsequently entitled land for student housing, worth many magnitudes above the sponsor’s actual cost basis. While an extremely challenging request, Highland identified a bank that provided a $28.15 million low interest rate construction loan, which represents 85% of the project’s actual costs. The loan was sized to $687,000 per unit, with a recourse burn-off at CofO. Additionally, HRC arranged the $3.0 million pre-development Line-of-Credit in Nov 2021, which funded entitlements.

The Principals of Highland Realty Capital have arranged debt, mezzanine, and equity capital in excess of $8.0 Billion for commercial real estate owners, investors, and developers. Highland has broad experience in all product types and all layers of the capital stack for ground-up developments, value-add acquisitions, land acquisitions, recapitalizations, and permanent refinancings.

West Coast Commercial Real Estate News