Mountain Funding Inc.

Mountain Funding Inc., a private real estate lender based in Parsippany, NJ, has closed a $2.3 million equity funding transaction and has committed to fund an additional $14 million as a non-recourse construction takeout for SMG, Inc., a New Jersey-based development firm that is in the process of completing and selling of an 83-unit luxury mid-rise condominium in Rockland, NY.

"In early December, the developer contacted us and explained that this equity funding had to be completed by Christmas," said Peter Fioretti, CEO of Mountain Funding. "Since we have known the developer for many years, and due diligence was fairly simple based on the quality of the work, the prime location and the impressive sales record to date, we were able to close in two weeks."

The project is a conversion and gut rehabilitation of apartments into condominiums selling from $250,000 to $800,000. More than 50 percent of the units had been pre-sold, with a projected total sellout of $35 million. However, the developer's construction line was fully expended, and certain work had to be completed before the end of 1999 or some contracts would have been terminated.

The $2.3 million equity funding had a term of 36 months, accrues interest at 10 percent per annum, and required two points to close, plus a participation in profits. The $14 million construction commitment calls for an interest rate of prime plus 2 percent, a two point closing fee and a two point exit fee.