Freedom Financial Funds completed a $6 million bridge loan on a leased and cash flowing parking lot in the Little Italy section of downtown San Diego. The 12-month loan is structured with two six-month extensions. The expected source of repayment will be from construction financing for a 33-story apartment tower. The site is fully entitled for the tower, and the borrower is working through the process of planning and approval for an early 2022 start.
The sponsors have experience in the product type proposed, with a similar project currently under construction in San Francisco. The project is further buoyed by political support, since it will deliver much-needed affordable housing to downtown.
Although the loan request was originally framed as a land loan, Freedom looked at the underlying asset as a cash flowing parking lot. Freedom then conducted extensive research of parking lots in San Diego, particularly downtown. Based on its research, Freedom was able to meet the borrower’s dollar request while remaining true to its objectives of limiting its exposure to land.
This loan is out of the ordinary for Freedom, as it usually does not finance parking lots or development sites for which it cannot make the construction loan. However, because Freedom looked at the request from a fresh angle, it saw value in the request based upon the premium site location; a parking lease with a demonstrated history of covering the cost of debt; and guarantors with the experience and resources to keep the loan current.