In the tight market of Boulder, CO, we provided a $3.15 million loan to help our customer Thistle acquire 2.6 vacant acres that will be turned into much-needed affordable homes.
Two developers were trying to move the project forward, but with several other projects in development, they decided to not proceed with it. They both approached Thistle, who purchased the project site in April.
Velo will be developed in two phases and will include 70 one- to three-bedroom condos. Fourteen of those will be income restricted to 80 – 120% of AMI ($87,000 to $130,320). Median income in Boulder increased 10% in 2018 and the median price of homes currently listed in Boulder is $825,000, up 5% from a year ago.
“There are 3.3 new jobs for every housing unit, so it’s a tight market. ‘Entry-level’ in Boulder County is considered ‘under $300,000,’ and that price point is moving upward so it’s a very high-priced market to do what we do,” said Michael Reis, Thistle’s Real Estate Development Manager.
We have provided three previous loans to Thistle: an acquisition loan for an affordable multifamily project, and unsecured loans for predevelopment (for single family homes) and bridge financing (for an affordable multifamily project).
“NC is quick to close and easy to work with. Our decision to call them was driven on our relationship and previous experiences,” said Mary Duvall, Thistle’s CEO.
As part of those two phases, we will split the acquisition loan into two notes, continuing the loan until Velo’s condos are ready for the market. We are keeping our acquisition loan in the deal through the construction phases of the project, when most conventional lenders would require repayment from the construction loan. Most lenders would also not be willing to subordinate their loan to the construction loan, as we did. We have more flexibility in the way we structure our loans and our approval process of these uniquely structured loans.
By keeping our acquisition funds in the deal during construction, Thistle can reduce the cash equity required for the construction costs of the project. This same structure is repeated once phase 2 begins construction – our acquisition loan becomes a subordinate loan that is essentially “bridging” the developer’s equity in the deal, so as to maximize construction loan proceeds. We did this because of Thistle’s organizational capacity and successful track-record.
“This kind of loan is ‘outside the box’ for most conventional lenders, and is a perfect example of the flexible financing we strive to provide to our borrowers,” said our senior loan officer Tamar Sarkisian.
Velo will be laid out in five two- and three-story buildings and its community amenities will include co-working spaces, a micro-market, and bike storage/repair facility.
Thistle’s mission to create and preserve affordable homeownership. As the largest affordable home developer in Boulder County, the private, nonprofit Thistle believes affordable homes are more than just a place to live. They develop, manage and preserve quality, permanently affordable rental and ownership homes to serve a range of household income levels. Since their founding in 1989, they’ve created over 1,000 affordable homes. With valued partners, they invest in their properties to preserve and enhance over $45M in community assets. Thistle contributes to the diversity and inclusivity of its communities by creating comfortable, quality homes in welcoming neighborhoods and supporting working and low-income families to live near where they work. They listen to their residents and practice empathetic management, and partner with service providers for the benefit of residents, staff and community.