Development & Construction

Bank construction, debt funds, C-PACE, mezzanine, preferred equity, HUD 221(d)(4) and LIHTC equity.

Construction debt is negotiated, not shopped. The guarantee package routinely costs or saves more than the spread does. Owners who run a construction loan as a rate competition tend to win on coupon and lose on completion and repayment guarantees, burn-off tests and re-margin provisions, which are the terms that actually determine what happens if the schedule slips.

Where the capital comes from

Bank construction facilities with completion and repayment guarantees; debt funds for higher leverage and lighter recourse; C-PACE; mezzanine and preferred equity; HUD 221(d)(4) for ground-up multifamily; and LIHTC equity for affordable development.

What we underwrite and negotiate

• The guarantee package: completion, repayment, carry, and the burn-off tests that release them
• Interest reserve sizing and re-margin triggers, stressed against a downside absorption case
• GMP versus cost-plus, and where contingency actually sits
• Draw administration, retainage and lien-waiver mechanics
• Rate cap requirements and cost
• Takeout certainty, the term that determines whether the construction loan is a bridge or a trap

Representative experience

$30M construction financing for affordable development in Austin, and $38M of LIHTC equity placed across new construction and post-completion transactions.

This material is for general educational purposes only and does not constitute legal, tax, or financial advice. Terms, programs and requirements change and apply differently to specific transactions; confirm current requirements with qualified counsel and licensed professionals. Gibson Capital Advisors is a debt advisory firm and does not make loans.