Anatomy of an Actium Loan: Condominium in Maui

Situation

One of our trusted referral sources reached out to us, asking whether we would be interested in making a loan secured by a first-position lien on a condominium. The condominium, located on the Island of Maui of Hawaii, carried great present day value, and, as a first-position loan, could present relative safety for our capital.

Due Diligence

We contacted the prospective borrower and learned how the property was located in a development with which we were already familiar – on Kaanapali Beach. The buyer informed us that the condo was being put on market, and that he needed the loan for a short period of time to provide him liquidity until the condominium sold. An Actium partner conducted an in-person inspection, allowing us to learn how both the condominium and the building complex were both in a good, desirable condition. The condominium had a tax-assessed value of $1,739,000, which was further corroborated by the recent sale prices of similar condominiums in the same resort.

Decision

Our loan amount was $250,000, giving the investment a loan-to-value ratio of 14%. The loan had a one year maturity, a 12% interest rate and a 2% origination fee.