Tower Capital recently arranged a $3.1 million acquisition and renovation loan for a 100-key, Quality Inn hotel that will be repurposed to a 65-unit, B-Class, multifamily community. The project was originally built in 1973 and features a pool and large parking lot.

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 thirty-one studio units, thirty-one 1-bedroom units and three 3 bedroom units. Renovations will include the addition of kitchens as well as cosmetic improvements such as paint, fixtures, and countertops.

The non-recourse loan provides the borrower with a 9-month term plus two 9-month extension options. Out of the $3.1 million in proceeds, $1.3 million was held back for capital improvements.

Low cost housing is becoming increasingly difficult to find in Sierra Vista, while the hospitality market is struggling due to the economic climate and COVID. The high demand for this segment is apparent in the low vacancy rate in the trade area.

This transaction included multiple challenges for the Tower Capital team to overcome. The first of which was the location. Sierra Vista is not a top market like Phoenix. Second, the borrower had been working with a different lender that did not fund the loan by the original closing date. That is when the borrower reached out to Tower Capital, who stepped in and secured the financing within a few weeks.