Tower Capital Arranges 3 BTR Loans
The largest deal was a construction loan for a Texas community.
Tower Capital, a Scottsdale, Ariz.,-based private real estate capital advisory firm, has expanded its portfolio in the build-to-rent sector with three loans totaling $83 million. The financing is for projects in Texas, Arizona and Colorado.
Tower Capital has capitalized more than $2.3 billion, primarily in construction financing, for BTR projects involving 49 communities across the country. The firm closed more than $100 million in BTR construction financing in Texas in the last 90 days alon.
Kyle McDonough, managing partner and co-founder; George Maravilla, partner; David Stull, vice president, and Noah Schott, capital advisor, originated the financing on behalf of the borrowers.
Texas focus
The largest of the transactions originated by Tower Capital is a $58 million construction loan for the Village at Centerpoint Station, a 270-unit BTR community in San Marcos, Texas. The project is being developed by The Empire Group. The Tower team received multiple competitive term sheets and secured non-recourse stretch senior construction financing from a national debt fund for the sponsor.
The BTR community will be located on 24 acres west of the northwest intersection of Interstate-35 and Center Point Road. Situated in the Tech Corridor along I-35, San Marcos is close to major employment hubs in San Antonio and Austin.
Units will have an average size of 1,047 square feet and offer a private patio or yard. Other residential features include quartz countertops, stainless steel appliances, premium kitchen backsplashes, full-size washers and dryers and smart home technology.
Community amenities will include a fitness center, car care station, BBQ grills, pool, clubhouse, outdoor walking path and open recreational space.
Arizona lease-up bridge
After receiving multiple competitive term sheets for a repeat client, Tower Capital arranged $16 million in non-recourse bridge financing from a New York-based debt fund for a 47-unit BTR community in the Phoenix area.
The project is in its lease-up phase following completion in the second quarter of 2024. Tower Capital was familiar with the community since it had capitalized the initial construction debt and joint venture equity in 2022. The firm noted that the new loan will be accretive to the sponsor’s business plan as it continues to lease-up and stabilize the project by dropping a more expensive construction loan spread by nearly 300 basis points to the lower-cost bridge facility.
The community features a mix of three-, four- and five-bedroom units with an average size of 1,727 square feet. Units have open floor plans, ample storage and pocket offices, Energy Star certified appliances and smart home technology. The homes have two-car garages and backyards.
Colorado construction deal
The Tower Capital team also arranged a $9 million construction loan from a local bank at an attractive rate and with minimal fees after generating more than 10 competitive term sheets for the owner of a 25-unit BTR townhome community in the Fort Collins, Colo., area.
The rapidly growing city is seeing significant demand for BTR communities due to a limited supply of high-quality single-family home rentals in the market. The sponsor’s target demographic includes young professionals, Colorado State University students, families and retirees who are seeking the convenience of rental living combined with the benefits of a townhome. In addition to CSU, other major employers nearby include Hewlett-Packard, AMD and Intel.
Earlier Empire deals
Tower Capital has worked on financing deals for The Empire Group, a Scottsdale-based development firm, on more than 15 properties.
In January, Tower Capital provided two construction financing loans totaling nearly $100 million for two BTR properties in the Phoenix and Dallas markets. The larger of the two transactions was a $70.3 million financing package for Village at Borgata, a 287-unit BTR community being developed by The Empire Group in Phoenix’s Queen Creek submarket. Tower Capital arranged the non-recourse construction financing from a debt fund.
Tower Capital also arranged a $47.4 million construction loan for The Empire Group’s 217-unit Village at Mayfair project in New Braunfels, Texas, in June of last year. The company had also secured $72.9 million in financing for the Village at Golden Triangle, a 317-unit BTR project being built by The Empire Group in Fort Worth, Texas.
