Tower Capital arranged more than $21.3 million in combined acquisition financing for four multifamily properties in Arizona.
The transactions involve the Portofino in Phoenix, the Hayden Apartments in Scottsdale, the Filmore Apartments in Phoenix and the Santa Carolina Apartments in Nogales, AZ.
Tower Capital’s Adam Finkel, CCIM, Principal, said, “The multifamily sector continues to attract strong lender interest, especially in the Metro Phoenix market. Population and business growth over the past 18-months has fueled market activity and demand for affordable workforce housing. The financing will allow the sponsors to achieve their investment objectives in a time- and cost-efficient manner.”
Phoenix Deal: Portofino
Tower Capital facilitated a $7,000,000 bridge loan for the acquisition and rehabilitation of the Portofino, a 66-unit, low-rise, urban multifamily property in Phoenix. Originally a Best Western Inn & Suites hotel that was converted into a multifamily use, the property contains 65 one bedroom/one-bathroom units, with a single unit featuring a two bedroom/one bathroom floorplan. Portofino includes an onsite tenant storage, community pool, interior unit renovations and offers proximity to the amenity bases of the immediate Sky Harbor area, Downtown Phoenix and Tempe.
The unnamed borrower, which purchased the property in an off-market transaction, intends to capitalize on bringing below-market rents up to market and taking advantage of significant capital improvements from a few years ago. There is additional value-add opportunity to replace the in-unit flooring, replace all windows, upgrade the landscaping and pool area, install in-unit stacked washer/dryer units, as well as installing water heaters into each individual unit.
Finkel said, “Portofino’s retro-style community appeal assimilates itself well into the artsy, boutique retail, restaurant and entertainment amenities located just down the road. Tower Capital was able to successfully source the bridge financing on behalf of the borrower within an extremely critical timeframe. Tower generated a competitive lending environment, which ultimately delivered the best pricing and terms for the borrower and was able to successfully close the transaction within four weeks.”
The short-term bridge loan provided the borrower with a loan amount equal to 75% of the total acquisition and rehabilitation cost, as well as a flexible prepayment structure to meet the borrower’s investment objectives.
Scottsdale Deal: The Hayden
Tower Capital facilitated $5,395,000 in acquisition financing for the Hayden Apartments, a two-story, 25-unit garden-style property in Scottsdale. The five-year, interest only loan carried a fixed rate of 3.2% at 65% loan-to-value. The low-rise, recently renovated apartment community is in South Scottsdale, was originally built in 1977 and remodeled in 2020.
The interior units have been upgraded with new stainless-steel appliances, new closet systems, paint, flooring, in-unit washer/dryers, dishwashers, new shaker-style cabinetry, and a bathroom package including shower, vanity and backlit mirrors. Situated along Hayden Rd. just south of Thomas Rd., the property is near the Loop-101 freeway, as well as retail, dining and entertainment amenities in Downtown Scottsdale, and Downtown Tempe, one of the largest employment hubs in the Phoenix MSA.
Finkel said, “The property was not completely stabilized when it went under contract, so some maneuvering was required with both the seller and lender to effectuate the maximum loan terms on behalf of the borrower.”
Phoenix Deal: Filmore
Tower Capital facilitated $5,100,000 in acquisition financing for the Filmore Apartments, a 41-unit, low-rise, multifamily property in Phoenix. Situated just north of Phoenix Sky Harbor International Airport, the property enjoys direct access to all of Phoenix’s employment and entertainment corridors. The property features two bedroom/one bathroom floorplans with upgraded interior units and is near retail, dining and entertainment amenities in the surrounding Airport Area submarket.
The borrower, which purchased the property in an off-market transaction, intends to capitalize on bringing below-market rents up to market, while also seeking additional value-add opportunities through re-painting all the exterior buildings, replacing windows, replacing bathroom vanities, toilets and tubs in all units, a complete remodel of the pool area and overall landscaping improvements.
Tower Capital’s Finkel said, “The short-term bridge loan provided the borrower with a loan amount equal to 75% of the total acquisition and rehabilitation cost, as well as a flexible prepayment structure to meet the borrower’s investment objectives.”
Nogales Deal: Santa Carolina Apartments
Tower Capital facilitated $3,850,000 in acquisition financing for the Santa Carolina Apartments, a two-story, 128-unit, garden-style property located in Nogales, AZ. The five-year fixed rate loan will provide the borrower with a low interest rate of 3.75% and no prepayment penalty through a local credit union.
The 100% affordable property was built in 2005 and sits on a 6.25-acre lot. The property features common area amenities including a playground, community room with computer and internet access, a laundry facility, and a fitness center. The units are spacious, featuring a 928-square-foot two-bedroom unit and an 1,100-square-foot three-bedroom unit with walk-in closets.
Situated 50 miles south of Tucson, and 150 miles southeast of Phoenix, Nogales serves as a gateway for international trade and is a major link in the CANAMEX Trade Corridor, which is a western transportation corridor connecting Canada, the U.S., and Mexico.
Tower Capital’s Finkel said, “The city’s strategic location along the U.S. and Mexican border provides excellent opportunities for shipping and distribution, retail trade, manufacturing, and tourism. This assignment was especially challenging given that the asset is 100% affordable and situated in a tertiary market that doesn’t meet the geographic investment parameters for most lenders.”