Tower Capital recently arranged the financing for a 135-unit, low-rise, 2 and 3-story apartment community located in the Glendale, Arizona.  The property was built in 1985 and sits on 5.72 acres. The community features an outdoor swimming pool, leasing office, clubhouse and two on-site laundry facilities.  The unit mix consisted of 12 Studios, 75 One Bed units, and 48 Two Bed units.

The 10-year floating rate, non-recourse, Freddie Mac loan offers the borrower a low starting rate and then adjusts monthly over the 30 Day AVG SOFR.  With 5 years of interest only payments and only a 1 point pre-pay penalty, this gives the borrower plenty of time to increase the value of the property, and then sell or refinance into a fixed rate loan without paying a large pre-pay penalty.

During the loan application process with Freddie Mac, the 10 Yearr UST actually dropped significantly.  With Tower’s strong relationships with its lenders, it was able to convince Freddie to reissue the loan application based on the lower 10 Yearr UST, thereby increasing the loan proceeds since it dropped the fixed equivalent rate by 23 bps.