120 Unit Senior Housing Development: Construction Loan

[Scott Walton]

Hi there,

I am developing a 120 unit IL/ISL community on a 19 acre property (flush with old growth trees, waterfront, and 210 foot elevated views). The project is $54M in total costs. The debt equity split on the financing will be 85% debt (75% bank, 10% secondary lenders) and 15% equity (mix of private investment and land contribution). The developers (myself and two others) are big on insulating ourselves from personal guarantees in deals. One idea we had was to have a construction company borrow the money (in exchange for holding the title until refinancing) to insulate us from signing guarantees. 

Has anyone had any experience with this? What is an acceptable interest rate premium (construction company borrows at 5% but add on X%)? 

Thank you,