Fairbridge Bridge Loan Revives a Stalled and Complex Project

Fairbridge’s bridge loan, along with its network of expert resources, helps a Florida developer complete an adaptive reuse commercial project.

With its warm temps and sandy beaches, Florida is attracting a new generation of residents and students. So, when a commercial developer spotted a vacant office building with excess buildable land, he realized it may be the exact right property for a modern, climate-controlled self-storage facility in an area in great need of one. But many lenders balked. Fairbridge’s due diligence and network of service professionals provided ample confidence to issue an $8 million bridge loan that’s bringing this 94,000 gross square foot project online ahead of schedule.

A two-fold challenge

The office building near a large university campus had once housed a call center but now stood vacant. What it offered this developer-with-vision was the proper zoning and physical foundation to convert it to a climate-controlled, drive-in self-storage facility. As for the construction itself, the process would be quite straightforward: The existing building would undergo adaptive reuse while ground-up construction would extend the building’s footprint.

However, two things stood in the way of the developer obtaining short-term financing to get the facility ready for rental. First, construction had been temporarily stalled, making lenders cautious about the integrity of the work already done. And second, it being an older property, understanding the nuances of the adaptive reuse plans, including stormwater and drainage resilience, took additional efforts and structuring.

The developer’s financing broker, who has brought dozens of projects to Fairbridge’s attention, knew that this kind of nuanced project is where Fairbridge excels. The broker notes, “I trust Fairbridge implicitly. The project required a little bit of a personal touch and understanding of all aspects of real estate, construction and adaptive reuse.”

“It wasn’t the easiest project out-of-the-box,” recalls Steven Wissak, Fairbridge co-founder and partner, “but we were able to understand it, get control of it, and feel good about it.” Wissak adds that part of feeling positive was that the developer was experienced and had done projects in this asset class before. An important value-add: the sponsor had already onboarded a brand name to eventually buy the property.

Professional due diligence and expert resources create a foundation for lending

Lenders have a reputation for avoiding mid-construction projects; they haven’t signed off on what’s already taken place and whether it’s been properly done. Fairbridge was able to establish confidence in the project’s feasibility by taking time to fully vet and understand it.

Given that the construction is slab on grade, with relatively simple interior build-out details, and minimal electrical and plumbing, “we could get comfortable very quickly on the past work,” notes Wissak. Fairbridge brought in an outside engineering firm to check the quality of the adaptive reuse work, inspect for issues like cracks, and provide an expert opinion on the property condition. Passing the examination eliminated hurdle one.

Fairbridge similarly addressed the resilience issues with professionalism, bringing in a local remediation company to work in tandem with the remediation company that Fairbridge often uses. “People tend to overestimate issues related to stormwater and drainage retention. Yes, there is a cost, but if the proper steps are taken and you fund into that, you can make sure that the issue is resolved and the site is sound – then it doesn’t become an obstacle to refinancing,” explains Wissak.

Quick process for a multi-million-dollar short-term loan

With all due diligence complete, Fairbridge issued an $8 million one-year bridge loan. Wissak comments, “We were able to get the term sheet out quickly, do the third-party work, and get the transaction closed. The quicker we work, the happier everyone is.”

With the short-term financing and a schedule in place, the sponsor has not only met Fairbridge’s projections, “They have probably exceeded what we thought they could complete in time,” says Wissak.

And with progress made possible by Fairbridge financing, Fairbridge should be able to exit the project when the loan comes due, the sponsor can refinance the project with the storage company’s lending arm, and, eventually, the storage company can buy the space outright.

It will be approximately 14 months from the time the deal was presented to Fairbridge to the project going online – a very quick turnaround by industry standards. A complex project that almost never was, is now set to fill up fast.

A private lender with capital, resources, and foresight

This project may have had other lenders, both private and public, walking away. The principals at Fairbridge bring decades of hands-on experience in real estate, construction and bridge financing to spot opportunity and support developers. When a project has sound fundamentals and a sponsor has a record of success, Fairbridge seeks to provide quick alternative lending solutions. Complexity may be a hurdle for some, but here, it’s an exercise in applying creative thinking and the proper resources.

To learn more about Fairbridge’s approach to bridge loans and our commitment to support commercial developers, reach out and talk to a decision maker or visit fairbridgellc.com.

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