High Yield Financing Opportunity on a Quality Development Site
August 9, 2010
Carlton Advisory Services, Inc. as exclusive advisor to S&N Properties of Manning Inc. (“Sponsor”) a highly successful real estate land developer, is seeking a lender to provide a $5 million first mortgage (which includes closing costs and interest reserves) secured by Eagle’s Cove, a 420-acre existing golf course and land development project adjacent to South Carolina’s largest lake, Lake Marion, in Manning, South Carolina. The proceeds will be used to re-finance all of the $3.2 million existing debt, and finance the construction of infrastructure.
Eagle’s Cove has received map approval for the entire development, survey work has been completed on two of the five planned phases of the project, and all necessary permitting is in progress. The Sponsor has invested over $5.5 million into the project and will develop the land which includes re-developing the golf course, installing utilities and roads, and building the common area amenities.
With respect to the repayment of the loan, the Sponsor has a sure fire two pronged approach which will assure repayment. The plan is as follows:
First, the Sponsor, once additional site work is complete, can obtain a community development bond which is expected to generate approximately $7 million, which can be used to pay down the mortgage and/or finance additional land development work.
Second, the Sponsor plans to wholesale each of the five phases (either as is, or once the land development is completed) to end developers. The Sponsor can then use the proceeds to pay down the first mortgage and/or fund the remaining development work. The Sponsor currently has a letter of intent from a developer to purchase Phase 1 and the rental site for $12.83 million upon completion of infrastructure, and has strong interest from other developers to purchase Phase 2. The Sponsor has a proforma value of $13.37 million for Phase 2 for a total gross proforma sellout for Phases 1 and 2 of $26.2 million.
The Sponsor anticipates repaying the first mortgage loan once all the site work is complete on Phase 1 and Phase 2 and they have sold.
In addition, a portion of the loan can qualify for federal loan guarantees from the Department of Agriculture due to Eagle’s Cove’s location designation as a rural area, thus offering the lender additional security. To qualify for the guarantees, the lender must be a federally or state chartered institution. The Sponsor has already filed the necessary application with the appropriate government agencies for the federal loan guarantee program.
Key highlights of this Loan are as follows:
- One of a kind 420-acre lakeside development site featuring an existing golf course and marina.
- Sure fire development plan and exit strategy for the first mortgage lender.
- Excellent location in a high growth development area and desirable retirement community with great access to a major interstate (I-95).
- The loan can qualify for federal loan guarantees from the Department of Agriculture, providing the Lender with additional security.
- Experienced sponsorship.
We look forward to discussing the foregoing with you.
Sincerely,
| Howard L. Michaels
Chairman (212) 545-1000 |
Michael J. Campbell
Partner (212) 716-5611 |
Robert Mudry
Managing Director (212) 716-5618 |
