The borrower owns more than 100 condominium units within the same complex. Because of this high investor ownership, the project is classified as non-warrantable.
The investor originally financed the portfolio using a bridge loan, but the loan was approaching maturity. At the same time, the borrower had an opportunity to purchase another condo complex and needed liquidity to move forward. The refinance needed to accomplish two things simultaneously:
Exit the maturing bridge loan
Generate cash-out proceeds for the next acquisition
The biggest obstacle was concentration. Most lenders immediately decline projects with ownership levels this high. On top of that, the non-warrantable status significantly limits secondary market demand for these loans.
These 10 units were part of the borrower's larger request involving financing 80 units.
Instead of trying to place the entire portfolio as one loan, the deal was restructured. The solution was to break the financing into smaller tranches of 10 units at a time, the first one being this 2.6M refinance.
By structuring the portfolio this way, the loans could be distributed among different note buyers on the secondary market. While the final structure used slightly lower leverage, it still allowed the borrower to generate enough cash-out proceeds to support the upcoming acquisition.
Investor concentration and warrantability rules can eliminate otherwise strong deals. If you're working on a condo portfolio that traditional lenders won't touch, our team may be able to structure a solution.
The deal ultimately closed after approximately 30 days, successfully replacing the borrower's bridge loan with long-term financing.
In addition to stabilizing the debt structure, the refinance also generated the liquidity needed for the investor's next purchase. Even though the transaction required structural adjustments along the way, the final result still met all of the borrower's original goals, with the rest of the 70 condos to be tackled soon after.
Loan Amount
$2,625,000
Property Type
10 Condos
Structure
30-Year Fixed
LTV
70% LTV
Timeline
Approx. 30 Days
"Non-warrantable condos are difficult to place because the secondary market demand is limited. But with the right relationships and structuring approach, we were able to get the deal done."
Non-warrantable condo financing is rarely simple. But with the right structuring strategy, even highly concentrated investor projects can still find financing solutions.
For large portfolio investors, the key is working with a lender who understands how to structure around the restrictions.
Our headquarters
50 Park Place, Suite 301
Newark, NJ 07102
loan products
