Due to population growth in 2020, demand is surging for affordable housing in the Phoenix market. Investor owners recognize the shutdown of hospitality industry in the past year has created opportunities to transform underutilized hotels into income-producing assets simply by delivering new residential options.
Two recent deals are good examples of that trend. Acquisition and renovation loans totaling $21.3 million were recently secured for two hotel-to-multifamily conversions in the Tempe/Phoenix markets.
The first transaction was a $12 million acquisition and rehab loan for a four story 158-key interior corridor Best Western hotel that will be repurposed into a 113-unit class-B multifamily community. The second transaction is a $9.3 million acquisition and rehab loan for a four-story 188-key select-service Quality Inn Phoenix Airport hotel that will be repurposed into a 97-unit class-B multifamily community.
Tower Capital arranged the financing.
“Affordable housing is becoming increasingly difficult to find near Tempe’s city core, and more renters seeking modestly priced units are being pushed from the core southward towards the Tempe property,” said Adam Finkel, co-founder of Tower Capital. “The Phoenix property is ideally located at the base of the picturesque South Mountain Preserve and is within walking distance to the Ahwatukee Country Club, which will appeal to residents seeking housing in one of Phoenix’s most affluent submarkets. High demand for this segment is evident in the low vacancy rate in the trade area. The projected rents are below subsidized rent standards and should be popular as an affordable option in the Tempe market.”
Lisa Brown has more than 30 years of experience in corporate communications and marketing management with organizations including Grubb & Ellis, Marcus & Millichap and NAIOP.
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