$24M Interim Financing Funds 238-Unit Buy

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TUCSON-A $23.5-million interim loan has helped a Denver-based investment group take on the 238-unit Bear Canyon Apartments. The class A property, once slated for condo conversion, will be maintained as a rental and stabilized.

A developer from Omaha had bought Bear Canyon Apartments in 2004 as a condo conversion property. When the market bottomed out, none of the condos at 9055 E. Catalina Highway had been sold.

Marty Hayes, vice president of Capmark Finance’s San Diego office, says the lender on the project ended up taking back the property from the developer, which necessitated the need for interim financing. “They ended up with a very aggressive loan to go with a strong Tucson market,” says Hayes, who originated the three-year, fixed-term loan for Bear Canyon Acquisitions LP. The loan, closing in 38 days, is an 85% loan-to-value “as is” financing with two one-year extension options.

Hayes tells GlobeSt.com that within 38 days of closing, Bear Canyon Apartments went from 75% occupancy to 95%. “This is why we had no problems with the loan. We knew the demand and market were strong,” he adds. “They have a few more projects in Tucson and we’re hoping to work with them again.”

Overall demand for multifamily product continues to be high in Tucson due to the lack of new product coming on line and the growing population. Adding to the situation is little availability of land and soaring construction costs, which would make building new apartment complexes a costly endeavor.

Bear Creek Apartments has a mix of one-, two- and three-bedroom apartments, averaging 973 sf. Rents range from $750 to $1,059 per month.