Presidio Residential Capital Funds First Residential Construction Loan

Presidio Residential Capital, a newly formed real estate construction lending company started by 30-year real estate finance veteran Don Faye, has closed and funded its first residential construction loan for the build out of 45 residential units. Presidio's goal over the next 24 months is to fund in excess of $250 million in construction loans for home-building projects in the Western United States and Texas.

The first loan by the new company, $11 million to Cornerstone Communities of San Diego, closed on October 30. The loan will provide the funding needed to complete homes in the Andorra neighborhood in Chula Vista, Calif.

John Burns, a nationally recognized expert and market analyst whose firm advises home builders and developers as well as lenders and equity investors, views the fund as meeting a critical market demand.

"Presidio Residential Capital fills an urgent need in the real estate industry - providing non-recourse construction loans for amounts of $10 million and above that can be obtained quickly and efficiently."

Buffeted by dramatic shifts in the banking industry, residential builders have found obtaining financing increasingly more difficult if not impossible to obtain. In the Federal Reserve's July Senior Loan Officer Opinion Survey, nearly half of the 54 banks responding indicated that for the past three months they had tightened credit standards for commercial real estate loans, including loans to residential builders. This continues a three-year trend of continually tightening lending standards. Nearly three-quarters of the builders surveyed responded that the availability of loans for single-family construction was worse.

Although Presidio Residential Capital targets single-family home builders, condominium projects will be considered on a case-by-case basis. Loans, with a minimum loan amount of $10 million, are being made based on the project and builder meeting specific standards. While the loans are made on a non-recourse basis to the borrower, they will be made as a first trust deed with a maximum loan-to-cost ratio of 75 percent.

With the National Association of Home Builders forecasting a need for more than 1.5 million single-family homes per year by 2012, Faye's company is positioned to take advantage of the inability of banks to provide funds to residential builders who still want to build homes.

Source: http://www.cornerstonecommunities.com/

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