Kennedy Funding closes $860,000 land loan for Glen Cove development

Glen Cove, NY Securing financing for a development project with only raw land as collateral has become more difficult in recent years thanks to a combination of stricter government regulations such as the Dodd-Frank act on lenders, and traditional financial institutions becoming more conservative in their lending practices.

Kennedy Funding Financial LLC has closed on a $860,000 loan to La Mare Win LLC. The land loan will provide working capital for the borrower to begin on a residential development in the Long Island community. The 6.82-acre property, purchased by La Mare Win in 2014, is located on Burns Ave. on the Long Island Sound. La Mare Win is still in the early stages of the permitting process with the Glen Cove Planning Board.

The company’s current plan is to subdivide the property into 22 parcels with 21 single-family homes, and 12 affordable housing units for rent.

The La Mare Win property is convenient to Sea Cliff Beach, as well as the Sea Cliff Long Island Railroad station, and the $1 billion Garveis Point waterfront district that recently broke ground, which will be a 56-acre mixed-use development that will include residential, commercial, restaurant, retail, cultural, park and green space.

Lending on land, strictly based on the value of undeveloped land, is not common. Traditional lenders, such as banks, have strict limits on borrowing when it comes to raw land as collateral. As a direct private lender, Kennedy Funding Financial has more flexibility in lending and is not impacted by the same regulations that conventional lenders encounter. According to a report in Bloomberg, direct lending funds surged to a record $29.9 billion worldwide in 2014. The Mortgage Bankers Association reports that alternative lenders, including direct private lenders, saw a 68 percent increase in lending activity in 2015.

“Very few, if any, traditional lenders are willing to provide loans on raw land,” said Kevin Wolfer, CEO of the Englewood Cliffs, N.J., firm. “Raw land loans are seen as a greater risk because of the perception that the borrower has less of a stake in undeveloped land.”

What also makes lenders nervous about raw land loans is, if the development project does not go forward, the lender is stuck with undeveloped or unfinished land that may take a long time to sell.

“A borrower comes to us with a vision for their project,” Wolfer said. “But there’s one major obstacle: getting money for working capital to move the project forward. Making that happen is what Kennedy Funding Financial is built on.”