Walker & Dunlop, Inc. announced that it structured a $49,628,000 loan for Arrowhead Summit, a 412-unit, Class B property in Glendale, Arizona. The financing was arranged for repeat-borrower, Cortland Partners (“Cortland” or the “Borrower”), and the transaction marks their first investment in the Phoenix metropolitan statistical area.
Managing Director Stephen Farnsworth led the Walker & Dunlop team in arranging the Freddie Mac acquisition financing for the Borrower, who has an outstanding track record with both Walker & Dunlop and Freddie Mac. The financing utilized Freddie Mac’s Mod-Rehab Program, which provides capital for the renovation and repositioning of multifamily assets at very competitive rates. Mike Altman, Chief Investment Officer at Cortland, stated “Once again, Walker & Dunlop and Freddie Mac proved to be outstanding partners in helping us close our first deal in Phoenix. We are thrilled about this acquisition and look forward to not only transforming Arrowhead Summit but also growing our footprint in the greater Phoenix market.”
The loan was structured as a float-to-float execution, which starts with three years of interest-only payments at a floating rate, allowing the borrower to complete planned renovations and upgrades. This initial term is followed by a seven-year floating rate loan with two years of interest-only payments. Approximately $9.2 million has been budgeted for renovations to amenities, exteriors, interiors, and capital improvements, including green upgrades to enhance energy efficiency and reduce future utility costs at the property.
Cortland expects the renovation period to last 22 months and plans to upgrade the unit interiors when each turns over. Once improvements are complete, Arrowhead Summit’s units will feature premium finishes, such as granite countertops, farmhouse sinks and fixtures, new cabinetry, stainless steel appliances, fireplaces, and Nest thermostats. Following the renovations, Arrowhead Summit will offer the highest quality amenity packages and interior units in the local area’s competitive set and the average rents are projected to increase significantly.
Mr. Farnsworth commented, “We are confident that Cortland’s substantial construction, development, and operating experience will ensure a successful repositioning of Arrowhead Summit.” He added, “The Borrower has a fully integrated platform including overseas manufacturing, interior design, construction, and management, which allows them to successfully execute large-scale renovation projects such as Arrowhead Summit.”
Located in Glendale, Arizona, Arrowhead Summit is located just 30 minutes away from downtown Phoenix, which enjoys one of the strongest rent growth rates in the country. Employment growth is also strong in the region, with companies such as PetSmart and Farmers Insurance nearby. Built in 1999, Arrowhead Summit is a garden-style community featuring two swimming pools, a fitness center, clubhouse, picnic areas with barbecue grills, and a sand volleyball court.
Walker & Dunlop, a leader in the conventional multifamily lending space, ranked as the #1 Fannie Mae DUS® Lender in 2017, and the No. 2 Multifamily Agency lender in 2017. For more information about Walker & Dunlop’s financing options, click on its website.