Tower Capital recently arranged a $23.2 million acquisition and renovation loan for a 132-key, Holiday Inn Express hotel that will be repurposed to a 129-unit, B-Class, multifamily community. The four-story project was originally built in 1979 and is located in Sacramento’s downtown convention center.
Tower’s client, a Phoenix-based private investment firm, specializes in the transforming of underperforming hotels into attainable rental housing. They have completed several hotel-to-multifamily conversions, capitalizing on the need for more workforce housing located in in-fill locations.
The sponsor projects completing construction and converting all the units over a 12-month time-period, while leasing is scheduled to begin as soon as month 10. The unit mix will consist of seventy-four studio units, nine 1-bedroom units and forty-six 2-bedroom units. Renovations will include the addition of kitchens and washer/dryers as well as cosmetic improvements such as paint, fixtures, and countertops.
The non-recourse loan provides the borrower with a 36-month term at 85% loan-to-cost. Out of the $23.2 million in proceeds, $12.9 million was held back for capital improvements. The loan was closed with California-based debt fund with whom Tower Capital has proudly financed over $62 million with as of August 2021.