Land loan from Kennedy Funding gets Long Island development off the ground
$860,000 bridge loan to be used for working capital for 22-parcel project on Long Island
ENGLEWOOD CLIFFS, NJ — Securing financing for a development project with only raw land as collateral has become more difficult in recent years thanks to a combination of stricter government regulations such as the Dodd-Frank act on lenders, and traditional financial institutions becoming more conservative in their lending practices.
Kennedy Funding LLC, a large nationwide direct private lender, has announced that it has closed on a $860,000 loan to La Mare Win, LLC. The land loan will provide working capital for the borrower to begin on a residential development in the Long Island community of Glen Cove, NY.
The 6.82-acre property, purchased by La Mare Win in 2014, is located on a cul-de-sac on Burns Avenue on the Long Island Sound about 30 miles from Manhattan. La Mare Win is still in the early stages of the permitting process with the Glen Cove Planning Board. The company’s current plan is to subdivide the property into 22 parcels with 21 single-family homes, and 12 affordable housing units for rent.
The La Mare Win property is convenient to Sea Cliff Beach, as well as the Sea Cliff Long Island Railroad station, and the $1 billion Garvies Point waterfront district that recently broke ground, which will be a 56-acre mixed-use development that will include residential, commercial, restaurant, retail, cultural, park and green space.
Lending on land, strictly based on the value of undeveloped land, is not common. Traditional lenders, such as banks, have strict limits on borrowing when it comes to raw land as collateral. As a direct private lender, Kennedy Funding has more flexibility in lending and is not impacted by the same regulations that conventional lenders encounter. According to a report in Bloomberg, direct lending funds surged to a record $29.9 billion worldwide in 2014. The Mortgage Bankers Association reports that alternative lenders, including direct private lenders, saw a 68 percent increase in lending activity in 2015.
“Very few, if any, traditional lenders are willing to provide loans on raw land,” explained Kevin Wolfer, CEO of the Englewood Cliffs, N.J., firm. “Raw land loans are seen as a greater risk because of the perception that the borrower has less of a stake in undeveloped land.”
What also makes lenders nervous about raw land loans is, if the development project does not go forward, the lender is stuck with undeveloped or unfinished land that may take a long time to sell.
“A borrower comes to us with a vision for their project,” Wolfer said. “But there’s one major obstacle: getting money for working capital to move the project forward. Making that happen is what Kennedy Funding is built on.”
Kennedy Funding LLC, a nationwide direct private lender, specializes in bridge loans for commercial property including land, acquisition, development, workouts, bankruptcies, and foreclosures. The principals of the company have closed in excess of $2.5 billion in loans to date. The firm’s creative financing expertise enables the closing in equity-based loans up to a 75% loan-to-value ratio, from $1 million to more than $50 million, in as little as five days. Kennedy Funding LLC continues to actively seek new funding opportunities throughout the world.