Holiday Inn Express Finds New Life as Multifamily
Tower Capital recently arranged a $23.2 million acquisition and renovation loan for a 132-key Holiday Inn Express hotel in Sacramento that will be repurposed into a 129-unit class-B multifamily community. The four-story project was originally built in 1979 and is located at Sacramento’s downtown convention center.
“The sponsor’s conversion strategy aligns with Tower Capital’s objective of providing capital to commercial real estate investors who specialize in transforming underperforming hotels into attainable rental housing,” said Adam S. Finkel, principal and co-founder of Phoenix-based Tower Capital. “The sponsor has completed several hotel-to-multifamily conversions, capitalizing on the need for more workforce housing in infill locations which have a high level of demand and are located in desirable locations with rising property values.”
The sponsor plans to complete construction and convert all the units in a 12-month time-period. Additionally, leasing is scheduled to begin as soon as month 10. The unit mix will consist of 74 studio units, nine one-bedroom units and 46 two-bedroom units. Renovations will include the addition of kitchens and washer/dryers as well as improvements such as fixtures and countertops.
Tower Capital’s non-recourse loan provides the borrower with a 36-month term at 85 percent loan-to-cost and includes funds for capital improvements. The loan was closed with a California-based debt fund with which Tower Capital has completed more than $62 million in financing transactions through August 2021.