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A refreshing outcome for a desert oasis.

Key Information


Mark-Taylor Inc. and Kitchell Development Corp.


Tempe, Arizona


$90.8 million refinance of a 590-unit multifamily community


San Sonoma is a Class-A multifamily property in Tempe, Arizona, featuring 590 units in two- and three-story buildings. San Sonoma includes one-, two- and three-bedroom units averaging 1,094 square feet and features upscale amenities, including the industry’s largest fitness center, business center, clubhouse and swimming pool.

Shortly after completion, the developer sought to refinance the property to take out its construction loan and replenish equity. The borrower needed to convince the lender of the property’s premium valuation—even though it wasn’t yet fully stabilized, and operating expenses were temporarily inflated by marketing, administrative and personnel costs during the lease-up period. Additionally, the project has the unique operating distinction of being one of few new garden designs with exceptionally large units in a market where new developments are dominated by higher-density, infill, wrap- or podium-style developments with generally smaller units and different unit mixes. Lenders had concerns of saturation, looking closely at the market’s inventory and pipeline.

Solution & Outcome

CBRE has a long-standing relationship with Mark-Taylor Inc. and Kitchell Development Corp., San Sonoma’s developer, acting as a full-service advisor since 2001 and assisting with many successful capital markets strategies, appraisals and dispositions. When the opportunity arose to assist Mark-Taylor/Kitchell on the refinancing of San Sonoma, the CBRE Capital Markets Debt & Structured Finance team created an economic analysis and underwriting based on extensive data and market expertise built upon 60 years of operating experience. Demonstrating how the property was experiencing faster absorption than its peers and was situated in one of the highest barrier to entry submarkets in Phoenix, CBRE capitalized on Mark-Taylor’s stellar financial and operational track record with 19,000 Class-A units built over 32 years to provide financing proceeds greater than 120% of total paid costs with full-term, interest only payments.

In addition, CBRE built a case for San Sonoma to be evaluated as lower risk because of its unit mix; with a significant number of two- and three-bedroom units (65%), there would generally be larger household sizes and correspondingly larger household incomes (smaller ratio of household income spent on rent). CBRE ultimately arranged a $90.8 million, 12-year loan for San Sonoma, with full-term, interest-only payments. Fannie Mae’s financing reflected a near-stabilized underwriting while the loan amount was based on the net operating income estimate in place within four months after rate lock—without any additional collateral or borrower obligation.

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