$37.4M Construction Loan for Office-to-Residential Redevelopment
Introduction
Unlocking value through strategic financing. A private real estate investment group sought a tailored capital solution to convert a vacant office complex into a high-density residential community. As demand for multifamily housing surged and office vacancies rose, the borrower recognized an opportunity to repurpose two outdated office buildings into modern residential units while developing new townhomes on underutilized land.
Executing this transformation required a sophisticated financing strategy to navigate construction costs, public incentives, lease-up timing, and long-term investment stability.
Challenge
Structuring a complex capital stack for adaptive reuse. The borrower faced several critical challenges in executing this large-scale redevelopment:
- Structural & zoning adaptation: Converting commercial office space into residential units required structural modifications, zoning approvals, and infrastructure modernization to meet building code and market demands.
TIF (Tax Increment Financing) Integration
- The project secured TIF funding from a local economic development authority to offset infrastructure and public improvement costs.
- Aligning TIF disbursement schedules with private capital sources required expert coordination between lenders, municipal agencies, and development stakeholders.
Capital Structuring & Risk Mitigation
- Maximum leverage to minimize equity requirements
- Phased disbursements tied to construction milestones
- A built-in Mini-Perm transition for seamless post-construction stabilization
Market Positioning & Lease-Up Strategy
- Financing needed to support lease-up efforts, absorption risk, and stabilization before permanent refinancing.
Exit Strategy & Long-Term Investment Stability
- The borrower required a capital structure that ensured financial flexibility post-construction, allowing for a smooth transition into permanent financing or asset disposition.
Solution
Expertly structured capital & $37.4 million non-recourse construction loan. To meet the project’s unique capital needs, Cornovus Capital acted as the advisory partner, structuring a financing package that provided:
Key Financing Elements
- Loan Amount: $37.4 million
- Loan Type: Non-recourse construction loan
- Interest Rate: Competitive market rate with a built-in Mini-Perm transition
- Loan Term: Designed to support lease-up, stabilization, and long-term asset appreciation
- Capital Stack: Integrated TIF funding to optimize cost efficiency
- Leverage Optimization: High loan-to-cost ratio, reducing borrower equity requirements
- Reserves & Capital Allocations: Structured reserves for tenant improvements, leasing commissions, and operating expenses
Through Cornovus Capital’s advisory expertise, the borrower was able to:
- Secure a high-leverage, non-recourse construction loan with an optimized capital stack
- Successfully integrate public and private funding sources, ensuring TIF alignment with lender disbursements
- Develop a strategic exit strategy, mitigating risk while preserving long-term asset appreciation
Results
Unlocking long-term value in a competitive market. With expert advisory services and strategic capital structuring, the borrower successfully executed the adaptive reuse plan, transforming an underutilized commercial site into a highly sought-after residential community.
Key Outcomes
- Efficient financing execution & development timeline: Construction commenced immediately, maintaining an efficient project schedule while leveraging TIF funding for infrastructure improvements.
- Phased development: Lease-up began before full project completion, optimizing cash flow and occupancy ramp-up.
- Multifamily market expansion:
- 144 newly converted apartment units within repurposed office buildings
- 97 newly constructed townhomes added to the housing mix
- High-end amenities including a fitness center, clubhouse, rooftop areas, and under-building parking
- Seamless loan conversion & financial stability: The Mini-Perm transition allowed the project to stabilize before securing permanent financing, ensuring a smooth financial trajectory.
- Market-driven positioning: The repositioned property emerged as a high-value asset, supporting the borrower’s long-term portfolio strategy.
About Cornovus Capital
With over 60 years of combined experience, Cornovus Capital is a trusted financial partner specializing in business financing, commercial real estate lending, and hospitality funding solutions. We design customized capital strategies that help businesses acquire, expand, and optimize operations, ensuring long-term growth and financial stability.
Our expertise spans SBA 7(a) and 504 loans, CMBS and LifeCo financing, private capital solutions, and structured debt strategies. By focusing on certainty of execution and closing assurance, we guide businesses and investors through complex financial landscapes, securing funding tailored to their long-term objectives.
Why Partner with Cornovus Capital?
At Cornovus Capital, we understand that complex transactions require sophisticated financing solutions. Whether you’re acquiring a business, buying out a partner, expanding operations, or combining real estate into a growth plan—we deliver capital strategies designed for certainty and efficiency.
What Sets Us Apart?
• Advisory expertise across business stages and sectors: We structure financing for acquisitions, expansions, partner buyouts, and practice ownership transitions.
• Innovative capital structuring: We integrate seller notes, working capital, CapEx, and goodwill financing into efficient, customized capital stacks.
• Lender alignment and competitive terms: We match each transaction with lenders who understand your industry—ensuring smooth approvals and favorable terms.
• End-to-end execution and advisory support: From deal modeling and loan packaging to lender communication and closing, we manage the entire process to ensure successful outcomes.
For business owners, professionals, and entrepreneurs seeking flexible SBA financing, Cornovus Capital delivers strategic insight, execution certainty, and long-term support.
Contact Cornovus Capital
At Cornovus Capital, we simplify the financing process with tailored solutions, competitive loan terms, and expert advice. Whether you’re acquiring, refinancing, or developing a property, we’re here to help you succeed.
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📞 513-653-4246
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