We put this custom structure together with a family office for NNN developers.

100% financing for Pre leased NNN developments with credit rated tenants.
10% To 12% Base Rate, Floating.
No lender participation.
1-2 Points In - to Lender
0- 1 Point Out - to Lender
You will need at least a 1.5% spread between the yield on cost and the exit cap rate.
Lenders need to see a clear path to an exit.
Full Guaranties until rent commencement
I will charge 1%
“Bad Boys”
Limitations on Development Fees until CO
Typical collateral:
First Deed Of Trust
Assignment of Rents
UCCs, Etc.

The developer will need to demonstrate the financial capacity, including the ability to cover cost over runs, to get this to commitment. To proceed, I need project proformas and 2 years’ PFS of the developer, comps, ProForma. The money is paid out in draws either monthly or as benchmarks are reached. Notice we've kept origination to a minimum. If you're a broker please don't ask for more than a point. We're looking to get repeat business from developers.

Overview in detail

The loan can be for the total project cost so long as the loan does not exceed 80% of the eventual value.

For credit rated, pre-leased, “household-name” development, assume the loan will be 100% of cost not to exceed 80% of ultimate value.

Recourse is negotiable.

The borrower will never be relieved from recourse for construction completion, environmental nor “bad boy” clauses.

There must be a clear path to exit.

The lenders want to charge a point going in and same at exit. (Everything is negotiable.)

Usually 18-24 -month term; can pay off sooner. Term can be extended at a charge.

The lenders want to establish a credit facility, not just do one-off.

The lenders must understand (be able to predict) the exit cap rate w/in a narrow range.
Usually, there is a about a two-point spread between yield on cost (NOI ÷ Total Cost) and exit cap rate (NOI ÷ Sales Price or Value). A 1.5% spread could be enough.

No dollar limit.

Anywhere in the USA and Eastern Canada.