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Warm Springs - Washington County Utah |
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 The project was phase 5 of a 6-phase housing development in Washington, Utah. The land owner had already developed and sold out phases 1 through 4, but —due to health reasons— sold the last two phases to a Real Estate Agent and an Appraiser. However, the owner maintained an option to take over the project if it wasn’t paid for completely in six months.
The new buyers worked for 6 months. They paid for engineering, property improvements and application fees to the city of Washington for entitlements to develop 64 single-family building lots on the phase-5 property. (Once they received these entitlements, the property value would almost double, and commercial bank financing would become available to build roads and start selling lots.)
The two borrowers were getting close to the deadline when the city council told them that one last thing had to be done. They had to move an electrical line 4 feet on their engineering drawings in order to be approved at the next city council meeting in 30 days.
The borrowers asked the land owner for an extension, and the land owner said, “no.” The purchase contract was due in 5 days, and the land owner was not going to extend because the increase in property value was imminent. BLoC was the lead lender, and brought in syndicate partners. Two of BLoC’s fund mangers and four additional senior syndicate partners all traveled to Washington for the due diligence. After 5 days of intensive work, BLoC
and the syndicate partners funded the loan.
During the 5 days of due diligence, the six underwriters from the syndicate reviewed all documents; and had verification meetings with city officials, engineering contractors, several R.E. agents, the title company (who had previously completed phases 1 through 4), the original
land owner, and other neighbors.
In 90 days BLoC received a partial payment, and in 120 days the loan was paid off completely. As is often the case, BLoC “engineered and built a financial bridge” that ultimately saved these borrowers from losing their invested time and money due to a simple timing shortfall. |
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