Financing Amount:
Cash-Out Refinance
Capital Source:
Fannie Mae
Transaction Details:

Tower Capital has refinanced an 80-unit multifamily property located in northcentral Phoenix. The garden-style, mid-80’s vintage property was acquired by the borrower in 2017, who has since completed a number of capital improvements to the property. These include renovating approximately 50% of the units, installing new signage, enhanced lighting, and upgrades to building mechanical systems. The borrower’s efforts have resulted in a 33% increase in rental income.

The 65% LTV, non-recourse loan provides the borrower with a 3.04% interest rate, fixed for ten years. The loan offers five years of interest-only payments, followed by a 30-year amortization schedule.

The current COVID-19 pandemic has caused most lenders, including the agencies, to become more conservative with their underwriting and cash-out requests. In order to maximize the best loan terms for the borrower, LTV was capped at 65%, which provided lower pricing, additional years on interest only payments, and reduced COVID-related debt service reserve holdbacks. Through a pro-active approach, Tower worked closely with the appraiser and the lender’s underwriting team in order to maximize underwritten NOI and value for the property, which led to a significant cash out to the borrower.

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