Financing Amount:
Refinance Construction Loan into Permanent Debt
Capital Source:
Freddie Mac
Transaction Details:

Tower Capital recently arranged the permanent financing for a newly completed, class A, townhome development located in Phoenix, Arizona. Tower’s client, an experienced, Toronto-based developer, has completed and sold numerous multifamily projects throughout Canada and Arizona. The subject property was completed in 2021 and fully leased by the end of that year.

The 14 luxury townhome units are 1,540 and 1,776 square-foot, 3-bed x 2.5-baths and come standard with attached 1 or 2-car garages. Residents enjoy living in an open concept floor plan with stainless steel appliances, quartz countertops, shaker cabinets, and a pantry. All units come completed with private backyards and are two-story with staircases that lead up to an efficiently designed second floor with an upstairs loft, and all bedrooms.

The property rests in the Papago Park neighborhood, which is in the heart of Central Phoenix, providing residents with plentiful opportunities to visit nearby neighborhoods such as the Biltmore area, Old Town Scottsdale, Downtown Tempe, and Downtown Phoenix. This conveniently located community spoils residents with an abundance of shopping destinations and highly rated restaurants. Scenic mountain views from Camelback Mountain, Papago Park, or South Mountain can be enjoyed from many of the resident’s windows.

Loan Structure:

The $3,315,000 loan replaced the existing construction debt with a 3.4% fixed interest rate based upon a 30-year term and 30-year amortization schedule. The interest rate will adjust after year 5 of the initial term and the loan utilizes a stepdown prepayment schedule that provides flexibility to the borrower should they wish to sell or refinance the asset. Since the borrower was only interested in replacing the existing debt and not pulling any cash out the loan to value was 50% and the lender agreed to make the loan on a non-recourse basis.

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