Purchasers of luxury apartments in Beverly Hills lending money to developer for construction - One of the most expensive real estate projects in the US introduces an unusual financing model

The developer behind one of the country’s most expensive real-estate projects has an unusual request for its condo buyers - to lend them money for construction. Namely, purchasers of luxury apartments in the One Beverly Hills complex in California can finance part of its construction by lending money to the investor through a special bond program, with an annual yield of 5%. It is an unusual project financing model whose total value is estimated at USD 10 billion.

Apartments in the complex cost from USD 15 million, while the most expensive units reach USD 200 million. According to a report published on October 13, customers have secured about USD 350 million through this model. For some buyers, the bond amount reached about 30% of the value of the apartment they intend to buy.

This model gives the investor access to additional capital, while it gives the purchasers the opportunity to generate income even before they move into the property. However, investing also carries risk: customer bonds have a lower collection priority than other loans secured for the project. Should the construction run into serious problems, the purchasers could lose both the borrowed money and the expected real estate.