Constructed in 1976, this sprawling 11-acre apartment complex in Tucson, Arizona consists of 176 units spread across 11 two-story buildings. With an impressive occupancy rate at closing of 97%, the property offers a diverse mix of units, including 43 studios, 89 one-bedroom, and 44 two-bedroom apartments.

RRA Capital provided a $9.75MM loan with a 2-year loan term, offering two six-month extension options. The financing package includes a holdback facility, facilitating scheduled renovations and upgrades as leases roll over.

The property's seller, who self-managed the complex, faced challenges in raising rents to market levels. Recognizing this opportunity, the sponsor established a collaborative relationship with the seller throughout the acquisition process. The loan proceeds will fund various improvements, such as new appliances, quartz countertops, wood-plank flooring, roof repairs, exterior paint, and parking lot resurfacing. These enhancements will enhance the property's appeal and enable the sponsor to maximize rental income.

The sponsor has a detailed renovation program aimed at revitalizing both the interior and exterior of the units. By bringing the property up to market standards, the sponsor intends to optimize rental rates and enhance the overall appeal. The acquisition journey, which lasted nearly two years, underscores the sponsor's recognition of the value creation potential.

Despite operating below market rents, the property's trailing 12-month net operating income (T-12 NOI) demonstrates the potential for income growth, yielding an approximate 0.9x debt service coverage ratio (DSCR) based on the initial loan funding. This highlights the promising outlook for improved financial performance through the sponsor's renovation efforts.

The sponsor's comprehensive renovation program, supported by the flexible loan structure provided by RRA Capital, enabled significant improvements inside and outside the property. Through this partnership, the apartment complex is well-positioned for increased rental income and improved overall performance.

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