Fractured Condominiums
The following case study illustrates how we add value in refinancing fractured condos for our clients.
Case: One of our clients sold 2/3 of the units in a recently completed condominium development. The construction lender had been paid off but due to the stalling condo market the developer could not realize his profits in the project. Also, the client needed these profits to inject more equity capital into another development that has stalled due to cost overruns.
Our Solution: Mortgage Equicap arranged a 3-year line of credit permitting individual unit releases without prepayment penalty. The developer will use the proceeds to complete the other development. The flexible repayment terms of the line of credit allow the developer to sell the units when market conditions improve.
About Fractured Condos
Fractured condos are unsold units in a condominium development. The need for financing structured condos has grown steadily in 2009 as a result of an increase in inventory of unsold condominium units. Unsold units can stall a project and pull a development into foreclosure.
