Marc Tropp, a senior managing director with Eastern Union, arranged $12,050,000 in financing toward the acquisition and conversion of Wolf Creek, a 192-unit multifamily property located at 500 North Caraway Road in Jonesboro, Arkansas.
The site had served as student housing for attendees of Arkansas State University, situated less than a quarter mile from the property. A public, research university, Arkansas State University is the second-largest university in Arkansas. The property is now being converted to a commercial multifamily site.
Eastern Union is one of America’s largest providers of commercial mortgage brokerage and capital markets advisory services. Mr. Tropp, together with senior managing director David Merkin, oversee the firm’s Mid-Atlantic Region office in Bethesda, Marylan.
The purchase price for Wolf Creek was $12,050,000. The buyer was New York-based Hillcrest Acquisitions. The seller was not identified.
“This was a complex and challenging transaction that required the services of a talented and experienced broker like Marc Tropp,” said Abe Bergman, president and co-founder of Eastern Union. “Few banks would be prepared to take on the multiple risks associated with this deal. But Mr. Tropp’s excellent and far-reaching relationships with the banking community enabled him to find a suitable lender.”
“This unusual and difficult deal began with a stabilized property with a healthy cash flow, followed by the removal of that cash flow and the assumption of risk associated with renovation, and, finally, the assumption of additional risk associated with a new lease-up,” said Mr. Tropp. “Numerous banks declined to take on this transaction. Having built trusting relationships with many lenders over nearly two decades, however, I was gratified to have succeeded in identifying a willing banker.”
Mr. Tropp secured a five-year mortgage with 24 months interest-only payments during renovations and lease-up. Once leased up, the mortgage converts to a principal-and-interest payment based on an amortization period of 25 years. The transaction carries a 65-percent loan-to-cost ratio. The lender was Bay Vanguard.
The overall budget for the project was $17.79 million. Total renovation costs amount to $4.4 million. The remaining money will be applied to closing costs and soft costs.
