Progress Capital Secures $12.5 Million in Acquisition Financing for “The Harvard” Apartments in East Orange, NJ

“I got the call from my client”, said Brad Domenico.  “How can I finance a newly constructed Class A apartment building that is completely vacant without a TCO and I need to close quickly!?!”  To understand the solution, there first needs to be some background.

Our client wanted to purchase a building located in an Opportunity Zone in order to shelter capital gains.  ‘The Harvard’ in East Orange is a 60 unit newly constructed multi-family building located within an Opportunity Zone.  The OZ rules permit capital gains to be invested into a newly completed building within a Qualified Opportunity Zone as long as a) the building has not yet received a TCO; AND b) no tenants have moved into the building at the time of purchase.

THE CHALLENGE:
Secure 75% financing for a newly constructed vacant building without a TCO during COVID.  The mission was to provide the correct set of facts to a Lender who could get comfortable with the market rents and absorption projections in order to support a loan equal to 75% of the purchase price.

THE SOLUTION:
Brad reached out to Eric Regenbogen of Arbor Commercial Capital to structure options for the Borrower.  Arbor provided a balance sheet bridge loan to allow the Borrower to purchase the property, finalize the TCO and allow 18 months for stabilization.  Brad also relied upon the market knowledge of the selling brokers (Fahri Ozturk and Rich Gatto of Marcus & Millichap) to provide data to Arbor mitigating the lease up risk.

This is a classic example of how a team of experts can take a seemingly impossible task and make it possible.