AHWATUKEE, AZ-Spectrum Retirement Communities LLC will break ground next month on its second senior housing project in Arizona. The 140-unit rental project, which has a price tag of roughly $20.5 million, will offer independent living, assisted living and dementia/memory care.
The Denver-based firm obtained a $15.44 million construction and mini-perm loan from a local bank to build its newest project, which is located at the southeast corner of 44th Street and Knox Road. The five-loan has a loan-to-cost of 75% and an interest rate of about 6%, according to Cynthia Hammond, president of Churchill Commercial Capital Inc.
Hammond arranged the loan for Spectrum. “This is a unique financing because it’s a conventional construction loan rather than a HUD loan,” she tells GlobeSt.com. “Over the past couple of years, most senior housing projects have been financed by HUD, but the borrower wanted to get this project built faster than a HUD loan would allow.”
Hammond says there is only a “small subset” of lenders that understand the senior housing sector and are comfortable taking on the construction risk of a new project. “The fact the borrower was able to obtain a conventional loans speaks to the quality of the project and the sponsorship,” she adds. “The lender was very impressed with the borrower's experience as an owner and operator of senior housing.”
Moreover, the local market has significant demand for senior housing with an assisted living and memory care component, Hammond notes. “The market has a clear need for this property, and the feasibility of the project was clear,” she points out.
Spectrum’s first Arizona project, Palos Verdes, will open next month in Peoria, just northwest of Phoenix.
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