Lima One Capital funds high-end development in Napa Valley

Lima One Capital recently closed a $23.8 million loan to fund construction of 15 high-end homes in an infill development in Wine Country.

A renowned Bay Area builder with decades of experience in the area came to Lima One for funds to develop new homes on a 5.8-acre in-town lot in Napa County, California. Based on the quality of the sponsors and the uniqueness of the opportunity, Lima One provided a ground-up construction loan for all 15 homes in the development. Lima One’s top originator, Josh Schwartz, had funded loans for the builders before and brought the opportunity to the company.

“Wine Country is a highly desirable area to live thanks to wineries, spas, hiking trails, and more, but it has very limited new home inventory,” Schwartz said. “We saw this as a rare opportunity we wanted to partner on.”

Lima One’s strategic accounts team, construction management experts, and credit review committee thoroughly vetted the deal to ensure it was soundly underwritten. Lima One completed this process in three months, ensuring that the loan closed as soon as the builders had all the municipal approvals needed to put shovels in the ground.

“Our goal is to be the lender of choice for all of the top builders across the country.” Lima One Capital President and CEO Josh Woodward said. “I very much enjoyed spending time with this incredible team and visiting this wonderful site, and we look forward to seeing these properties come to life.”

Lima One’s loan structure with no interest charged on undrawn construction funds gives the builders flexibility to use their experience to manage operating capital during construction. Lima One also offered the builders non-recourse financing while including interest reserves to help the builders preserve operating capital as construction began.

In the end, Lima One financed 60% of the lot purchase cost and the full $17.25 million construction budget. The result was a $23.8 million loan funded at 85% blended loan to cost and 65% loan to value leverage, based on a $36.9 million valuation on the completed homes.

“The builder typically constructs about dozens of homes a year around the Bay Area, plus some multifamily properties,” Schwartz said. “With this proven history of successful builds and strong knowledge of the local market, the builder knew that planning high-end homes in this Napa Valley locale was a wonderful investment.”

The homes will be available in three different models. They are scheduled to be complete and available to the market in 2027.

About Lima One Capital

Since its inception in 2010, Lima One Capital has been recognized as the nation’s premier lender for real estate investors and has funded over $11 billion in business purpose real estate loans. With a reach across 46 states, Lima One operates as a capital partner for both real estate investors and brokers by financing residential investment strategies including fix and flips, rental, new construction, and multifamily. In 2021, Lima One was acquired by real estate investment trust, MFA Financial Inc. (NYSE:MFA), ensuring a consistent source of capital and further cementing Lima One as one of the most dependable private lenders in the United States. For more information, visit limaone.com.