Bridge Loan for Industrial Property Acquisition in Sacramento, California

SDC Capital, a direct private lender based in Burbank, funded a $4MM bridge loan for the acquisition of industrial property in Sacramento, California. The purchase price was around $5.3MM, so our loan is 75% loan-to-value, while the Borrower contributed 25% cash at closing. The building is in the “Green Zone” and will be used for a cannabis business. The Borrower plans to use their own funds to do some renovations and add some fixtures in order to provide a turnkey cannabis grow facility. Once they have obtained the appropriate licenses from the City, they will be leasing the building and will not operate the cannabis facility. SDC will only lend to a landlord for a cannabis property, not an operator. The Borrower agreed to partially pay down the loan subsequent to a near-term capital raise and sell the property during the loan term. We did our own valuation in-house and did not require an appraisal. Our interest rate on this deal was significantly higher than what we normally charge, due to the high LTV. We charged an 11% interest rate and 1.5 points. If the LTV was 65% or less, the rate would have been much lower. We made an exception with the higher LTV on this deal because one of the principals of our firm had a prior relationship with the Borrower, and we are confident in their ability to perform. This CRE bridge loan was funded in November 2018.