San Diego Commercial Real Estate Loans

San Diego multifamily closings

The firm's published San Diego closings are 2 multifamily financings: a $26.2M lease-up bridge loan on an 82-unit multifamily property, financed by Thorofare Capital and covered by Multi-Housing News in January 2024, and a $24M ground-up construction loan for an 82-unit multifamily project.

Those structures cover 2 separate stages of a development's capital plan: funding vertical construction, and replacing a maturing construction loan before the building has the operating history a permanent lender needs. Both appear on the track record.

• $26.2M lease-up bridge loan, 82-unit multifamily, San Diego, financed by Thorofare Capital
• $24M ground-up construction loan, 82-unit multifamily, San Diego

How lease-up bridge loans work on new San Diego apartments

A new apartment building usually receives its certificate of occupancy before it has enough leased units to qualify for agency or bank permanent debt. If the construction loan matures during that window, the sponsor needs a bridge lender that will size the loan on projected stabilized income and fund an interest reserve to carry the property through lease-up.

Bridge lenders look closely at weekly leasing velocity, concessions offered, the gap between pro forma and achieved rents, and how competing deliveries nearby are leasing. They also test the permanent takeout, so the stabilized net operating income has to hold up after concessions burn off and taxes reset to the completed value. Run the takeout through the debt yield calculator before you ask for proceeds.

Construction lending and entitlement in San Diego

San Diego is short on developable land, and much of the coast sits inside the coastal zone, where projects may need a coastal development permit on top of city approvals. Voters also set a height limit in much of the coastal area, which caps density on some of the most valuable sites. Construction lenders want those approvals final and any appeal periods run before they close.

The city offers density and height incentives near transit in exchange for affordable units, and state housing laws give some projects a ministerial path. Lenders underwrite the income restrictions on those units and confirm the covenants recorded against the land. For budget, contingency, and interest reserve mechanics statewide, see California construction loans and multifamily construction lenders.

Demand drivers lenders weigh by property type

Lenders read San Diego as several markets. Multifamily near military installations and the university campuses benefits from steady renter demand, while life science and lab space in Sorrento Valley and Torrey Pines is underwritten on tenant funding, lab buildout cost, and re-leasing risk. Hospitality lenders focus on leisure and convention demand and how quickly a hotel's revenue recovers after a downturn.

Industrial in Otay Mesa is tied to cross-border trade, so lenders ask about tenant exposure to manufacturing and logistics flows through the border crossings. Retail and self-storage are judged mainly on the trade area and competing supply. Across all of these, insurance cost in wildfire-exposed inland areas has become a real underwriting line item.

• Multifamily: rent regulation status, turnover, and new supply nearby
• Life science: tenant funding runway and lab conversion cost
• Industrial: cross-border tenant exposure and yard and truck access
• Hospitality: seasonality, group demand, and brand
• All assets: reassessed taxes and current insurance quotes

Existing buildings and California tenant rules

Older San Diego apartments are generally covered by the statewide annual rent cap and just-cause eviction rules, and the city has adopted added tenant protections. Lenders on acquisitions and value-add bridge loans underwrite rent growth within those limits and discount plans that assume large increases on occupied units.

An acquisition also resets property taxes to the purchase price under Proposition 13, so the seller's expense history overstates what a buyer will net. Build the pro forma on reassessed taxes and test it in the DSCR calculator.

Sending a San Diego deal for review

For construction, send the entitlement and coastal permit status, budget, contractor bid, and capital stack. For a lease-up bridge loan, send the current rent roll, weekly leasing report, concession schedule, and the construction loan maturity date. For stabilized assets, send trailing operating statements and a rent roll.

A principal reviews the file, identifies the lender types that fit, and tells you what they will focus on. When the package is ready, submit your deal.

Published closings

See all 30 transactions

Common questions