CASE STUDIES

COMMERCIAL LENDING

UNDER CONSTRUCTION

UNDER CONSTRUCTION

COMPLETED PROJECT

COMPLETED PROJECT

LOS ANGELES, CA

The project, 12 Single Family Townhomes, built under L.A.'s small-lot subdivision ordinance, located in the Miracle Mile section of Los Angeles, was in mid-construction when the developer wanted to take out equity to finance the project’s completion.

THE CHALLENGE

Traditional financing was difficult to secure because the project was in mid-construction and the sponsor wanted a cash-out refinance from the equity in the project.

THE SOLUTION

Arixa provided the developer a $6,800,000 loan to pay off existing financing and to fund the project’s completion. Out of the twelve units, the developer sold four units ranging from $968,000 to $1,040,000. The sales prices for the remaining units are projected between $930,000 and $1,000,000.

RESULTS

Our private investors & resources allowed our client to refinance and complete construction in an efficient and timely manner. To learn more about Arixa’s commercial lending, contact us today.

PROJECT SNAPSHOT

Table Style
Property Type 12 Townhomes
Funding Date April 2016
Loan Amount $6,800,000
Term 15 Months
Loan Type Refinance & Construction Completion
Estimated ARV $10,680,000
Loan-To-Cost 77%
Position Senior Loan

Opportunity Zones

1031 Exchange

Type of sold property that qualifies

Any appreciated asset or investment (need not be real estate)

Real property only

Amount required to invest

Only the capital gain derived from the sale of an asset is to be invested

100% of the proceeds from the sale of an asset must be invested

Deferral of capital gain

Up to 7 years

Indefinite – until sale of the final “replacement property”

Tax reduction (step up in basis) on capital gains tax

10% after 5 years

+5% after 2 years

=15% after 7 years

None

Tax free appreciation

Tax basis is reset to fair market value after 10 years, through 2047, resulting in no capital gains.

Capital gains are realized upon final sale of the replacement property assets. Tax basis is reset to fair market value upon death.

Taxes on depreciation recapture

Tax basis is reset to fair market value after 10 years, through 2047, resulting in no capital gains.

Taxes are due on depreciation recapture

Substantial improvement

Requires ground-up construction or heavy value added to qualify

(improvement cost > initial value of improvements)

No renovation or improvement required

Geography

Restricted to designated lower income census tracts in every state

Unrestricted within or outside of the U.S. Cannot exchange U.S. property for foreign property and vice versa.

Timeline

180 days from date of sale to invest in a fund + up to 180 days to identify a specific property or properties

45 days from date of sale to identify a property

180 days from date of sale to purchase property or properties

Required structure

· Requires a separate entity designated as an Qualified Opportunity Fund (QOF)

· 90% of capital invested in a project level entity within 6 months

· 31-month working capital safe harbor period

· Must pass asset test after safe harbor period: 70%substantially improved real estate; 30% working capital

None

RESIDENTIAL LENDING

UNDER CONSTRUCTION

UNDER CONSTRUCTION

COMPLETED PROJECT

COMPLETED PROJECT

LOS ANGELES, CA

The project, 12 Single Family Townhomes, built under L.A.'s small-lot subdivision ordinance, located in the Miracle Mile section of Los Angeles, was in mid-construction when the developer wanted to take out equity to finance the project’s completion.

THE CHALLENGE

Traditional financing was difficult to secure because the project was in mid-construction and the sponsor wanted a cash-out refinance from the equity in the project.

THE SOLUTION

Arixa provided the developer a $6,800,000 loan to pay off existing financing and to fund the project’s completion. Out of the twelve units, the developer sold four units ranging from $968,000 to $1,040,000. The sales prices for the remaining units are projected between $930,000 and $1,000,000.

RESULTS

Our private investors & resources allowed our client to refinance and complete construction in an efficient and timely manner. To learn more about Arixa’s commercial lending, contact us today.

PROJECT SNAPSHOT

Table Style
Property Type 12 Townhomes
Funding Date April 2016
Loan Amount $6,800,000
Term 15 Months
Loan Type Refinance & Construction Completion
Estimated ARV $10,680,000
Loan-To-Cost 77%
Position Senior Loan