Construction Bridge Loan for Philadelphia SFR Development

Funded by i Fund Cities

Philadelphia, PA

$5,670,000

Portfolio of Residential Properties

Residential Ground-Up Construction

02/15/2022
Transaction by
i Fund Cities
HIGHLIGHTS: All properties were originally new construction that was 75-90% complete when we got involved; Construction Budget: $ 345K to finish the properties; ARV: 70%; Loan to Value: 75% (of appraised value of already completed construction); Length of Loan: 12 months. OVERVIEW: The investor for 13 properties in Philadelphia, an existing customer that uses both iFC and local banks for project funding, was running into trouble due to increased construction costs and delays. The borrower was being severely impacted by the supply chain issues, which was causing their property budgets to be underfunded from their original lenders. To make matters worse, they were coming up on loan maturity dates with projects near the finish line, but not completed. The client came to iFC for help. Using our model of creative and flexible funding, we were able to originate a new blanket Bridge Construction Loan across all 13 properties, based on the current appraised value of the properties, even though construction was still ongoing. How did we do this? We calculated the as-is value by taking the percentage of the construction that was complete and applied that value towards the ARV. Solving for 75% of current appraised value, and 70% of ARV, we were able to originate a large initial cash-out amount so the borrower could recoup the capital that was put into the projects to cover overages and provide the remaining construction budget amounts in holdback. We were able to do all of this without having to order new appraisals. We simply got construction inspections to verify the percentage of work completed. (We did ask to see the original appraisals but knew those values would hold strong and most likely outperform.) Explains iFC co-founder and Loan Officer for these transactions, Chris Tereo, “The key for us being able to fund this investor was recognizing the value in the projects and believing in our borrower. This situation was not a function of failure to execute by the customer, rather, an unprecedented increase in construction costs and supply chain issues. We put on our investor hats and said, ‘how do we help this customer get out of this bind so they can continue to grow their business?’” KEY BENEFIT TO THE BORROWER: At the end of the day, this type of personalized relationship, flexible funding and out-of-the-box thinking is what you get when you come to i Fund Cities, and work with a lending company that is "Built by Investors, for Investors." CUSTOMER FEEDBACK: Says Chris, “Our customer was extremely satisfied with iFC’s lending capabilities because it got them out of a jam with tied up capital, saved them from having to pay extension fees and possible default interest, and allowed them to finish the projects and focus on new deals in their pipeline. The client made it crystal clear that it’s the creativity in our lending solutions that keeps them coming back to i Fund Cities.” (Note: Photos of these projects are not available.)