Investment in Las Vegas theatre development was a top performer for private lending firm.
If you are a private lender, you know that creativity is the cornerstone to getting complex construction projects done (safely). Sometimes, even the seemingly simple projects turn out to be wildly complex. Private money lending is arguably one of the most influential contributors to completing private, ground-up construction projects.
One of the most influential and recent redevelopment projects in downtown Las Vegas is Eclipse Theater. Construction of this ambitious ground-up development started in 2015. It opened in fall 2017. The developer was the theater operator and his investment group. The financer was Enact Partners, a private-money lending firm based in Carlsbad, California.
Eclipse is an upscale, concierge-style, three-story, 72,889-square-foot luxury theater on a .8-acre parcel located just blocks from Fremont Street. The movie theater includes a restaurant, retail space, and parking garage on the first floor; eight theaters on the second floor; and offices and a VIP private screening room on the third floor. Access from the first floor to the two floors above is provided by two elevators located in the main lobby area.
|Project // Eclipse Theatre||LTV // Starts at 11% and will peak at project completion at approximately 42%|
|Financer // Enact Partners||Credit Score Considered // Yes|
|Location // Downtown Las Vegas, Nevada||Borrower Experience Level // Borrower is an experienced Las Vegas developer and sophisticated financier|
|Architecture Style // Upscale, concierge-style, three-story modern theater||Interest Rate // 12.99%|
|Loan Amount // $7,500,000||Length of Loan // 30 months|
Summary of Opportunity
Because it is located in a redevelopment area of Las Vegas rather than in a trendy area such as New York City or San Francisco, the project took some creative financing before any movie tickets could be sold or popcorn could be popped. One of the opportunities for financing was New Market Tax Credits (NMTC), a competitive incentive program designed to provide capital to areas targeted for revitalization.
The project qualified for $10.2 million in NMTC, which equaled approximately 50 percent of the total project costs. Once the borrower received the funds, they were held in a fund control account and were released as construction progressed.
The final piece of financing was a private money loan, which was deployed last but was senior to the rest of the capital stack. As you can imagine, the loan draw administration required to approve each draw was reviewed by the entire capital stack. This process took tremendous coordination and cooperation from each financing agency.
The lenders sold their note to a note purchaser in 2017. ∞