Stormfield Capital has two primary lending strategies: Residential Transitional Lending (“RTL”) and CRE Bridge Lending. In this piece, we will look at a specific type of CRE bridge loan known as a condominium inventory loan.
What is a Condominium Inventory Loan?
A condominium inventory loan is a specific type of CRE bridge loan. It is secured by a condominium project that is either completed or nearly completed. Typically, these projects are developed with a construction loan from a local or regional bank.
The need for this type of bridge financing often arises from a project delay. In these scenarios, the bank-provided construction loan may reach its maturity date before the sponsor has successfully sold all available units.
While the sponsor and the bank might negotiate a short extension, there are cases where an extension is simply not possible. When this occurs, the sponsor faces a choice: they must either pay out of pocket to repay the maturing bank loan or find another loan to retire the existing bank debt.
Since traditional bank loans often contain steep prepayment penalties, sponsors frequently turn to the CRE bridge loan for a more flexible solution.
While these situations do not arise often, they represent a compelling opportunity for both the lender and the borrower.
From a lender’s perspective, the project has been significantly “derisked”. The developer has already cleared the various obstacles and hurdles inherent in any development project.
Most importantly, condominium inventory loans contain risk-mitigating factors that contribute to an outsized risk-return tradeoff. The most notable factor is the clear path to resolution. The remaining condominium units are sold, and the proceeds are required to be used to rapidly pay down the bridge loan.
Let us understand this with a case study.
The Scenario
Stormfield Capital recently made a condominium inventory loan secured by a portfolio of thirty-one newly constructed residential units. These units are located in Union City, New Jersey. The loan was also secured by a development parcel located in nearby Hackensack.
At the time the loan was originated, twelve of the Union City condominiums were already under binding contract. These contracts represented approximately $7.5 million in proceeds from sales closing soon.
For a lender, this is an encouraging signal of both market demand and the sponsor’s ability to execute.
The borrowing entity was a seasoned regional developer. Their professional resume includes more than 250 completed units.
This developer faced the common conundrum of maturing construction debt occurring during an extended sales cycle.
UNION CITY, NJ
Union City sits directly on the Palisades overlooking the Hudson. Commuters are moving here after being priced out of Manhattan and Brooklyn. The city offers direct access to Midtown via the Lincoln Tunnel, often in less than 20 minutes.
This makes it a strong, undervalued option compared to saturated waterfront markets like Hoboken or Jersey City.
The location works because of the transit options. This includes direct bus lines and proximity to PATH and ferry services. For professionals seeking affordability without losing the easy commute, it’s a perfect spot for professionals.
The Solution
Stormfield’s facility was utilized for two primary purposes: to pay off the current construction lender and to help the sponsor pull out equity. By freeing up that cash, the developer could move straight into their next project in Hackensack.
Stormfield’s loan was structured with a dynamic unit-release mechanism.
Instead of waiting for one big “liquidity event,” the loan pays down as units sell. This protects both the lender and the borrower.
There is no gamble of a single date. The principal returns steadily, the collateral coverage stays strong, and the exit is a controlled wind-down.
The Outcome
Stormfield closed this Union City loan in February 2025. Within 6 months, 16 of the 31 condominium units had been sold. This resulted in the repayment of 60% of the total loan amount.
Do note that this 60% repayment was achieved with only 51% of the units being released. This specific repayment ratio is a result of two things:
- The negotiated release structure.
- The strong execution by the sponsorship group.
As a result, the loan’s LTV decreased significantly as units were sold. For the sponsor, this creates increasing financial flexibility and a smoother exit, while for Stormfield Capital, it maintains strong collateral coverage throughout the remaining sales cycle.
Underwriting a Condominium Inventory Loan
Let us understand how a disciplined private lender evaluates a CRE bridge loan secured by unsold condominium units.
The private lender mitigates legal and political risk before assessing the real estate itself. Thus, ensuring that repayment is not blocked by regulatory hurdles.
The underwriting process generally focuses on three pillars of risk:
The Offering Plan: Private lenders verify that the state has approved the documents required to sell units individually. The project cannot be liquidated unit-by-unit without a valid, active offering plan. An absence of approval could leave the lender with a single, illiquid block of debt.
Municipal Compliance: Private lenders review that the developer holds all necessary Certificates of Occupancy and has satisfied local building codes. This verification confirms that the project is legally “complete” and ready for immediate retail sale.
Local Regulatory Shifts: Private lenders look beyond the building to the local political climate. This includes monitoring for changes in rent laws, tax abatements, or zoning ordinances. They look for changes that could deter individual buyers or stall the sales cycle.
Once they have understood the risks, the focus shifts to collateral valuation. There are two standard valuation methodologies used in this process:
- Bulk Sellout Value: This assumes a single buyer acquires all units at once. This buyer usually receives a discount, typically 10-15% below individual retail pricing. This reflects a faster, more efficient disposition and is used by lenders to stress-test loan proceeds.
- Aggregate Retail Sellout Value: This assumes units are sold individually to homeowners. This is typically a longer and more laborious process.
Finally, lenders carefully structure the individual unit release prices. This protects downside risk and provides a clear project exit strategy.
Final Takeaway: Bridging the Gap to a Full Sell-Out
The Union City transaction shows Stormfield’s ability to identify and execute on niche bridge lending opportunities with asymmetric risk-return profiles.
Condominium inventory loans are unique because the collateral is already finished, and the path to repayment is pre-defined.
For the Builder: This loan is a lifeline for their equity. Instead of being forced into a “fire sale” or a frantic refinance with a bank that doesn’t understand the local market, the builder gains the time they need. It allows them to pull out their initial capital and move on to their next project while the remaining units sell at full retail price.
For the Private Lender: This is one of the safest positions in real estate. Unlike a construction loan, where the lender bets on a future building, this loan is secured by finished “sticks and bricks.” The risk isn’t in the building’s completion, but in the timing of the sales. By setting a “release price” for each unit, the lender ensures that every closing automatically pays down the debt.
When a project has a seasoned builder and a clear sales plan, the “condominium inventory” bridge becomes a win-win. It protects the lender with a finished asset and protects the builder’s profit from a ticking clock.
Don’t let a maturing construction loan force a fire sale. Visit Stormfield Capital’s CRE Bridge Lending Page to see how they can recapitalize your project and bridge the gap to a full retail sell-out.
