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Transactions
Construction Loan Financing
Research
Lofts – Detroit, Michigan
Milestone Realty Services, Inc. procured first mortgage and
mezzanine loan financing for the redevelopment of a vacant former
office and manufacturing facility into a loft condominium complex
located in the City of Detroit.
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Property
Research Lofts is an adaptive
reuse of a 44,000 square foot vacant manufacturing
building into 38 loft condominium units. The Project
will be comprised of one and two-bedroom units averaging
798 square feet. The two-story Crescent Brass & Pin Company
Building was constructed in stages between 1905 and 1956. This
property is located on Trumbull Avenue adjacent to the New
Center area, Wayne State University, and Henry Ford Hospital.
Owner Objectives
The developers of this project had altered their development
strategy from rental units to for-sale residential as the condominium
market in Detroit began to flourish in 2004. The developer had
purchased this building and adjacent parcels and much of the
pre-development work had been completed. The Developer engaged
Milestone to procure necessary financing to commence the construction
phase of the project.
The strong residential condominium market
in the City of Detroit has resulted in numerous lenders becoming
active in lending on projects of this type, and the developers
sought Milestone’s
expertise to navigate this process and procure the most favorable
financing terms available. Milestone quickly gained an understanding
of the project and utilized its knowledge of the residential
condominium market in Detroit to assess the most likely lenders
for such a project.
Solicitation
Milestone prepared a Request for
Financing Proposal, a comprehensive offering package on the project
which detailed the property’s
proposed amenities, location, facilities, development team, and
sale projections, and distributed it to those lenders deemed
most compatible with a project of this type. Milestone personnel
have substantial experience in real estate development, management,
valuation, and financing which proved invaluable in this assignment.
Milestone’s
extensive knowledge of Detroit-based lending sources and non-conventional
lenders active in redevelopment projects was important to this
process as it significantly streamlined the initial phases of lender
solicitation and eventually provided for maximum loan proceeds.
Negotiation/Closing
Milestone received and analyzed
several proposals from construction lenders, met with these lenders,
conducted site tours, and assisted in the flow of information.
Milestone ultimately aided the developer in the selection of
the primary construction lender as well as a lender to provide
mezzanine financing to be used for the build out of model units
as well as some pre-development activities. While many mortgage
brokers’ services stop with a signed
commitment letter, Milestone continued to work with the developer
in the negotiation of the commitment letter, coordination of
due diligence, and review of loan documents, all to ensure a
timely closing. The experience and expertise of Milestone proved
integral to the success of this transaction. |
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