Why Spectra Provided the Loan
Spectra's investment thesis centered on multiple structural protections and market fundamentals supporting favorable risk-adjusted returns. The executed $8.343 million sale contract with Resibuilt provided substantial downside protection, with the 44% loan-to-value ratio based on the contracted sale price creating significant equity cushion. Even utilizing conservative liquidation assumptions of $4.98 million—well below the contracted sale price—the transaction maintained appropriate collateralization.
The borrower's track record proved particularly compelling: eight completed similar transactions with additional projects in progress demonstrated both execution capability and market relationships critical to successful lot disposition. The borrower's Charlotte base provided proximity to the Hickory market while maintaining access to capital and homebuilder relationships throughout the region.
Market fundamentals further supported the investment decision. Hickory's significant population growth and demonstrated homebuilder interest provided multiple potential exit paths beyond the Resibuilt contract, ensuring adequate market liquidity to support alternative disposition strategies if required.
Why This Borrower Chose Spectra
The borrower required bridge financing to complete the 150-acre land acquisition and capitalize on the executed sale contract with Resibuilt. The transaction's time-sensitive nature—with entitlement work completed and a homebuilder counterparty secured—necessitated rapid execution that traditional land lenders' extended timelines could not accommodate.
Spectra's expertise in land acquisition financing and ability to underwrite based on the borrower's executed takeout contract enabled efficient transaction structuring aligned with the anticipated six-month hold period.
Background
The borrower secured a $3.6 million acquisition contract for over 150 acres of land in Hickory, North Carolina, having already invested over $700,000 in entitlement work to create 309 single-family paper lots. An executed purchase contract with Resibuilt, a regional homebuilder, provided for the sale of the entitled lots at $8.343 million, or $27,000 per lot.
The borrower sought a six-month bridge loan to complete the land acquisition, with the expectation of selling the entitled lots to Resibuilt prior to the Spectra loan's maturity. The Charlotte-based borrower brought substantial relevant experience, having successfully completed at least eight similar land entitlement and disposition transactions with additional projects in progress.
The transaction timing aligned favorably with robust homebuilder activity in the Hickory market, where significant population growth was driving development interest from multiple national and regional builders seeking finished lot inventory.
Market Overview
The Hickory market demonstrated robust demographic and economic fundamentals supporting residential development activity. Between 2000 and 2022, the market experienced population growth of 15.10%, with continued annual growth of 0.59% reflecting sustained in-migration trends. Median household income grew 9.67% between 2021 and 2022, indicating strong economic expansion accompanying population gains.
The combination of population and income growth created compelling supply-demand dynamics for residential development. The subject site benefited from strategic positioning providing access to major employment centers, including Catawba Valley Medical Center and Klingspor Abrasives USA—two of Hickory's largest employers located approximately five miles west of the development.
This employment base, combined with the market's relative affordability compared to larger North Carolina metropolitan areas, continued to attract both residents and homebuilders seeking to capitalize on the region's growth trajectory.
