Cottonwood Townhomes

Value-Add, Multifamily
Amount: $

StackSource recently arranged financing for the value-add acquisition of a 29-unit multifamily located in Amarillo, Texas. The units were individually deeded, but the lender funded one loan for all of them, while allowing the sponsor the flexibility to sell individual units in the future. The lender funded 75% of the total cost, which included the purchase price and the rehab expenses. During the first two years, the loan required only interest-only payments, which would then automatically convert to an amortizing loan with a 25-year amortization period. The financing comes with no prepayment penalty during the first two years, and a 3-2-1 prepayment schedule in years three to five, giving the sponsor ample flexibility to improve the property and refinance without penalty. If the market does not support the refinance at the time, the sponsors can ride the loan through its 5-year maturity. The loan is serving as a bridge loan in the short term and a permanent bank loan in the long term. The deal was reviewed and approved using the proforma debt-service coverage ratio. Associate Director Jaideep Chadha secured the deal, at an 8% fixed interest rate for 5 years.

Deal Team

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