LFB was engaged by a second-generation homebuilder who operates in the San Joaquin Valley area of California to secure a homebuilder production facility in which it could acquire, develop, and build out its portfolio of subdivisions. This client specializes in entry-level single-family home construction and has been in business for over 40 years.

As structured, the facility was broken into two tranches – a $15,000,000 A&D facility in which projects could be acquired and developed to a finished lot condition, and a $30,000,000 vertical facility that is fed lots from the A&D bucket. In total, the peak revolving amount of the homebuilder facility is $45,000,000. The facility can accordion up as new projects are identified and added as collateral.

The facility allows for up to 70% LTC/LTV leverage during land acquisition and horizontal development stage, that increases to 75% LTV once the lots are finished. Once vertical, models and pre-sold homes are sized to 75%/95% (LTV/LTC), and spec homes at 70%/90% (LTV/LTC). Initial facility term length is 36 months, with extension options.

LFB is actively structuring similar homebuilder and developer facilities across the country, ranging in size from $25,000,000 to upwards of $250,000,000.