San Diego, September 21, 2025
News Summary
PSRS arranged a $13.4 million construction loan through a debt fund to finance a nine‑story, 70‑unit micro‑apartment building in San Diego. The nonrecourse facility carries a 75% loan‑to‑cost ratio and a 24‑month term with two six‑month extension options to cover construction and early lease‑up. The development will include 69 studio units and one one‑bed/one‑bath unit, averaging about 360 sq ft per unit. The loan structure is aimed at predictable draw scheduling for ground‑up construction. Observers will watch permitting, vertical construction timing and lease‑up strategy in this transit‑oriented market.
San Diego Nine‑Story Micro‑Apartment Project Secures $13.4M Construction Loan
A nine‑story, 70‑unit micro‑apartment development in San Diego has secured $13.4 million in construction financing arranged by a capital placement firm. The loan is provided through a debt fund on a nonrecourse basis, carries a 75 percent loan‑to‑cost (LTC) ratio and a 24‑month term with two optional six‑month extensions.
Key financing and deal structure
The construction financing was arranged by two dealmakers at the placement firm and is structured as a nonrecourse construction loan, meaning the debt is secured by the project rather than by the personal guarantee of the developers. The lender is a debt fund, and the loan finances the project at a 75 percent LTC level. The initial loan term is two years, with two six‑month extension options available if additional time is needed to complete construction or stabilize the property.
Project scope and unit mix
The building will rise nine stories and contain a total of 70 units. Of those, 69 are studio apartments and one is a one‑bedroom/one‑bath unit. The average unit size across the development is approximately 360 square feet, aligning the project with the micro‑apartment model that emphasizes compact living units in urban locations.
Where this sits in the market
Construction loans provided by debt funds are a common financing route for mid‑rise multifamily projects, particularly those with higher LTC needs and condensed development timelines. The combination of a nonrecourse structure and short initial term with extension options is tailored to construction schedules and early lease‑up periods, giving borrowers some flexibility while protecting lender downside to the asset itself.
Related local activity and recent transactions
The financing for this San Diego project comes amid a busy slate of Southern California real estate activity:
- A 68.3‑acre nursery site in Oceanside sold for $18 million, a parcel zoned for industrial uses and potentially eligible for future industrial development.
- A mixed‑use property along North Coast Highway 101 in Encinitas changed hands for $10 million, with plans to convert 13 commercial units from for‑lease to for‑purchase configurations.
- An acquisition of a 2.3‑acre redevelopment site in Covina closed at $8 million, where a four‑story, roughly 180,000‑square‑foot self‑storage facility is planned.
Other financing moves in the region include a $34.8 million construction loan for an affordable apartment project near Vermont Square and multiple bridge and refinance transactions arranged for conversions and multifamily assets.
People and market players mentioned
The construction loan for the San Diego micro‑apartment project was arranged by two professionals at the placing firm. Elsewhere in the market, there have been senior hires and firm launches: a longtime finance executive joined a regional owner as chief financial officer, a leasing specialist moved between brokerage firms to focus on creative and entertainment office space, and a new investment firm launched to target industrial outdoor storage properties across Southern California.
Why this matters
The deal highlights ongoing investor appetite for compact urban housing and the role of debt funds in filling construction financing needs. The nonrecourse nature of the loan and the 75 percent LTC indicate a lender willingness to take project‑first collateral positions while providing the developer substantial leverage to complete construction and lease up a specialized product type.
Next steps and timeline
With construction financing secured for a 24‑month period plus two extension options, the project team will move forward into the construction phase and initial leasing. The short term aligns with typical build‑and‑stabilize schedules for projects of this scale; the extension options provide contingency if permitting, construction or lease‑up timelines extend beyond expectations.
FAQ
What type of loan was secured for the San Diego project?
The project secured a $13.4 million construction loan provided through a debt fund. The loan is nonrecourse, carries a 75 percent loan‑to‑cost ratio and has a 24‑month term with two six‑month extension options.
What does nonrecourse mean?
Nonrecourse financing means the lender’s recovery is generally limited to the collateral (the project) and the lender cannot pursue the borrower personally for deficiencies, subject to standard carve‑outs and exceptions in the loan agreement.
How many units and unit types are in the building?
The building will contain 70 units: 69 studios and one one‑bedroom/one‑bath unit, with an average unit size of about 360 square feet.
Who arranged the financing?
The construction financing was arranged by two dealmakers at the placement firm; the loan was sourced through a debt fund lender.
What is loan‑to‑cost (LTC) and why does it matter?
Loan‑to‑cost measures the loan amount as a percentage of total project cost. A 75 percent LTC indicates the lender is financing three‑quarters of the project cost, with the sponsor expected to provide the remaining capital from equity or other sources.
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Project Quick Facts
| Feature | Detail |
|---|---|
| Loan amount | $13.4 million |
| Loan type | Construction loan (debt fund) |
| Loan structure | Nonrecourse |
| Loan‑to‑cost (LTC) | 75% |
| Term | 24 months (two 6‑month extension options) |
| Building height | Nine stories |
| Total units | 70 units |
| Unit mix | 69 studios; 1 one‑bedroom/one‑bath |
| Average unit size | Approximately 360 sq ft |
| Arrangers | Dealmakers at the placement firm |
Deeper Dive: News & Info About This Topic
Additional Resources
- REBusiness Online: PSRS Arranges $13.4M Construction Loan for San Diego Micro‑Apartment Project
- Wikipedia: Studio apartment
- REBusiness Online: IDI Logistics Enters Phoenix Market, Buys 101,794 SF Industrial Property for $20M
- Google Search: IDI Logistics Phoenix industrial property
- Bisnow: This Week’s LA Deal Sheet
- Google Scholar: Los Angeles commercial real estate deal sheet
- ConnectCRE: Investment Firm Targets Industrial Outdoor Storage Niche
- Encyclopedia Britannica: industrial outdoor storage (search)
- Bisnow: This Week’s LA Deal Sheet (repeat)
- Google News: This Week’s LA Deal Sheet (Bisnow)
Author: Construction TX News
TEXAS STAFF WRITER The TEXAS STAFF WRITER represents the experienced team at constructiontxnews.com, your go-to source for actionable local news and information in Texas and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Texas Construction Expo, major infrastructure unveilings, and advancements in construction technology showcases. Our coverage extends to key organizations like the Associated General Contractors of Texas and the Texas Building Branch, plus leading businesses in construction and real estate that power the local economy such as Austin Commercial and CMiC Global. As part of the broader network, including constructioncanews.com, constructionnynews.com, and constructionflnews.com, we provide comprehensive, credible insights into the dynamic construction landscape across multiple states.
