Mountain Lakes is a 96 unit, garden style, apartment project located in Tucson, AZ. The property was originally built in 1985 had been owned by the same private owners since 1993. The long-term ownership had become complacent and was no longer operating the property efficiently, providing an opportunity for Tower Capital’s client, an experienced value-add investor, to acquire the asset in an all-cash transaction at a below-market price. At the time of acquisition in January 2018, the property was roughly 65% occupied and is in need of updating. Since then, the borrower has stabilized the property and plans to spend another $120,000 on renovations, including new paint, landscaping, parking lot, signage, office and laundry room remodel, and interior unit renovations.

Upon stabilizing the asset, Tower Capital secured conventional permanent debt on behalf of the borrower, representing 75% of the recent purchase price. The new loan allows the borrower to recapitalize, providing funds for future capital improvements. The flexible prepay structure offered by the credit union, allows the borrower to sell or refinance the property with no penalty following month 36 of the initial loan term.