The RRA team recently closed on a hotel-to-apartment conversion project in Bloomington, Indiana. Built in 1972, the property operated as an extended-stay hotel under the Wingate by Wyndham brand through October 2021. Following the closing, the sponsor converted the property into a 90-unit apartment building. The existing plumbing and electrical configurations of the extended-stay hotel streamline the conversion process.

The construction work for the apartment conversion took approximately six months, encompassing significant modifications to accommodate the new apartment units, along with the addition of amenities such as a co-working area, game room, and fitness center.

RRA Capital provided a $5,500,000 non-recourse loan with a 36-month interest-only term, including two 12-month extension options. The loan covers all budgeted capital improvements required for the conversion, and interest reserves are in place to support financing needs during the construction period.

With a pro forma stabilized debt yield of 11.0%, the property demonstrates strong financial performance, offering security and potential refinancing or sales options for the sponsor. The sponsor brings expertise in hotel-to-apartment conversions, having completed or initiated seven similar projects. Notably, RRA Capital has previously financed two of the sponsor's conversion projects in New Braunfels, TX, and Omaha, NE.

This conversion presents a unique market opportunity, and the financing structure aligns with the sponsor's business plan. The sponsor's experience in similar projects, combined with their established relationship with RRA, reinforces their ability to execute the conversion successfully. RRA Capital is dedicated to supporting adaptive reuse initiatives that contribute to vibrant communities.

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