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Transactions
Construction Loan Financing
Northpointe Townhomes
Milestone Realty Services worked in a mortgage
brokerage capacity to procure $6 million in construction loan financing
on Northpointe Townhomes, a townhome development in Melvindale,
Michigan.
Development
Northpointe Townhomes is a 264-unit townhome
development located on 21 acres. The development team was a joint
venture of two experienced teams, Hughes Properties, LLC and Hometowne
Building Company. Hughes Properties had extensive experience in
site planning and land development and Hometowne Building Company
had extensive single-family and condominium construction experience
Michigan.
Developer Objectives
Milestone met with the developers to understand the history of the
project and identify the developers' objectives. The developers
had successfully completed rezoning of the property and had designed
a new type of townhome product for the site providing privacy and
quality amenities for the homeowners and affordably priced for the
market. The objective of the financing was to procure both a land
acquisition and infrastructure loan and a revolving townhome construction
loan that would provide the developers with the adequate financing
to meet the projected absorption demand schedule. Since the developers
had created value through the rezoning and permitting process, they
wanted the loan proceeds to reflect this value, which was supported
by an outside appraisal. They wanted a competitive, adjustable interest
rate.
Solicitation
After outlining the parameters of the financing need, Milestone
prepared a Request for Financing Proposal, a comprehensive offering
package on the development, that detailed the development, the projected
construction costs and the proforma absorption schedules. As this
was a new construction loan, Milestone identified selected Taft-Hartley
pension funds and banks as likely targets to do this financing.
Requests for Financing Proposals were sent to several prospective
lenders who specialize in the financing of new construction.
Negotiation
Milestone received and analyzed several proposals, met with these
lenders to discuss the development and conducted site tours. After
review and negotiations, lenders were asked to submit final financing
scenarios.
Closing
While many mortgage brokers' services stop with a signed commitment
letter, Milestone continued to assist the developers in closing
the loan. Milestone was available to assist the developers in negotiating
the commitment letter, coordinating the due diligence and reviewing
loan documents, all to ensure a timely closing.
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