Tower Capital, a leading provider of build-to-rent financing, has secured $15.85 million in non-recourse bridge financing for a 47-unit build-to-rent community in the South Mountain submarket of the Phoenix MSA. The community, situated on a ~15-acre (AC) site, completed construction and received final CofO in Q2 2024 and is currently in lease-up. The project features a unique and in-demand mix of large 3, 4, and 5 bedroom units, open floor plans, ample storage, pocket offices, spacious backyards with covered patio, modern elevations, energy star certification, smart home technology and high speed internet. Another attractive amenity at the project are spacious 2-car garages with direct access. The average unit size for the project is an impressive 1,727 square feet (SF) and features great street frontage and convenient freeway access.
The Sponsor is a joint venture between a local AZ-based, private BTR/SFR developer and a CA-based investment firm which has structured over $7.0B in total transactions since 2008 across numerous asset classes and geographies across the country. The joint venture for the development was originally arranged by Tower Capital in 2022 along with the senior debt financing for the project.
Tower Capital was able to secure the financing via a NY-based debt fund despite persistent challenging market conditions and an impending loan maturity. Tower, due to their familiarity with the asset since capitalizing the initial construction debt and equity, was able to get lenders comfortable with the business plan and property despite a slower than expected lease-up and increased concessions. However, as a result, the Tower team was able to capture multiple competitive term sheets for its repeat client and ultimately secure attractive 72% LTC non-recourse financing at a mid-7% untrended debt yield. The new loan will be accretive to the Sponsor’s business plan as they continue to lease-up and stabilize the project by dropping their more expensive construction loan spread by nearly 300 bps into a lower cost bridge facility and allowing them to buy additional time.
This financing is the latest in a series of successful transactions for Tower Capital in the build-to-rent space. The company has capitalized over $2.3 billion in build-to-rent projects for 49 communities encompassing more than 8,500 units across the country, having closed nearly $200M in BTR construction financing in the last 90 days alone with a substantial pipeline behind it.
