Advisory and Capital Services – Adaptive Reuse From Office To Multifamily

Challenge – Lineage Asset Advisors was hired by a family office to assist them in raising capital for a partially completed adaptive reuse project in

Santa Ana (Orange County) that their existing private lender had stopped funding the construction for. The project was approximately 60% completed at the time that Lineage was engaged on the assignment. The family was self-performing the construction of the project as the general contractor and developer but needed approximately $10 Million to complete the project and to obtain the Certificate of Occupancy. This was a 10-story office tower that had previously been vacant for years prior. When the COVID pandemic hit it stalled the construction and approval process with the City of Santa Ana and delayed the completion considerably.

Solution – Lineage Asset Advisors was able to identify a family office and multifamily capital source that was willing to provide the remainder of the $10 Million to the owner to complete the project and get to Certificate of Occupancy. Additionally, this capital source agreed to acquire the project outright prior to delivery of the Certificate of Occupancy thus providing both a capital source and a back end buyer / operator for the owner / developer.

Outcome – The buyer / developer ended up acquiring the 148 unit workforce housing property for $54 Million prior to Certificate of Occupancy which was achieved a few months post-closing. Lineage advised on the capital sourcing and disposition of the project. This was also an Opportunity Zone project with the developer bringing in a tranche of equity that was able to take advantage of the Opportunity Zone tax benefits. 1-year after closing the buyer / operator for the project has achieved rents at least 10% above the originally underwritten rents and are over 90% leased. This is one of the first adaptive reuse projects to be completed in Santa Ana and Orange County.