Tower Capital, a private real estate capital advisory firm based in Scottsdale, Ariz., arranged $47.4 million in non-recourse construction financing for the Village, which will be built by general contractor Legacy MCS. The project is to be situated on nearly 20 acres within the 1,900-acre Mayfair master-planned community located roughly 35 miles north of San Antonio and 40 miles south of Austin.
A build-to-rent townhome development southeast of Charlotte is shifting to a for-sale model. Here's why.
Tower Capital helped arrange a $19 million loan to refinance 99 townhomes developed in the first phase of Poplin Glen, a 268-unit BTR development in Charlotte. The loan replaced an original bridge loan Tower Capital arranged in July 2021 to acquire the townhomes at certificate of occupancy with the intention to lease all the units.
The sponsor, who has declined to be identified, will begin selling the individually platted homes in Phase 1 to homeowners individually as units become vacant. Redfin’s Jill Moyer has been brought on to handle the sales. The subsequent phases, including Phase 2 with 70 units and Phase 3 with 99 units, will remain rentals.
Tower Capital advised on the placement of a $19,149,000 loan to refinance 99 townhomes developed in the first phase of Poplin Glen, an overall 268-unit BTR development in the Charlotte, North Carolina market.
Due to a strong homeownership market, the sponsor will begin selling the individually platted homes in Phase 1 to homeowners individually as units become vacant. Redfin has been brought on to handle the sales. The subsequent phases, including Phase 2 with 70 units and Phase 3 with 99 units, will remain as rentals.
Tower Capital has arranged a $19.1 million loan for the refinancing of the first phase of Poplin Glen, a 268-unit build-to-rent project in the Charlotte. The borrower was a real estate investment company headquartered in Arizona. The loan replaced a bridge loan that Tower Capital arranged in July 2021 to facilitate the acquisition of the townhomes at certificate of occupancy with the intention to lease all the units.
The initial phase of Poplin Glen comprises 99 units and was completed in 2021 and 2022. The community offers two-story, three-bedroom townhome units. Townhomes feature one-car attached garages and backyards. Phase two of Poplin Glen will deliver a further 70 units, while phase three will comprise 99 townhomes.
The sponsor plans to begin selling the individually platted homes in phase I to homeowners individually as units become vacant. The second and third phases will remain as rental units.
Tower Capital, a leading capital adviser in CRE finance, has expanded with a new team in California, adding three capital markets leaders and opening a new office in Los Angeles. The latest additions boost its newly formed, retail-focused Capital Markets Group to five members, led by Geoffrey Harris, who arrange capital for clients across multiple markets including California, Texas and the Sun Belt.
The latest to join in California are Alex Chenarides, who will serve as senior vice president; Monica Pendergast, who joins as a transaction manager; and Adam Folz, who joins as a capital adviser. The Capital Markets Group also includes Tanner Johnson, a vice president. The expansion in California follows Tower Capital’s growth in Texas, where it opened a Dallas office earlier this year, and expansion in Denver in 2022.
FORT WORTH, TEXAS — Empire Group of Cos. has secured a $72.8 million loan to develop Village at Golden Triangle, a build-to-rent development roughly 14 miles north of downtown Fort Worth. Tower Capital arranged the financing. BBL Building Co. is the general contractor. The developer has broken ground on the community, which is slated for delivery in 2025.
Las Vegas, NV – Members of our team recently attended the 2023 Western States CREF conference. It was a major success as we gained valuable insight into the current state of the Commercial Real Estate market and further fostered relationships with our lending and capital partners.
Capital Seeking Yield: A prominent theme discussed throughout the conference was the abundance of capital waiting on the sidelines. With US Treasuries offering 4-5% and attractive yields on both corporate and CMBS bonds, many capital providers are limiting their exposure to direct real estate. As lenders remain cautious and selective, spreads have continued to widen out.
Market Outlook: Many participants agreed that while 2023 was a more difficult year than forecasted, the outlook for the industry remains optimistic. It is expected rates will begin to stabilize or decline in the first half of 2024, generating greater liquidity in the real estate markets and leading to an uptick in transaction activity.
Surge in Bridge Financing: Assets underperforming aggressive pro-forma projections has led to a spike in bridge financing originations. Many lenders are offering bridge-to-bridge solutions as well as Fixed-Rate bridge programs to create greater stability for borrowers.
The Emergence of Debt Funds and Credit Unions: Debt fund, private lender, and credit union lending activity has soared as these groups look to fill the void left by banks. Greater flexibility, customized solutions, and less stringent asset requirements have made this capital extremely attractive to borrowers.
Multifamily and Industrial Properties Remain in High Demand: Multifamily and Industrial properties continue to generate the greatest interest among capital providers. Multi-tenant Retail and Hospitality are beginning to see greater interest based on strengthening sector fundamentals. Location, property quality, and sponsorship remain key aspects to asset attractiveness.
As we are faced with a volatile commercial real estate market, Tower Capital remains committed to helping our clients navigate and succeed in this challenging environment. Please do not hesitate to reach out if you have any questions or if you would like to discuss how we can best be a resource for you going forward.
Thank you for your trust in Tower Capital.
I recently attended a captivating real estate summit at the picturesque Arrabelle Resort in Vail, Colorado, hosted by the Leadership Cabinet of the Jewish Federation of North America. The summit was an amalgamation of insights, ideas, and a wide range of sentiments about the ever-evolving real estate landscape. I’m excited to share some key takeaways with you.
Sentiment and Market Overview
The atmosphere at the summit was a blend of cautious optimism and prudent pessimism. As we delved into the intricacies of the commercial real estate market, it became evident that performance in this sector is highly nuanced, with a need to scrutinize individual submarkets more carefully. Despite a wave of new supply entering some areas, there's still a palpable shortage of housing with continued strong demand for industrial spaces. Retail appears to be fully recovered since the Great Recession and hospitality is healthy, helped by the popularity of experienced based recreation today. The real conundrum lies in the office space, where uncertainty prevails. My expectation is that there will be limited new office supply, potential conversions to multifamily, or even complete demolitions, all while the market gradually absorbs the existing stock.
Debt Market and Note Purchasing
Investors are on the lookout for opportunities in the debt markets, hungrily eyeing discounted notes from lenders. However, the high demand for these notes has kept prices close to par, with limited opportunities available. It's important to point out that some lenders claim to have healthy portfolios with lower leverage, but skepticism lingers regarding the accuracy of these assertions.
Opportunities and Fragmentation
A recurrent theme throughout the summit was the search for opportunities in fragmented marketplaces where there will be less competition from institutional buyers. Mobile Home Parks (MHPs) and self-storage facilities are gaining popularity among investors for their potential.
Insurance Challenges
The soaring costs and limited availability of insurance have become major pain points, particularly in the southeast. These challenges are casting a shadow on real estate transactions across the board, affecting values and debt service coverage ratios.
Keynote Speaker: Ethan Penner
One of the highlights of the summit was a compelling keynote speech by Ethan Penner, the founder of Mosaic, renowned for pioneering the first CMBS securitization. Penner shared his personal journey, growing up in a challenging environment and finding inspiration in the most unexpected places. He emphasized the importance of recognizing the child in people as a means of connecting with them.
Luck and Timing
Penner discussed the evolution of banking and the increasing consolidation of the industry as a concerning sign of economic health. He also shared his experiences working at savings & loans during the early '80s, which eventually led to his foray into trading mortgages.
Integrated System Concept
A central concept that resonated with attendees was the notion that everything in real estate (and life) is interconnected and must be evaluated holistically.
Market Behavior
Herd behavior and greed were identified as primary drivers of market movements, shedding light on the psychology behind real estate trends.
Audience Questions and Insights
Penner fielded questions from the audience on how to identify opportunities, build conviction, and execute plans. His advice boiled down to taking action and rallying support for ideas. He encouraged skepticism of consensus, challenging authority when necessary, and emphasized the importance of clear profit margins in seizing significant opportunities. Interestingly, he advised against competing head-to-head with others and instead recommended creating a distinctive brand, one that exudes positivity and attracts like-minded individuals. In an unexpected twist, he cautioned against hiring individuals with extensive lending experience, favoring ambition and likability as key hiring criteria.
In conclusion, the real estate summit in Vail provided a multifaceted view of the current real estate landscape, with experts offering valuable insights and strategies to navigate the challenges and seize the opportunities that lie ahead. We remain committed to staying on top of the latest developments in the real estate market to serve your interests better.
Thank you for trusting us with your real estate endeavors.
Warm regards,
Adam S. Finkel
Midway through the year, financial experts are still trying to understand how the U.S. banking crisis that unfolded quickly in the first few months of 2023 will play out in capital markets. Until the uncertainty clears, commercial real estate sponsors and borrowers must be patient as the pieces are reassembled in the capital markets and in the larger marketplace.
The result of the Fed changing its rate hike trajectory and investors adopting more conservative and safe strategies have caused expectations to be reset and bond yields to decline. Early in 2023, a commonly held view was that the Fed would continue hiking rates until something broke. Clearly, something did break in the banking sector. The financial crisis that unfolded in the spring of 2023 stemmed from the liquidation of Silvergate Bank, as well as subsequent collapse of Silicon Valley Bank (SVB), Signature Bank and First Republic Bank, which sent shockwaves through the ranks of the country’s local and regional banks.
While various factors played into the failures of these banks, one factor that they all had in common was increased pressure from the Fed’s interest rate hikes that began in 2022. The spate of interest rate hikes appears to be nearing a pause and the Fed has expanded its balance sheet to provide additional support to banks. But the crisis makes a soft economic landing even more unlikely, and many experts believe a recession is unavoidable.
Banks are seeking to boost liquidity by asking for greater depositor relationships. Because the largest banks saw a major inflow of deposits following the regional bank failures, many lenders are willing to give better rates to borrowers who provide meaningful deposits. There are also numerous lenders shifting resources from originations to asset management. Banks are also sharply reducing lending levels and are expected to be even more cautious about future loans.
by Adam S. Finkel | Principal and Co-founder of Tower Capital
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