Highland Realty Capital (“Highland”) is pleased to announce the successful capitalization of The Den, a 160-bed student housing development located in the heart of Downtown Berkeley, at Telegraph Avenue and Channing Way. The site, requiring demolition of the existing retail/office space, is located just two blocks from campus.
The Den, being developed by Sponsor, The Austin Group, will consist of seven levels comprised of 40-units and 160-beds in a mix of layouts, as well as 2,500 square feet of retail/restaurant space. The eight-story project will feature a rooftop balcony and garden to allow for student gatherings and take advantage of the beautiful views. The Den will receive a GreenPoint environmental certification equivalent to LEED Gold. Located next door to the University’s Maximino Martinez Commons sophomore dorm, the completed project will create much-needed student housing as well as complement the block’s collegiate pedestrian vibe.
On behalf of the Sponsor, an active Berkeley developer and an existing client relationship, Highland arranged the $2.25 million land acquisition and pre-development loan in April 2017, which was sized at 70% Loan-to-Purchase-Price. Once entitled, which caused the land value to increase significantly, the Sponsor desired a conventionally-priced lender who could recognize the entitled land value, to minimize its cash investment. Highland identified a foreign bank not subject to Dodd-Frank’s HVCRE requirements, which provided a $24 million construction loan, representing 87% of the actual project costs. The construction loan was sized to $600,000 per unit at a spread in the mid 300’s over LIBOR.
Jeff Eliason, Principal with Highland, noted “Given the supply-constrained market in Berkeley and insatiable demand for student housing, The Den will be a highly profitable project for our client. And with the favorable construction financing requiring minimum cash equity, the projected return on equity is compelling”
About Highland Realty Capital
Highland Realty Capital is a commercial real estate capital advisor, representing developers, investors, and owners to raise debt, mezzanine, and equity for their developments, acquisitions, refinancings, and recapitalizations. Highland’s expertise spans all product types including office, retail, residential, industrial, and hotels, as well as land. Its principals have closed more than $7 billion in transaction volume over 60 years of combined experience. The Northern California team includes Principal Jeff Eliason and VP’s Brett Mlinarich and Leland Ortega. www.highlandrc.com.