Affordable Housing Apartment Acquisition – Phoenix, AZ

• Capital Source: Bank
• Purpose of Loan: Acquisition
• Loan Amount: $21,500,000
• LTV: 75%
• Rate: 3.25%
• Term: 10 Years
• Amortization: 2 Years Interest Only, followed by 30 Year Am
• Prepayment: Stepdown
• Recourse: Non-Recours

Transaction Details:
Tower Capital recently secured financing for a 400-unit, garden-style, multifamily property located in Phoenix, Arizona. Built in 1986, the community features gated-access, heated swimming pool, spa, basketball court, clubhouse with kitchen, business center, barbeque areas, on-site laundry facility, and covered parking. Currently, 100% of the units are encumbered by a Land Use Restriction Agreement (LURA) for the next 7 years, however, the majority of the units are not rented at the maximum allowable amount, providing a true off-market, value-add opportunity. The buyer was a highly experienced multi-family investor with more than 5,600 units under ownership throughout the southwestern United States.

The non-recourse bank loan provides the bower with a 10-year total loan term, fixed for the first 5 years at 3.25%, with two years interest only payments, followed by a 30-year amortization schedule. The step-down prepayment structure is a more flexible option then the Yield Maintenance and Defeasance found in Fannie Mae, Freddie Mac, and CMBS loans.

Despite the volatility in the markets caused by the COVID-19 pandemic, Tower was able to work quickly to facilitate the successful execution of the loan, with no changes to the loan terms from application through to final loan approval.