Tower Capital has secured an $11,971,000 loan for a 288-unti multifamily property located in Tucson, Arizona. The Borrower acquired the property in March 2018 for $12.2 million, utilizing floating rate Fannie Mae financing that Tower Capital also arranged. Since acquisition, the borrower has completed a number of capital improvements to the property, including HVAC replacement, new appliances and flooring in many of the units, electrical and equipment upgrades, along with an exterior cleanup and rehab. Through the borrower’s efforts of renovating the property and changing the tenant base, they more than doubled monthly rental income within a relatively short period of time.

Challenges:
The borrower’s goal was to take advantage of today’s low interest rates by locking in long term fixed rate debt while securing the maximum amount of loan dollars. Unfortunately, historical crime issues at the property prior to the borrower taking over operations, along with a submarket that historically has faced challenges, caused most lenders to approach this loan more conservatively. The team at Tower was able to highlight the borrower’s successful track record in turning similar properties around, the vast reduction in crime, and material increase in NOI in order to push loan dollars.

The loan was sourced through one of Tower Capital’s capital partners who is currently offering a “Private Label” conduit product where they are both the originator, servicer, and B-piece buyer, offering a high level of execution certainty. The 10-year fixed rate loan provides a competitive 4.18% coupon and 2 years of interest only payments.