$1.5M Predevelopment Bridge: Gaslamp Quarter Mixed-Use Conversion
San Diego, CA — A short-term-rental operator held two vacant historic buildings in the Gaslamp Quarter with a maturing purchase mortgage and construction plans still in process. Helvetica funded a $1,500,000 first mortgage at 58% LTV on a 9-month interest-only term — with nine months of interest held in reserve — so the borrower could retire the maturing debt and finish entitlements without a forced sale.
The Borrower's Problem
The sponsor — an operator managing roughly 75 short-term rental doors — had assembled two adjacent historic buildings downtown with a plan to combine them into a single mixed-use asset: ground-floor retail below high-end two-bedroom short-term rental units, joined by a shared elevator and easement.
The problem was timing. Both buildings were vacant and producing no income, construction drawings weren't finished, and a purchase mortgage was coming due. Credit was fair, liquidity was thin, and the two properties represented most of the sponsor's net worth. No bank was going to refinance a vacant, pre-entitlement asset on that profile — and no construction lender would fund before plans were complete. Without a bridge, the choices were a distressed sale or losing the assembly entirely.
The Helvetica Solution
Helvetica underwrote the real estate and the plan rather than in-place cash flow. A $1,500,000 senior first mortgage funded at 58% of the $2,600,000 as-is value on a 9-month interest-only term, retiring the maturing purchase loan and leaving room for predevelopment costs.
Because the property produced no income, Helvetica held back nine months of interest at closing as a reserve — the loan carried itself through the predevelopment period, removing the monthly payment pressure a thin-liquidity borrower could not have absorbed. Additional security was taken as a second lien on the adjacent building, with a defined $300,000 release price so the borrower kept flexibility to sell or refinance that parcel separately.
Benefit to the Borrower
- Maturing purchase mortgage retired — no distressed sale of the assembly
- Vacancy and unfinished plans underwritten as a stage, not a decline
- Fair credit and limited liquidity did not disqualify the request
- Nine-month interest reserve meant no out-of-pocket debt service
- Cross-collateral structured with a clear $300K release price for flexibility
- Runway to finalize plans and move into construction financing
- All of the conversion upside stayed with the ownership group
Deal Highlights
- 10,750 SF three-story-plus-basement historic mixed-use building
- Planned 2,790 SF ground-floor retail plus six two-bedroom residential units
- As-is $2.6M; as-complete $7.8M; as-stabilized $8.0M
- Second lien on the adjacent 5,000 SF building as additional collateral
- Exit via construction takeout financing in 6–12 months
Loan maturing before your plans are ready?
Helvetica funds bridge and predevelopment loans from $300K–$10M+ on investment and business-purpose real estate, typically closing in 3–10 days following receipt of all requested documentation.
