Purpose

The loan will be used for predevelopment costs for affordable rental and for-sale homes, including condominiums and townhomes.

Structure

Predevelopment loans may be structured as term loans or as revolving lines of credit.

Loan Amount

Loans may range between $50,000 and $500,000; a budget of the predevelopment expenses must be provided and approved by Century.

Term

6 to 24 months

Pricing

Interest rates will be negotiated between the Borrower/Sponsor and Century. Market conditions and overall risk of repayment will determine the loan interest rate, which may be fixed or variable based on an index rate (typically LIBOR). Loan fees include origination fees (typically 1.5–2.0%), legal documentation fees, and the costs of third party reports (appraisal, environmental, etc.).

Repayment

Predevelopment loans are normally repaid through site acquisition or construction financing. Public agency funds may be used, when available. Interest reserves may be funded from the loan proceeds, or interest may be paid directly by the Borrower/Sponsor.

Security

Predevelopment loans are secured against development sites, when possible, through a recorded Deed of Trust and Assignment of Rents. Loans may also be recourse to the development Sponsors. Other collateral, including real estate, may be required.