Northmarq secures a $12.255M construction-to-permanent loan for an office/warehouse building in San Diego, CA

SAN DIEGO, Calif. (Nov. 12, 2024) — Steve Hollister, of Northmarq’s San Diego Debt + Equity team, successfully arranged the construction-to-permanent financing for a 56,275-sq.-ft. office/warehouse building in the San Diego, California area.

“Given the current challenges in the construction financing market, this construction-to-perm loan for a non-credit tenant build-to-suit provided an attractive financing solution for the borrower,” said Hollister. “It enabled them to lock in a very attractive interest rate at loan application for the entire loan term, automatically rolling into a non-recourse permanent loan at completion, thus eliminating interest rate risk.”

Northmarq secured the construction-to-permanent loan for the borrower through its correspondent relationship with a life insurance company. The transaction was structured with a 15-year term, two years of interest-only payments followed by a 30-year amortization. The proceeds funded during construction are 65% loan-to-cost, with an additional earnout up to 80% loan-to-cost available upon occupancy. Northmarq also structured the loan with a fully amortizing $805,000 B Note to cover some of the tenant improvement costs and increase the overall proceeds.

The building will be of concrete tilt-up construction on 3.3 acres of land. It will have a 28-foot clear height with four dock-high doors, two grade-level doors and will be divisible into two tenant spaces. The office improvements will consist of 22,475 sq. ft., roughly 40%, including 6,846 sq. ft. of mezzanine space.