$2.81M Value-Add Purchase Bridge: Mixed-Use Retail Strip Center
San Diego, CA — A newly formed ownership entity was in escrow on a 20,846 SF mixed-use retail, storage and residential property on a high-traffic University Avenue corridor. Helvetica provided a $2,810,000 first mortgage at 65% LTV, including a tenant-improvement holdback, so the buyers could close on schedule and begin repositioning the asset immediately.
The Borrower's Problem
The buyers — a group of experienced commercial investors operating through a single-purpose LLC formed for the acquisition — had the asset under contract at $4,100,000. The value was in the upside, not the current income: the center was 99%+ occupied but almost entirely on month-to-month leases at well below market rents, producing roughly $306,000 of annual gross rent.
That profile is exactly what conventional lenders avoid. Underwritten on in-place income and short-term tenancies, the deal wouldn't support bank financing, and a newly formed entity with no operating history added more friction. Waiting on a bank meant risking the escrow, the deposit, and an off-market basis the buyers had worked to secure.
The Helvetica Solution
Helvetica underwrote to the collateral and the repositioning plan rather than to trailing cash flow, funding a $2,810,000 senior first mortgage at 65% of value on an 18-month interest-only term. The structure funded $2,665,000 at closing, with the balance held back for tenant improvements and released as new leases at market rents were signed — so improvement capital was available exactly when it was needed, not tied up in advance.
Two six-month extension options were built in, giving the borrowers up to 30 months of runway to convert month-to-month tenancies into longer-term leases at market rates and refinance into bank permanent debt once income was stabilized.
Benefit to the Borrower
- Escrow closed on schedule — the below-market basis was preserved
- Underwritten to collateral value and business plan, not in-place income
- Tenant-improvement holdback funded the lease-up without a second loan
- Interest-only payments kept carrying costs low during repositioning
- Two 6-month extensions provided up to 30 months to stabilize and refinance
- All of the lease-up upside stayed with the ownership group
Deal Highlights
- 20,846 SF mixed-use: strip retail, 17 storage units, one apartment
- Three-parcel, 35,719 SF site facing a ~19,000 vehicle-per-day corridor
- Value-add acquisition with month-to-month tenancy repositioning
- Future-funding holdback tied to signed leases at market rents
- Exit via bank refinance after stabilization
Value-add purchase on a deadline?
Helvetica funds acquisition and bridge loans from $300K–$10M+ on investment and business-purpose real estate, typically closing in 3–10 days following receipt of all requested documentation.
