Dealmaker: Gantry Secures $17M For San Diego Multifamily Developments

Gantry, San Francisco, secured $17.1 million in construction-to-permanent financing for two multifamily infill development projects in San Diego’s Pacific Beach neighborhood.

Both developments lie within walking distance of the beach and will include ground-floor retail components. The borrower expects to commence construction early next year; the first project will house 40 apartment units and the second will have 20 units.

Gantry Director Jeff Matlock secured the financing for the private San Diego-based developer. A regional bank supplied both loans at a 70 percent loan-to-cost ratio. The two-year construction loans will convert to five-year fixed permanent loans during stabilization, ensuring predictable project financing costs for a total of seven years.

“The lender locked rate three and six months before permits on these construction-to-permanent loans,” Matlock said. “It is a unique opportunity for qualifying developers in the current cycle because while we remain in a generationally low interest rate climate, they are locking in their financing costs across the entirety of the project’s first seven years of operation.”

Matlock noted the borrower has more than 40 years of experience in the region and remembers the inflation of the 1980s, so they focused on locking their interest rate now to hedge against higher rates at completion. “With the current increases in building material costs and signs of continued inflation emerging today, securing a fixed-rate construction loan while also locking in the permanent financing component provided assurances that these projects will deliver and perform as envisioned,” he said.